Importance of portfolio management pdf

Importance of portfolio management pdf material may be challenged and removed. Likely the earliest mention of the Applications Portfolio was in Cyrus Gibson and Richard Nolan’s HBR article “Managing the Four Stages of EDP Growth” in 1974.

Gibson and Nolan posited that businesses’ understanding and successful use of IT “grows” in predictable stages and a given business’ progress through the stages can be measured by observing the Applications Portfolio, User Awareness, IT Management Practices, and IT Resources within the context of an analysis of overall IT spending. In these “Stage Assessments” they measured the degree to which each application supported or “covered” each business function or process, spending on the application, functional qualities, and technical qualities. These measures provided a comprehensive view of the application of IT to the business, the strengths and weaknesses, and a road map to improvement. During this time, tens of thousands of IT organizations around the world developed a comprehensive list of their applications, with information about each application.

Application mining tools, now marketed as APM tools, support this approach. Hundreds of tools are available to support the ‘Top Down’ approach. For that reason, many organizations bypass using commercial tools and use Microsoft Excel to store inventory data. However, if the inventory becomes complex, Excel can become cumbersome to maintain.

Automatically updating the data is not well supported by an Excel-based solution. Finally, such an Inventory solution is completely separate from the ‘Bottom Up’ understanding needs. For IT operating budgets, enterprises spend two-thirds or more on ongoing operations and maintenance. It is common to find organizations that have multiple systems that perform the same function. Many reasons may exist for this duplication, including the former prominence of departmental computing, the application silos of the 1970s and 1980s, the proliferation of corporate mergers and acquisitions, and abortive attempts to adopt new tools. Regardless of the duplication, each application is separately maintained and periodically upgraded, and the redundancy increases complexity and cost.

IT conflict, because when business leaders understand how applications support their key business functions, and the impact of outages and poor quality, conversations turn away from blaming IT for excessive costs and toward how to best spend precious resources to support corporate priorities. Using this information, the portfolio manager is able to provide detailed reports on the performance of the IT infrastructure in relation to the cost to own and the business value delivered. In application portfolio management, the definition of an application is a critical component. Many service providers help organizations create their own definition, due to the often contentious results that come from these definitions. In order to be counted, each component must not be a member of another application. An executable set of computer instructions contained in a single deployment container in such a way that it cannot be broken apart further. IT Management or Enterprise Architecture.

The art and practice of software application portfolio management requires a fairly detailed and specific definition of an application in order to create a catalog of applications installed in an organization. It must be simple for business team members to explain, understand, and apply. It must make sense to development, operations, and project management in the IT groups. It must be useful as an input to a complex function whose output is the overall cost of the portfolio. In other words, there are many factors that lead to the overall cost of an IT portfolio. The sheer number of applications is one of those factors. Therefore, the definition of an application must be useful in that calculation.

It must be useful for the members of the Enterprise Architecture team who are attempting to judge a project with respect to their objectives for portfolio optimization and simplification. It must clearly define the boundaries of an application so that a person working on a measurable ‘portfolio simplification’ activity cannot simply redefine the boundaries of two existing applications in such a way as to call them a single application. For that reason, this definition should be considered as a working start. The definition of an application can be difficult to convey clearly. In an IT organization, there might be subtle differences in the definition among teams and even within one IT team.