What Is the Application Portfolio Management Process?
A successful APM initiative involves these steps:
1. Compile an application inventory
Start by creating an inventory of all applications and software currently in use across the organization. Collaborate with each department to identify both actively used and unused applications. During this stage, it’s helpful to gather additional details, such as contract terms, associated costs, and integration dependencies, to streamline future evaluations.
2. Identify business owners
Engage with the business owners responsible for administering each application. As daily users, they are key stakeholders in the APM process. Inform them of planned adjustments to the application portfolio and explain how these changes align with broader business goals. Their insights are invaluable for understanding application usage and potential impacts.
3. Define application lifecycles
Each application goes through a lifecycle, from active use to being phased out and eventually retired. Defining these stages helps organizations identify when an application currently stands and assess its dependencies or relationships with other IT services. Over time, applications may become less aligned with business needs, posing challenges such as integration issues, reduced functionality, or limited vendor support. Effective lifecycle management ensures organizations can decide when to modernize, replace, or retire applications, keeping the IT environment aligned with strategic goals.
4. Assess the usage of applications
This step involves making strategic decisions about which applications are essential to the organization. Even regularly used applications may still have value, so a thorough evaluation is necessary. Identifying the users and owners of each application to understand its actual role within the organization is key. This stage often involves application rationalization, a process that highlights seldom-used or underperforming applications for potential retirement or optimization.
5. Establish application business value
Building on the previous step, determine the total cost of ownership (TCO) and the business value of each application. Comparing these metrics helps organizations understand which applications realize value to their cost. This analysis serves as a benchmark for evaluating alternative solutions or upgrades, ensuring your portfolio remains cost-effective.
6. Create an application architecture framework
Develop a long-term framework outlining the desired business, information, and application structures for your organization. This framework provides a reliable foundation for evaluating applications against business objectives and planning for future needs. It also serves as a guiding principle for migrating new solutions into the portfolio.
7. Implement and maintain the APM process
Once your application portfolio has been optimized, the real work begins: maintaining it. A one-time rationalization effort may show short-term benefits, but establishing an APM process ensures lasting value. Regularly reviewing and updating the portfolio keeps the IT landscape current, scalable, and aligned with evolving business goals.
