Application Portfolio Management

IT Application Portfolio Management (APM) is a practice that has emerged in mid to large size Information Technology (IT) organizations since the mid 1990s. Application Portfolio Management attempts to use the lessons of financial portfolio management to justify and measure the financial benefits of each application in comparison to the costs of the application's maintenance and operations.

Evolution of the practice

It is unclear where the basic idea of managing IT application assets as though they were a financial portfolio first emerged as a corporate practice. The roots of APM appear to have started in the late 1980s and through the 1990s as organizations began to address the threat of application failure when the date changed to the year 2000 (a threat that became known as Y2K). During this time, tens of thousands of IT organizations around the world developed a comprehensive list of their applications, with information about each application.

In many organizations, the value of developing this list was challenged by business leaders concerned about the cost of addressing the Y2K risk. In some organizations, the notion of managing the portfolio was presented to the business people in charge of the Information Technology budget as a benefit of performing the work, above and beyond managing the risk of "application failure."

Business case for APM

According to Forrester Research, the typical IT organization expends 78% of its human and capital resources maintaining an ever growing inventory of applications and supporting infrastructure ["Application Portfolio Management Tools," Forrester Research, [http://www.forrester.com/Research/Document/Excerpt/0,7211,34229,00.html link to research] ] .

It is not uncommon to find organizations that have multiple systems that perform the same function. Many reasons may exist for this duplication, including independent decisions, corporate mergers, and abortive attempts to adopt new tools. Regardless of the duplication, each application is separately maintained and periodically upgraded.

With a large majority of expenses going to manage the existing IT applications, the practice of Application Portfolio Management attempts to reign in these costs by identifying duplication and redundancy. The business benefit would come, according to the proponents of APM, by removing this duplication and redundancy by retiring systems that were not necessary.

Portfolio

Taking ideas from investment portfolio management, practitioners of APM gather information about each of the applications in use in a business or organization, including the cost to build and maintain the application, the business value produced, the quality of the application, and the expected lifespan. Using this information, the portfolio manager is able to provide detailed reports on the performance of the IT infrastructure in relation to the cost to own and the business value delivered.

Definition of an application

In the field of application portfolio management, the definition of an application is a critical component. Many service providers offer services specifically tailored to helping an organization create their own definition, due to the often contentious results that come from these definitions.

The definition below comes from the IT organization within the Microsoft Corporation as presented by their Enterprise Architecture team. [Definition of an Application, [http://blogs.msdn.com/nickmalik/archive/2006/08/11/third-attempt-definition-of-an-application-in-a-soa-environment.aspx Inside Architecture Blog] , Nick Malik]

* "Software application" — An executable software component or tightly coupled set of executable software components (one or more), deployed together, that deliver some or all of a series of steps needed to create, update, manage, calculate or display information for a specific business purpose. In order to be counted, each component must not be a member of another application.

* "Software component" — An executable set of computer instructions contained in a single deployment container in such a way that it cannot be broken apart further. Examples include a Dynamic Link Library, an ASP web page, and a command line "EXE" application. A zip file may contain zero or more software components because it is easy to break them down further (by unpacking the ZIP archive).

"Software application" and "software component" are technical terms used to describe a specific instance of the class of application software for the purposes of IT portfolio management. See application software for a definition for non-practitioners of IT Management or Enterprise Architecture.

The art and practice of Software Application Portfolio Management requires a fairly detailed and specific definition of an application in order to create a catalog of existing applications that are installed in an organization.

The requirements of a definition

The definition of an application has the following needs in the context of Application Portfolio Management:

* It must be simple for business team members to explain, understand, and apply.
* It must make sense to development, operations, and project mgmt in the IT groups.
* It must be useful as an input to a complex function whose output is the overall cost of the portfolio. In other words, there are many factors that lead to the overall cost of an IT portfolio. The sheer number of applications is one of those factors. Therefore, the definition of an application must be useful in that calculation.
* It must be useful for the members of the Enterprise Architecture team who are attempting to judge a project with respect to their objectives for portfolio optimization and simplification.
* It must clearly define the boundaries of an application so that a person working on a measurable 'portfolio simplification' activity cannot simply redefine the boundaries of two existing applications in such a way as to call them a single application.

Many organizations will readdress the definition of an application within the context of their IT Portfolio Management and governance practices. For that reason, this definition should be considered as a working start.

