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Application portfolio and its value to an organization

One of the critical components of an application management function for an organization is a usable and actively used application portfolio, as part of an overall IT portfolio management approach. It's been widely accepted that 70-80% of any IT organization's budget is consumed in keeping the existing applications running ("keeping the lights on"), yet there are significant technological and regulatory pressures for spending on change.

 

IT organizations need to shift their perspective to treating the suite of applications supported as an asset that enables the parent organization in meeting their business objectives. These are not just expense items with costs that need to be cut. They are value generation opportunities.

 

Enterprise IT systems are delivering value to the enterprise - otherwise we should just turn them off. The IT organization need to rationalize their spending and plan for upgrades and investments, otherwise the enterprise will calcify and become fragile, since an upgrade in one area will have a ripple effect on related systems. Solutions that are difficult to maintain and provide little value should be marked for retirement and other options investigated. Hardware that has become too expensive to maintain or unstable need to be replaced. You can't do application modernization without hardware modernization (and vice versa). Probably everyone is aware that this is the way things must work, but there are a surprising number of organizations who don't behave this way.

 

 

If the organization does not have a complete list of applications in production, one needs to be created. The system owner and effort expended to keep the systems running needs to be tracked. There are numerous articles and examples available on how to create and the value of application portfolios, so I'll not go into it here. If COTS solutions are involved, the vendors need to be brought into the portfolio planning process, to understand where they are taking their solutions. It's interesting how many times the relationship with COTS vendors become adversarial once the solution is in production. Wait, isn't your enterprise depending on this solution going forward. If you're pointing at the vendor, remember there are three fingers pointing back at you. The first rule of using COTS solutions is to not do anything you know will prevent you from taking the next release - at least not without a very good business reason. I'm not sure there would be a good technical reason.

 

All client and IT initiated application investments need to go through a governance process, where risks and benefits are assessed against available resources. This process will depend on a viable application portfolio in helping to make decisions. In most organizations, projects consume resources from the same pool. There can't be an underground economy for getting things done.

 

These application portfolio capabilities, ingrained within an organization's systems development and operations, will provide a firm footing for thought leadership. It should enable the IT organization to take advantage of the capabilities of the rapidly changing IT industry and provide a foundation to influence the enterprise on new ways value can be delivered.

Comments
Anonymous(anon) | ‎06-13-2008 03:57 AM

I had some questions about hardware and software portfolio and the linkage I mentioned in the note. My perspective is:

Hardware portfolio management without software portfolio management is just trying to manage a commodity, but software portfolio management without thinking about managing the hardware is using your imagination.

You must think about both to get true value for the enterprise.

IT was brought into the organization to increase the value delivery to the stakeholders. A purely cost reduction based perspective may help in the short term, but will not address the underlying strategic issues.

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