What is application portfolio management?

Application portfolio management (APM) is the discipline of developing and governing application strategy to optimise a company’s technology stack.

Given the ever-increasing acceleration towards digitalisation and increasing adoption of applications to support the transformation, organisations are discovering that governance and visibility into their app portfolios are becoming extremely difficult tasks. And, as software capabilities become more extensive, organisations are embracing a larger number of applications needed to support the business. As such, with this increased digital adoption, companies are seeing a specific disadvantage in the shift towards application transparency: application sprawl.

To support digital transformation and business, more and more applications are added to the environment. Not only are some applications known, but it’s easier than ever for users to purchase applications in the environment themselves. A quick online search followed by confirmation of payment details, and the app appears in the company’s technology stack for use. But once the need for that app disappears, too often the app itself remains. Many of these applications still draw upon company resources even though they no longer provide business value.

This is one example of application sprawl. Companies try to manage their application sprawl and inventory by creating a list of applications in excel, but that can easily lead to data duplication and become out of date quickly. To ensure that their tech stacks remain efficient and applicable to their current and ongoing needs, businesses are discovering that they need a comprehensive overview of their entire software portfolio.

Application portfolio management (APM) is the solution. APM strengthens organisations with insights and real-time data analysis vital to managing their complete application landscape. The end results? Better allocation of costs, a clearer understanding of applications that support the business capability, greater alignment of APM to business strategy and reduction of risk by understanding which applications are nearing end of life. Enterprise architects need to support today’s application infrastructure while planning for tomorrow’s business roadmap.

APM places a business’ entire software stack under a microscope, providing a detailed picture of every application and bringing them in line with the big-picture strategy for the enterprise. As such, application portfolio management empowers organisations to:

Eliminate risks

Perhaps the most prominent and potentially valuable advantage, the ability to counter the dangers posed by defunct apps, is central to APM. When applications reach the end of their life, they can begin to represent serious risks and vulnerabilities. Application portfolio management helps organisations create effective end-of-life plans for their apps, so that these potential security and process weaknesses don’t become liabilities at some point in the future.

Simplify and optimise IT infrastructure

Large and even small enterprises may find they have thousands of different software applications throughout their infrastructure. Application portfolio management maps the applications to the business capability, easily identifying those applications that are no longer useful or support the business. Additionally, app indicators may be applied to measure all-around performance. Using these indicators, APM quickly identifies and categorises every application, allowing organisations to eliminate redundant technologies, replace obsolete tools, and ensure that every piece of software is bringing in real value.

Evaluate strategy based on reliable data

Every business application has one key function: to support the company. And although application portfolio management is effective at providing a ground-level view of applications and dependencies, it also excels at collecting essential data for large-scale IT transformation. As application landscapes evolve and change to support new strategic initiatives, APM provides reliable, real-time reporting to help leaders and decision-makers better understand the impact of IT investments. Additionally, application portfolio management extends across the entire application portfolio, giving decision-makers insights to align every current piece of software to the big-picture needs of the business.

Rationalise costs

Application portfolio management categorises and evaluates applications based on total cost of ownership, along with other relevant factors. This gives decision-makers a clear view of the actual value of each piece of software, so that they can make informed choices and maximise returns on every IT investment that draws from the budgets.

Prioritise initiatives

Another advantage of app categorisation and evaluation in application portfolio management is that it allows businesses to more easily understand what needs to be done, and identify and prioritise their technology stack. Application portfolio management provides insight into which applications are nearing their end of life, and be able to plan with other company initiatives and priorities.

Improve business processes

Gaps, redundancies and obsolete technologies can slow important business processes to a crawl. Application portfolio management uncovers these hidden bottlenecks and then takes things a step further by outlining feasible improvements designed to help processes reach top efficiency.

Optimise communication and collaboration

Bringing all applications and tools together in one place, teams and departments across the entire organisation get to work with a single source of truth with regards to application functionality and investments. This allows for better communication between stakeholders and prevents resources from being applied to unnecessary IT purchases (and resource support of applications that serve no purpose).

