application portfolio management

Application Portfolio Rationalization Methodology

base on ”IT Portfolio Rationalization: 1”

by Prashant Halari, Sushil Paigankar, Hitesh Salla, Rajaram Vengurlekar

Presented by:

Alain Charpentier

Table of content Origin of the methodology Objectives Present the methodology Lessons learned Recommendation Questions

Copyright © 2009 by Alain Charpentier Page: 2

The methodology is based on the book:

“IT Portfolio Rationalization: 1” by Prashant Halari, Sushil Paigankar, Hitesh Salla, Rajaram Vengurlekar.

IT Application Portfolio Rationalization/Management (APM) is a practice that has emerged in mid to large size organizations in the mid 1990s. It attempts to use the lessons of financial portfolio management to justify and measure the financial benefits of each application in comparison to the costs of the application's maintenance and operations.

Origin of the methodology

Copyright © 2009 by Alain Charpentier Page: 3

Copyright © 2009 by Alain Charpentier

Establish a quantitative baseline on the efficiency and effectiveness of the current application landscape so that prudent management decisions, in terms of current and future application development, application phase-out or remediation (e.g., re-write), can be made

Ensure proper Business-IT alignment (i.e., IT is working on those things that business values the most)

Prioritize the applications that need attention Determine the several management options for undertaking

the application value improvement initiatives

Objectives

Page: 4


The methodology

Participant selection

Data collection

CategoryAnalysis

Planning

Roadmap

Appl ID Appl Name Architecture TypeFinancial

PerspectiveTechnical

PerspectiveBusiness

PerspectiveCriticality Profile

307 ESSBASE Analytical 0.826 0.784 0.798 0.558 0.050722 Kiting - Sécurité Fraude Analytical 0.768 0.679 0.643 0.428 0.038A25 INTRANET - Blanchiment Analytical 0.871 0.752 0.620 0.528 0.047A31 Intranet - GOC Analytical 0.855 0.770 0.783 0.598 0.054M4R Junior Analytical 0.772 0.652 0.563 0.603 0.054M7A Analyse de comptes Vostros Analytical 0.833 0.597 0.521 0.503 0.045029 FERR/FRV Integration 0.777 0.558 0.527 0.423 0.041069 TPV - IBM Integration 0.770 0.562 0.595 0.628 0.061070 Prêts du SAGE - Interface Integration 0.868 0.462 0.764 0.528 0.051294 Aiguilleur/Formateur MQ Integration 0.836 0.762 0.691 0.643 0.063667A IMN - SCD - Guichet Integration 0.950 0.748 0.663 0.668 0.065667P IMN - IDP - TPV-POS Integration 0.950 0.748 0.663 0.693 0.068693 MQ BNC Integration 0.786 0.667 0.611 0.428 0.042707 Transfert inter bancaire Integration 0.862 0.561 0.578 0.528 0.051A24 IA - Intelligence d'Affaires Integration 0.903 0.518 0.631 0.428 0.042A33 EAI MAN Core Integration 0.975 0.692 0.717 0.508 0.050M09 CAPS (choix du NIP) Integration 0.761 0.689 0.595 0.503 0.049M10A TXN Analyser - Guichet-ATM Integration 0.866 0.590 0.677 0.528 0.051M10P TXN Analyser - TPV-POS Integration 0.866 0.590 0.677 0.553 0.054M6J EAI Entreprise Application Integration - ICE Integration 0.735 0.624 0.760 0.718 0.070M72 TFC - Transfert fichiers corporatif Integration 0.856 0.416 0.751 0.703 0.069002 Signalement Legacy 0.776 0.534 0.794 0.468 0.017003 Smartstream Legacy 0.826 0.661 0.909 0.633 0.023005 PAT - Placements à terme Legacy 0.637 0.469 0.535 0.573 0.020010 CPCS - Mtl Legacy 0.824 0.630 0.756 0.503 0.018012 Agent OFAC - Fircosoft Legacy 0.856 0.744 0.741 0.528 0.019014 Commercial - GABI Legacy 0.932 0.690 0.787 0.678 0.024

Validation


Step 1: Participant Selection

Selection of appropriate:• Business relationship

managers (BRM)• Business owners• Application owners• Application support teams• IT development teams

Page: 6


Step 2 : Filtering & Data collection

Filter Criteria – Filter out non-applications, unused applications and applications under rewriting

Filter on data gathering

Appln 1

Appln 2

Appln 3

Appln 4

Appln 5

Appln n

Step 1

Step 2

Filer outNon-applications

Step 4

Overall Portfolio Application List

Step 1Filer out unused andapplications under rewriting

1

Filter Criteria – Filter out applications for which we don't have maintenance investment information

3

Filter Criteria – Filter based on the data gathering exercise

4

2

3

4

Final “In Scope” Application List “In scope” application list

1

Step 3

Filter out Applications not under IT

Filter Criteria – Filter out applications which are not under the responsibility of IT or supported by other parties

2

Filter out based on Maintenance investment

100

700

500

150

1000

Note: The number of applications is representative of a large organization.

Page: 7


Step 3 : Analysis

Conduct analysis on dimensions of cost vs benefit, current capability vs. future capability, etc.

