In order to optimize the allocation of an organization’s budgets and resources, IT decision makers should embrace application portfolio management (APM). IT executives often realize the benefits of having a well-established project and resource management processes while proper application portfolio management ends up not getting sufficient attention. However, having access to a full application inventory as well as transparency of how much each individual application costs an organization on a yearly basis drives a big part of a decision making process when it comes to investing precious dollars into strategic work versus sustaining work.
Organizations run multiple applications that help manage different aspects of their internal and external operations – finance, human resources, accounting, sales support,supply chain, inventory and manufacturing systems to name a few. Departments often use different software solutions, such as SAP, Microsoft, ADP, Oracle, and Salesforce to help manage each of these business functions.
The main challenge for IT as it relates to application portfolio management, is to identify the applications that are worth the investment versus those that might not be. Jim Duggan, the Gartner research analyst focusing on application development, writes that a top-down analysis of an application portfolio enables APM processes to focus attention on the areas of greatest opportunity.
Thus, TIME (Tolerate, Invest, Migrate, and Eliminate) analysis has proven to be useful tool for structuring the sorting of applications in a company’s portfolio.
After all the applications are divided into four categories, a deeper analysis of the application portfolio can be performed.
Tolerate – applications that are creating enough business value and have manageable costs but should be maintained for various reasons.
Invest – ideally we need to strive to place all existing portfolio of application under this category. These are the most lucrative and investment-worthy applications that bring enough revenue and help streamline operations.
Migrate – applications that need modernization and no are no longer worth the investment.
Eliminate – this category consists of applications that have low business value and even high risks. Therefore, they are of no real value to the organization and need to be eliminated.
The application scoring functionality embedded in APM solutions can help organizations to form these TIME categories based on higher or lower scores obtained for each application. Duggan writes that grouping applications according to their characteristics is a meaningful way of categorizing the inventory and defining the destinies of the applications in the portfolio cycle. A focused analysis of the areas that will most likely yield improvements reduce analytic and data collection efforts, without forgoing the most promising opportunities.
APM not only adds significant value to the overall IT Governance within the organization, but also gives much needed visibility to support decision making when it comes to CIOs. By determining which applications should be outsourced, updated, or retired, management can free up financial resources and reinvest into applications with higher ROI that contribute to strategic business goals. Thus APM can drive IT operations and provide CIOs with much needed clarity on efficiency of their operations and execution of strategic objectives.