Examples

Often the definition of an application can be a difficult thing to convey clearly. In any established IT organization, there may be subtle differences in the definition between different teams and even within one IT team. It helps to illustrate the definition by providing examples. The section below offers some examples of how to interpret this definition. There are examples both of things that are applications, things that are not applications, and things that are a composite of two or more applications.

Inclusions

By this definition, the following are applications:

* A web service endpoint that presents three web services: InvoiceCreate, InvoiceSearch, and InvoiceDetailGet
* A service oriented business application (SOBA) that presents a user interface for creating invoices, and that turns around and calls the "InvoiceCreate" service. (note that the service itself is a different application).
* A legacy system composed of a rich client, a server-based middle tier, and a database, all of which are tightly coupled. (e.g. changes in one are very likely to trigger changes in another).
* A website publishing system that pulls data from a database and publishes it to an HTML format as a sub-site on a public URL.
* A database that presents data to an Excel workbook that queries the information for layout and calculations. This is interesting in that the database itself is an application unless the database is already included in another application (like a legacy system).
* An Excel spreadsheet that contains a coherent set of reusable macros that deliver business value. The spreadsheet itself constitutes a deployment container for the application (like a TAR or CAB file).
* A set of ASP or PHP web pages that work in conjunction with one another to deliver the experience and logic of a web application. It is entirely possible that a sub-site would qualify as a separate application under this definition if the coupling is loose.
* A web service end point that no one uses, but which can be rationally understood to represent one or more useful steps in a business process.

Exclusions

The following are not an application at all:

* An HTML website.
* A database that contains data but is not part of any series of steps to deliver business value using that data.
* A web service that is structurally incapable of being part of a set of steps that provides value. For example, a web service which will only accept data that breaks the schema.
* A standalone batch script that compares the contents of two databases by making calls to each and then sends e-mail to a monitoring alias if data anomalies are noticed. In this case, the batch script is very likely to be tightly coupled with at least one of the two databases, and therefore should be included in the application boundary that contains the database that it is most tightly coupled with.

Composites

The following are many applications:

* A composite SOA application composed of a set of reusable services and a user interface that leverages those services. There are at least two applications here (the user interface and one or more service components). Note that each service is not counted as an application.
* A legacy client-server app that writes to a database to store data, and an excel spreadsheet that uses macros to read data from the database to present a report. There are TWO apps in this example. The database clearly belongs to the legacy app in that was developed with it, delivered with it, and is tightly coupled to it. This is true even if the legacy system uses the same stored procedures as the Excel spreadsheet.

References

External links

Product Vendors

* [http://www.mapador.com Mapador Inc. Application Portfolio Management]
* [http://www.planview.com/solutions/it/app_portfolio.aspx Planview - Application Portfolio Management]
* [http://www.metrixware.com Metrixware]
* [http://www.castsoftware.com Cast Software]
* [http://www.microfocus.com/Solutions/APM Micro Focus]
* [http://www.optimyth.com Optimyth Software]
* [http://www.serena.com/AU/products/mariner/application-portfolio-management.aspx Serena Mariner]
* [http://www.speedware.com/solutions/application_portfolio_management/ Speedware]
* [http://www.compuware.com/products/changepoint/application-portfolio-management.htm Compuware Changepoint]
* [http://www.relativity.com/pages/manage.asp Relativity Technologies Application Portfolio Manager]

"Focus Project / Program Portfolio Management"
* [http://www-306.ibm.com/software/awdtools/portfolio/index.html Rational Portfolio Manager]
* [http://www.microsoft.com Microsoft Project Portfolio Server]
* [http://www.borland.com/de/solutions/project-and-portfolio-management/index.html Borland IT Projekt & Portfolio Management]

Service Providers

* [http://www.microfocus.com/Solutions/APM Micro Focus]
* [http://www.hcltech.com HCL]
* [http://www.cognizant.com Cognizant]
* [http://www-935.ibm.com/services/uk/index.wss/offering/ams/a1006951 IBM]
* [http://www.umt.com/site/APM-Consulting_63.html UMT]
* [http://www.fujitsu.com/global/ Fujitsu]
* [http://www.infosys.com/services/application-development-maintenance/portfolio-management/default.asp Infosys]
* [http://www.wipro.com/webpages/consulting/eac/rationalize.htm Wipro]

User Groups & Communities

* [http://www.linkedin.com/groups?gid=916637 LinkedIn Group - Application Portfolio Management]
* [https://www.xing.com/net/apm XING Group - Application Portfolio Management]