Businesses rely on a lot of applications, and are constantly trying new software to meet their needs. That makes it difficult for IT to properly manage its software inventory and avoid running apps the company doesn’t need. In this guest post, Innotas CEO Kevin Kern offers some advice for application portfolio management.
Enterprise applications. We love them so much that we can’t let them go, even when they cost our businesses time and resources.
Whether your business uses software as a service (SaaS) applications, or legacy applications brought along from businesses your company acquired, most companies have so many applications now that they’re spending an inordinate amount of time trying to manage and maintain them. This management process drains time and resources, weighs companies down and creates inefficiencies. Call it application sprawl, application bloat or whatever you like, but most companies that rely on applications could use a good old-fashioned spring cleaning to reassess and determine which apps in a company’s portfolio provide unequivocal value and which should make a polite exit.
This spring cleaning doesn’t need to be particularly painful. In fact, there’s a very reasonable five-step process that will help companies determine which apps truly add value to the business, which they can get rid of, and how to organize the remaining apps so they work as efficiently as they can.
As you go through this recommended five-step process, pay particular attention to the third step. It’s the best means to determine the business value of each application, which is the best indicator of whether an application should stay in your company’s portfolio of apps.
1. Create a full inventory of all applications.
While it may seem self-evident, many companies are not sure how many apps they actually have. They typically have a handle on how many apps they use and and which ones they use often, but the overall number may be elusive, since many companies create, collect and save apps over time. Within your inventory, note which apps were used in the past, which are currently in use and which may be considered for future projects. Record which function each app performs, if other apps are used with it concurrently, and which project or projects the app supports. If your company has hundreds of apps, you should start with those apps that are used most frequently and work your way down to those used infrequently or not at all. Otherwise the process may seem too daunting.
2. Eliminate redundant applications.
Once you get through the inventory process, congratulate yourself, because things are going to start looking cleaner and clearer very quickly. Reviewing your inventory, it should be fairly easy to identify which apps are redundant and can be eliminated. In most cases, you can eliminate legacy applications that overlap with the capabilities of new applications. Some companies find they can reduce their cache of apps significantly with just this step. Another way to look at this step is to cull those apps that are not important enough to appear on a disaster recovery or business continuity plan. Even if you don’t go to this length to eliminate apps, it’s a good litmus test for an app.
3. Identify the business value and function of each application.
This step is at the heart of your application portfolio assessment. It will likely be the most challenging and time-consuming, but it’s also the most important. It’s critical to assess the value of each remaining application by analyzing its business value. Rather than focusing solely on financial concerns, your organization should determine the value generated by each application. To do this, each IT application should be assigned a score using six separate criteria:
- Strategic alignment: How closely does the function of the app line up with your business strategy?
- Business process impact: Does the app serve to save time, money or improve business processes?
- Architecture: How complicated is the app to use and/or change?
- Direct payback: How quickly does the app pay for itself?
- Risk: If the app fails to work, how much negative impact will it have on your business?
- Customer/revenue: How closely does the app touch your businesses customers, or affect revenues?
An initial portfolio strategy can be organized on the balance between business value and application effectiveness. For this purpose, application effectiveness is the balance among the application service level, the cost to achieve that service level and the underlying risks of the technology platform. These measures may vary over time, so the future values of each should be factored into the classification process and the order in which some actions will be taken.
Business value can be seasonal, sensitive to performance, or tied to particular financial terms or periods. Application costs will reflect, among other factors, the service levels that have to be maintained, wage rates and vendor pricing actions. Changes in the risk assessment will result from changes in business practices, vendor actions or transaction volumes. You’ll need to establish individual measures that go into business value and technology effectiveness — and the relative weights of each measure — for each organization and portfolio.
4. Map your applications in a TIME chart.
Once the business value, costs and function of each application has been identified and captured, you then need to determine where each application fits within the ecosystem of your company. This step is probably the most critical of the entire process, because it unveils the true value of each application, assessed in a very objective way. We recommend using a TIME (Tolerate, Invest, Mitigate, Eliminate) Chart, based on Gartner’s Portfolio Triage process.
- Tolerate: Applications in this group deliver business value, but are not necessarily built on modern platforms or well integrated with the company’s infrastructure. They are the candidates for future elimination, though they can be spared the ax this time around.
- Invest/Innovate/Integrate: These are apps that show great promise to deliver significant business value, but will require the company to invest in integrating or upgrading existing infrastructure to ensure that these applications are able to function at the highest level.
- Migrate/Modernize/Remediate: These apps use software that is no longer supported, or rely on a small group of human resources with specialized knowledge. Assuming they are of high value to the company, you should determine ways to update these apps.
- Eliminate: In addition to redundant applications, through scoring you may find additional apps in your inventory have little to no business value, or that have costs which outweigh the results delivered. These apps should be eliminated ASAP.
5. Optimize your resources against your applications.
At this point, you should have a good overview of the costs and resources involved in operating each application. The final step is to maximize efficiency of each application process by ensuring your human resources are effectively deployed and allocated to high-value applications. A resource management platform can be used to monitor and track inefficiencies in the process, and guarantee proper alignment of applications, projects and resources.
APM to the rescue
Some organizations get help overcoming the challenges of that process by using software designed specifically to handle the chore of application portfolio management.
APM software enables your company to manage costs and risks of applications more accurately. Once those factors are in your control, you can more easily plan for upgrades, migrations, modernizations and retirements before the applications reach the crisis stage. You can identify the obsolescence or redundancy of applications faster. You can also manage and speed up app retirements to reduce complexity and cost in applications and infrastructure. And you can track and support opportunities to advance the architectural plans and progress toward those plans by funding assessments matched to updating systems.
Finally, your APM solution should also offer PPM functionality, as both processes should not be handled in silos, but with an integration approach.
Are you ready to start your spring cleaning?
About the author: Kevin Kern serves as President and CEO of Innotas, leveraging his 20 years of operational experience with high-growth software companies. Innotas is a leading provider of Cloud Solutions for IT management, including Project Portfolio Management (PPM) and Application Portfolio Management (APM) solutions.