Why Application Portfolio Management?

In the digital era, the myriad of software and technology continues to grow. For CIO, IT leaders and Enterprise Architects, the need for an optimized, agile and flexible application landscape has never been greater. Leaders and senior execs will be familiar with the often frustrating glorification of start-ups; with their nimble culture, agile methodology and ability to get things done with little bureaucracy. These ‘up-and-comers’ can be agile and effective in getting things done, fast. Larger companies, in contrast, can be seen as slow to adapt and lackadaisical in their response to changing markets. But while innovative start-ups come up with new ideas and execute them quickly, today’s global CIO has to help the business understand why this “just do it” approach won't cut it for the larger organization – innovation and transformation simply takes longer and costs more as complexity grows. Mergers and acquisitions, disparate business units and global entities with individual approaches all contribute to application sprawl and technological complexity. IT leaders are left with a choice. Attempting to streamline in a way that allows the organization to compete with more agile competitors generally results in sacrificing your time-to-market, and can often mean opportunities are lost – things simply takes too long. Alternatively, standalone innovation or transformation teams can be put in place to execute at speed, but minimal integration with existing systems and processes ultimately leads to application sprawl in the long-run.

Managing an organization's application portfolio has never been so challenging.

There must be a better way for companies to simplify a complex IT landscape and increase their organizational agility.

CIOs and Architects turn to Application Portfolio Management (APM) practices as a means to optimize their technology landscape, rationalize spend and reduce risk.

Traditionally, Application Portfolio Management focuses on certain core areas. Depending upon an company’s size and architectural maturity, one of the most obvious and common areas to start with is application rationalization. A study conducted by Infosys found that application rationalization efforts can lead to cost-savings of more than USD $2m in a single enterprise.

Functional consolidation, the optimization of software licensing (the average IT organization spends 13% of their IT budget on licensing) and Software Asset Management (SAM) tools are often seen as the face of Application Portfolio Management. But let’s be clear: cost reduction initiatives are only one part of the story.

“Enterprises cannot achieve great customer success, digital disruption, and long-term growth and profitability without the right approach to core enterprise applications. To thrive, application development and delivery (AD&D) pros must foster a digital operations strategy that is "future fit" — to yield adaptivity, creativity and innovation, and ultimately sustainable business results (i.e., "resilience").”
(Forrester, 2021)