Application portfolio management can simplify a business’ approach to documenting and governing their application portfolio. That said, the stages involved in establishing an effective APM solution are not always as obvious. Here, we look at each of the steps that organisations will need to follow to find success with APM:

Compile an application Inventory

The very first step in application portfolio management is cataloguing the software in use by the organisation. Meet with service owners through every department and take inventory of any apps that are either being used, or that might still have current subscriptions but are sitting unused. At this stage, it is also recommended that businesses collect other relevant information about each of the apps—including specifics regarding contracts and cost—to help inform more extensive application evaluations later.

Graphic outlining the application portfolio management process.

Identify business owners

Along with taking stock of every current application, organisations need to pair each app with its prospective business owner. These owners are the ones who will use the app, and should be informed about the application portfolio management process and what the goals of improved APM entail. Additionally, by applying data certification workflows organisations can bring together the onboarding and quality control of app data, for a more streamlined app strategy.

Define application life cycles

Each application will naturally pass through a life cycle of usefulness as it transitions from active use, through partial activity as the app is phased out, and finally into inactivity. Once the application is no longer useful to the business, it must either be replaced with an updated version or retired completely. Defining this lifecycle will make it easier to identify where each application falls within these stages.

Assess application usage

Even among active applications there is going to be a wide range of value. Determining how often these applications see use—and how important even well-used applications are to teams and workflows—will make it easier to assign value.

Establish application business value

Building on the previous step, organisations must next determine the total cost and business value of every active piece of software. Determining the total cost of ownership and the value of every application as it relates to business capabilities provides a benchmark against which companies can evaluate other potential solutions.

Focus on maintaining the process

Finally, the last stage in the application portfolio management process is the implementation of a data driven application indicator framework. From there, managers can continually revisit and maintain the application portfolio, establishing long-term value and keeping IT fully aligned with business objectives.

When correctly implemented, application portfolio management can become a reliable foundation for business transformation, informing smarter investments, maximising their impacts and promoting ongoing innovation. Here are several best practices to help businesses see the greatest potential returns from APM solutions:

Understand internal users

Application portfolio management exists to help leaders and other stakeholders make better decisions on which applications provide the most value to the business. By understanding the needs of the current users, which applications they need to do their job, APM can help match business capabilities to company strategy. APM must be capable of working closely with executives, project managers, app architects and other technology-planning roles to provide them with software to do their jobs, support the business strategy and answer their questions.

Train data suppliers

Data collection and maintenance in application portfolio management isn’t a one-team job. Suppliers from other teams and departments will need to regularly contribute data, beyond their traditionally defined responsibilities. To ensure that they have the direction and inspiration they need to fill the position of APM data supplier, organisations should first select a group of ‘pilot’ data suppliers to train on important processes and best practices. Feedback from these early adopters can then be used to refine the training process for other data suppliers. However, this is not always a manual process—IT discovery and IT asset management (ITAM) can automatically collect relevant data.

Broadcast success

Application portfolio management success does not necessarily mean completely revolutionising entire app portfolios. Instead, success often comes more quietly.

With effective application portfolio management, organisations can have a clear understanding of what applications are in their environment and how to reduce costs by eliminating those that don’t align to the business strategy. Funds can be used to support those applications that help accelerate the business in its growth. Stakeholders and leaders can effectively use the data in APM to align applications to business functions and work together towards a common roadmap on strategy. Sharing this success throughout the organisation can help stakeholders at all levels recognise the value of APM.

Application ecosystems are becoming more complex than they have ever been. To effectively manage growing app portfolios while protecting business investments, organisations need reliable application portfolio management tools. At the same time, industries are experiencing a paradigm shift in their preferred deployment models, migrating a significant portion of their data and services into the cloud. ServiceNow, the leader in IT management, provides the solutions.

ServiceNow’s Application Portfolio Management creates a comprehensive inventory of every piece of software attributed to the company, categorising these applications based on four major areas of concern: business capability planning, application rationalisation, information usage, and technology risk management. Leaders may then use these insights to build tech-relevant strategies that bring app capabilities fully in line with established objectives. And, because APM from ServiceNow is a cloud-based solution that works seamlessly to incorporate data from other integrated IT workflows, organisations gain the benefit of complete data accuracy from across their entire ecosystem, accessible from anywhere and at any time.

Make your applications an essential part of your business strategy. Try ServiceNow’s Application Portfolio Management today!

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