There’s never been a better time to maximize the value of your application portfolio
Wes Simonds 120000EFD6 firstname.lastname@example.org | | Tags:  simonds wes application enterprise software ibm modernization per capabilities product-innovation management portfolio kroll
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Love and marriage. Spring and allergies. Bad economies and ROI. These concepts often come in pairs, and for good reason: when the first comes along, we need to pay more attention to the second. This is certainly true for the third example I've listed above. For both individuals and organizations, the question ‘How can I get the best ROI from the investments I've made?’ is mighty popular right now. And for both, the answers are too elusive.
If you're an individual, perhaps you decide to talk to a stockbroker -- a guy who charges you money to tell you things you probably already knew and who probably generates no clear value over time. (It's suggestive that stockbrokers, despite claiming extensive specialized insight going back multiple decades, are practically never billionaires.)
For businesses, fortunately, the situation is a lot brighter. Particularly in the case of a portfolio of applications, there are ways to go about improving ROI that are based on sound and consistent principles. And software solutions which are built on those principles are now available.
That, in sum, is what Application Portfolio Management (APM) is all about. If you think of applications as investments -- which, for organizations, they certainly are, and on a huge scale -- it's very logical to ask: ‘What kind of return am I getting from my investments? Which ones are vital to my business, is there a scope for consolidation, which applications should I consider retiring? How should I optimize my investments to dial up my total ROI and dial down my total risk?’
APM solutions are particularly attractive to organizations at the enterprise level. That's because the largest organizations have giant portfolios of applications, and getting good answers to the above list of questions is therefore much harder. Similarly, in certain industries like banking, where applications have been in use for an exceptionally long period of time, the idea of introducing change to those applications is going to encounter more cultural resistance than usual. Change may be necessary, but it's really going to have to be justified with demonstrable ROI, if it's going to happen.
When you throw in the problematic economy we continue to face, in which ROI has taken on greater significance, it becomes pretty clear the need for effective APM has never been greater. Yet in many cases, organizations have barely even begun to think about portfolio management in this context.
Recently I was very fortunate to be able to talk to a real expert in this area: Per Kroll, Chief Solution Architect for Application Portfolio Management at IBM. Kroll agreed with me that at many organizations, the time for APM and also project portfolio management capabilities is now -- and not just because the economy is bad, and ROI is a touchy topic.
‘The basic problems have been around for quite some time,’ he said. ‘But they are getting worse every year and have now reached a breaking point. Companies can no longer continue with business as usual. They need to assess the value versus cost of all their current applications.’
Kroll's slant on the cost benefit ratio of current applications is particularly intriguing.
The usual approach to portfolio management in the enterprise revolves around projects -- answering the question: ‘What is the ROI for this business project we're thinking about undergoing, or have just finished?’
Well, that question is sensible. But it has the effect of shifting the focus away from applications. It ignores the fact that a problematic application's influence can be, and often is, multiplied because it spans multiple business projects.
How do APM solutions help? They put the focus right back on the applications. And they provide a clear, logical path organizations can follow to get more value, and lower risk, from every application in the complete portfolio.
IBM solutions including IBM Rational Focal Point, System Architect and Asset Analyzer can be used to pursue the following steps:
1. Create an application inventory.
2. Provide initial information about each application.
3. Analyze applications and determine which need more investigation.
4. Make decisions, like consolidate, modernize or move to cloud
5. Execute and track on those decisions through project proposals and project delivery
Enhance both IT development and IT operations, and receive more value from every application you have
IBM thus helps organizations optimize their application portfolios the way a stockbroker is supposed to help an individual optimize an investment portfolio -- in a balanced, objective and data-driven way that takes full advantage of proven best practices.
This approach generates many positive effects. And the more creative the company is in using APM solutions, the more benefits it will realize. Some of them are more obvious and some more subtle, but the possibilities really are endless.
Looking for something big and obvious? Think about the 80/20 rule of IT budgets. This says that typically an organization spends 80 percent of its total budget on IT operations (‘keeping the lights on’) and only 20 percent on strategic innovation (‘doing new stuff to make the business grow’).
What IBM APM solutions do -- unlike certain alternatives -- is deliver value to both halves of that ratio. And particularly in operations, that's welcome news in the enterprise.
‘Seems to me like companies have got the 80/20 rule wrong,’ said Kroll. ‘Many implement an objective and transparent portfolio management process only in development, to determine how best to spend the 20 percent of funds going to new projects. But what about the 80 percent on the operations and maintenance side? That's often decided based on a 'who screams the loudest' approach -- the squeaky wheel gets the grease whether it deserves any or not. Our APM capabilities make decisions like that a great deal more objective.’
A subtler, but still powerful, improvement lies in the area of information transparency. APM solutions, once applied, have the effect of pulling key information out of the shadows and into the spotlight, where it can deliver more value through wider utilization (and/or correction or revision, if necessary).
Because it's revealed, that information also becomes more resilient -- surviving the loss of key employees, for instance, who leave the organization.
‘Think about what happens when people make decisions about investment levels, modernization targets or which applications to move to the cloud,’ said Kroll. ‘Usually the relevant information is distributed in people's heads throughout the company... or hidden in spreadsheets. APM is about revealing that information (including analytical processes), prioritizing it, and making it all easily available, to anybody who needs it, at the time decisions are made.’
That reference to cloud brings up yet another point. Cloud and APM turn out to be closely related areas because APM-based insights can significantly improve the odds of a cloud's success.
How? Given an application inventory in which each application's context (risks, costs, complexity, etc.) has been quantified and analyzed, that information can be very useful in deciding which applications are the best candidates for clouds and choosing specific cloud models. This is really important, because picking the right set of applications and the right model can make or break a cloud project. APM insight not only helps ensure the chosen applications will scale well in a cloud, but also addresses other factors -- security, for instance, or business criticality -- that definitely need to be taken into account as well.
Furthermore, these same APM solutions can be used to support and enhance many other kinds of initiatives as well, some of which are hot and rapidly getting hotter.
Kroll agreed. ‘The interest in APM is growing so rapidly right now partly because people need to make so many new kinds of application-related decisions -- not just cloud, but also in areas like mobility, regulation compliance and outsourcing,’ he said. ‘And once you've built an application inventory that captures value, costs and risks, all these decisions are much easier to make. IT's job is not to say 'no,' but to help business establish the constraints and trade-offs at hand.’
Innovate 2012, to be held June 3 - 7 in Orlando, Florida, offers more on portfolio management, enterprise modernization, application lifecycle management and more -- with nearly 400 technical sessions and more than 20 tracks -- to give you insight into how software can help your organization cut costs, drive innovation and reduce risk. Be sure to register < http://www.ibm.com/software/rational/innovate/register.html > by March 14 to save US $200.
Get more details on Application Portfolio Management solutions
See how to align your business with your strategy
Find out how IBM can help you with enterprise modernization
Watch the demo on Smarter Application Portfolio Management with IBM Rational
Check out what’s planned for Innovate 2012
Register for Innovate 2012 by March 14 and save
Read a commissioned study conducted by Forrester Consulting, Measuring The Total Economic Impact Of IBM Rational Integrated Solution for Application Portfolio Management
About the author
Guest blogger Wes Simonds worked in IT for seven years before becoming a technology writer on topics including virtualization, cloud computing and service management. He lives in sunny Austin, Texas and believes Mexican food should always be served with queso.