Appl ID Appl Name Architecture TypeFinancial

PerspectiveTechnical

PerspectiveBusiness

PerspectiveCriticality Profile

307 ESSBASE Analytical 0.826 0.784 0.798 0.558 0.050722 Kiting - Sécurité Fraude Analytical 0.768 0.679 0.643 0.428 0.038A25 INTRANET - Blanchiment Analytical 0.871 0.752 0.620 0.528 0.047A31 Intranet - GOC Analytical 0.855 0.770 0.783 0.598 0.054M4R Junior Analytical 0.772 0.652 0.563 0.603 0.054M7A Analyse de comptes Vostros Analytical 0.833 0.597 0.521 0.503 0.045029 FERR/FRV Integration 0.777 0.558 0.527 0.423 0.041069 TPV - IBM Integration 0.770 0.562 0.595 0.628 0.061070 Prêts du SAGE - Interface Integration 0.868 0.462 0.764 0.528 0.051294 Aiguilleur/Formateur MQ Integration 0.836 0.762 0.691 0.643 0.063667A IMN - SCD - Guichet Integration 0.950 0.748 0.663 0.668 0.065667P IMN - IDP - TPV-POS Integration 0.950 0.748 0.663 0.693 0.068693 MQ BNC Integration 0.786 0.667 0.611 0.428 0.042707 Transfert inter bancaire Integration 0.862 0.561 0.578 0.528 0.051A24 IA - Intelligence d'Affaires Integration 0.903 0.518 0.631 0.428 0.042A33 EAI MAN Core Integration 0.975 0.692 0.717 0.508 0.050M09 CAPS (choix du NIP) Integration 0.761 0.689 0.595 0.503 0.049M10A TXN Analyser - Guichet-ATM Integration 0.866 0.590 0.677 0.528 0.051M10P TXN Analyser - TPV-POS Integration 0.866 0.590 0.677 0.553 0.054M6J EAI Entreprise Application Integration - ICE Integration 0.735 0.624 0.760 0.718 0.070M72 TFC - Transfert fichiers corporatif Integration 0.856 0.416 0.751 0.703 0.069002 Signalement Legacy 0.776 0.534 0.794 0.468 0.017003 Smartstream Legacy 0.826 0.661 0.909 0.633 0.023005 PAT - Placements à terme Legacy 0.637 0.469 0.535 0.573 0.020010 CPCS - Mtl Legacy 0.824 0.630 0.756 0.503 0.018012 Agent OFAC - Fircosoft Legacy 0.856 0.744 0.741 0.528 0.019014 Commercial - GABI Legacy 0.932 0.690 0.787 0.678 0.024

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Re-engineer

Step 4 : CategorizationHigh

High

Low

Business Appreciation**

Tech

nolo

gy A

ppre

ciat

ion*

1 2

34

The dimensions used are• *Technology Appreciation

includes application owner and technical scores and covers aspects of•Application stability•Performance•Flexibility•Technical complexity •Technical documentation

• **Business Appreciation score covers aspects of •Current functional capability•Future functional capability • IT delivery •End user satisfaction

Low

Renovate

High Technology Appreciation Low Business Appreciation

Retain

Replace / Retire

Category Category

Category Category

High Technology Appreciation High Business Appreciation

Low Technology Appreciation High Business Appreciation

Low Technology Appreciation Low Business Appreciation

Page: 9


Step 4 : Categorization example

29/100 Applications 51/100 Applications

10/100 Applications20/100 Applications

Note: The number of applications is representative of a large organization.

Page: 10


Maintenance Spending

Step 5: Validation – Detail analysis example

Distribution and Assessment

Num

ber o

f App

licat

ions

Perc

enta

ge S

pend

Page: 11


Initiative Category Cost BVI Priority1 Strategic $$ N1 92 Strategic $$ N2 83 Growth $$ N3 64 Growth $$ N4 45 Efficiency $$ N5 66 Efficiency $$ N6 17 Efficiency $$ N7 38 Compliance $$ N8 59 Compliance $$ N9 2

Step 5: Validation of Business alignment

Initiative; size of the bubble indicates estimated cost of initiative

Business Value

Te

ch

nic

al C

on

dit

ion

Renovate

Replace or Retire

Retain

Re-engineer

Funding of initiatives depends on their alignment with critical business drivers

Page: 12


Step 6: Roadmap development

To ensure proper Business-IT alignment the roadmap is develop after proper validation with the key stakeholder

Q1

2010

Q2 Q3 Q4 Q2Q1Q4Q3Q2 Q4Q3 Q4 Q1

2011

Q3

2012

Q2Q1

2009

Q1

2010

Q2 Q3 Q4 Q2Q1Q4Q3Q2 Q4Q3 Q4 Q1

2011

Q3

2012

Q2Q1

2009

Policy Admin #1

Claims #1

Rating #1 Rating #2

Policy Admin #2

Assess-ment

Billing #1 Billing #2 Billing #4Billing #3

Policy Admin #3

Claims #2

Infrastructure#1

Infrastructure #2 Infrastructure #x

Customer / CRM #1 Customer / CRM #2 Customer / CRM #3

Customer / Agent UI #1 Customer / Agent UI #2

Mgt Reporting #1

Retire

Claims #3

Rating #2

Mgt Reporting #2

Savings Timeline

Page: 13

Imm

edia

te

Near t

erm

Long te

rm


Managing “projects” and managing “applications” are not the same

Change the organization’s culture — from the top down Establish an enterprise architecture framework to

provide focus Include APR as part of a broader decision-making

process Have a destination in mind and communicate it

throughout the organization Use tools as productivity aids, but they do not replace

tough human decisions Measure operation of the application over its life cycle APR is not just an IT decision

Lessons Learned

Page: 14


Establish a strong baseline Agree on how to measure “value” Identify operational “costs” Ensure fairness throughout the process Match decision making to organizational

style — edict or democracy? Institutionalize the process, not the event

Recommendations

Page: 15


Questions

?Page: 16