Keeping Your Application Portfolio Optimization Investment Evergreen

Part 1- Reduce Cost and Risk Through Application Portfolio Rationalization

Part 2- Why a CIO Should Focus on Application Portfolio “Optimization” over Rationalization

Part 3- How to Leverage Application Portfolio Optimization for Risk Reduction and Cost Savings

 

CIOs with sprawling application landscapes often undertake application portfolio optimization (APO) initiatives in order to simplify their IT landscape, reduce risk, achieve cost savings and improve situational awareness.

However, many of these well-intentioned initiatives are plagued by the same failings, notably portfolio governance.  Thus, uncontrolled application sprawl returns bigger and better than ever, and a new APO initiative kicks-off again in several years.  Who has heard this story before?

In my experiences, having advised a number of top companies on this very topic, I would like to share some of my learnings and best practices that can keep your APO initiative evergreen for the long-term.

 

 Governing the Application Inventory

Once a company has gone through the tiresome effort of cataloging its portfolio inventory, creating a structure and system for maintaining and governing that information is crucial. Three key components to be incorporated into this governance include:

1. Application ownership- Each application should be assigned both a business and IT owner who is responsible for maintaining the application inventory information.
2. Release management- This process should be updated to ensure evolutions to the application and its architecture are properly reflected in the inventory.
3. Architecture review board – A board is responsible for reviewing new solutions or major upgrades before they are released into production.  This governance represents a key control point in avoiding the introduction of non-standard technologies into the enterprise ecosystem.  The board is responsible for defining and governing changes to enterprise architecture standards and associated decision trees (see the second installment in this series for information on decision trees).

What IT Management Tools Support APO? 

Specialized software and expensive tools are not necessary to drive real insights from an optimization investment, and they can often be an impediment to getting started if you make implementation a pre-requisite.  That said, a mindful IT tools strategy is important for the effective governance of the enterprise IT ontology in the long term.

There are several categories of IT tools that support effective IT governance portfolio optimization:

 

• Integrated inventory planning & analysis (IIPA) – Tools in this space by Software AG, EOS Software, Planview, CA Technologies and HPE represent the most logical place to store information about the application inventory. Gartner defines the IIPA space as follows:

The IIPA market supports the integration of individual portfolios — of IT investments, projects and programs, and assets and applications — to present a more holistic view of the true state of the overall portfolio. IIPA presents the correct, interrelated perspectives, views and considerations needed to make strategic decisions. IIPA vendors offer versatile and dynamic portfolio analysis and management, enabling users to create, connect and share portfolios of the IT department’s investments, assets, and services.

While an IIPA solution is a great place to start, a number of other systems may be involved in providing a complete view of an organization’s application information.

• IT service support management (ITSSM)– Service support management tools from the likes of Service Now and BMC Remedy provide a set of tools designed to enable ITIL v2011 compliant processes. Of particular interest for practitioners of APO is the connection between service asset and configuration management, and the applications inventory.  The ITSM solution will typically contain transient data related to application quality like incident volume, unplanned downtime, open problems and known errors.

 

• Configuration management database (CMDB) – A configuration management database is a metadata repository of IT assets (commonly referred to as configuration items), and the relationships between items. Information related to the configuration of a specific server logically belongs in the CMDB, rather than the IIPA solution, as it is quite possible for a complex business application to have different operating systems, databases and servers.  Most ITSM vendors offer a CMDB solution as part of their product portfolio.
• Software asset management tools – The typical IT organization spends 22% of their annual budget on software licensing. Software asset management tools like Flexera Software, Snow Software, and HPE provide tools for managing asset costs and legal compliance.  By linking software license purchase order information, with installed base information, IT managers can identify areas of over and under-licensing.  By linking this information with the application inventory information within the IIPA solution, and the server inventory within the CMDB, teams can plan for and manage licensing costs very effectively.

Sustained Momentum is Key

In conclusion, application portfolio optimization is a powerful technique for reducing costs, simplifying the IT landscape, reducing risk, retiring technical debt and improving situational awareness.  However, such a program needs to be undertaken with a rigorous methodology, a well-thought-out plan, and strong ongoing governance in order to sustain momentum and realize the desired benefits.

To read more about the benefits of APO and when it should be undertaken, I encourage you to read the first article in this series.  In my second article, you can read about why a CIO should not be focused on portfolio rationalization, but rather on optimization. And, in the third article, you can learn more about cost reduction and risk reduction strategies.