1Re-Thinking ApplicationsManagementA Best Practices Approach to Portfolio Management Issue 12 Introduction3 You’ve Transformed Your Applications: Now What?5 Best Practices: Portfolio Management Techniques8 New Levels of Visibility10 Real-World Examples11 Getting Started12 Gartner Research Findings15 About HP ES Featuring research from
2 Introduction Across sectors and industries, the success and even In fact, unless they change how they manage, survival of many organizations depend on their view, and control their applications portfolio, that ability to sustain a healthy set of enterprise-class mix invariably slips away from the much-needed applications. Unfortunately, most CIOs struggle investment in growth and innovation. And that with severe applications-related limitations at a tendency can rob even the best organization of the time when their organizations expect improved full benefits of a portfolio modernization effort. performance and measurable results. In this series of articles, HP addresses the Applications are more complex than ever, a trend strategies and techniques used to optimally made worse by aging and obsolete systems, the manage an applications portfolio on an ongoing emergence of new technologies, and disparate and basis. HP features Gartner research on the topic often incompatible software. M&A strategies – of “Applications Overhaul: How to Get Out of the and years of adding applications and overlapping Hole and Not Fall Back In.” In the article, Gartner functionality – have created portfolios that are agrees that IT organizations have to take a long- crowded with redundant applications. term approach to staying out of the hole. It has been said that “all applications are not Ed Quinn, vice president of Applications equal.” CIOs seek real transparency into true cost Management for HP Enterprise Services, shares his of ownership, on a per-application basis, to enable thoughts on why organizations need to keep their intelligent alignment conversations with business applications optimized, and how to best manage owners on strategy, roadmaps, and rationalization. an enterprise-class portfolio. Unfortunately, poor visibility often prevents most We discuss best practices as they relate to CIOs from seeing and understanding the total cost applications portfolio management – including of ownership (TCO) and value of their applications. two vital techniques, and how they are applied As a result, while businesses demand that IT “do at both the strategic portfolio level and at the more with less” and allocate resources toward more tactical application level. We examine the growth and innovation, many IT units spend from importance of having deeper visibility into these 65-80% of their budgets to simply keep the lights two levels, and discuss the tools and processes on. organizations can use to better manage specific applications or entire portfolios. The good news is this: by rethinking how they manage their portfolios, and by replacing Our systematic approach described here allows the traditional “one and done” methods with organizations to reliably profile and categorize a systematic approach that balances the applications based on their true TCO. It enables maintenance-to-innovation ratio mix, organizations CIOs to clearly understand the risk and value can create and sustain a healthier set of these systems bring to their business. This proven applications. approach then allows those leaders to select the strategies, techniques, and tools needed to build Balancing that crucial mix can benefit and sustain a healthy set of applications. both organizations that have completed a transformation journey and those that have not.
3You’ve Transformed Your Applications: Now What?Maryanne Faschan, Director of Delivery, sourcing strategyApplications Management at HP Enterprise for each type ofServices interviews Ed Quinn, Vice President application, whetherof Applications Management at HP Enterprise that source is internal,Services, on how organizations can keep their outsourced, cloud-newly-transformed applications optimized. based, or elsewhere.MF: Thanks for joining us Ed. Let’s start They need to turn theirwith a basic question. Why is the ongoing focus to systematicallymanagement of the application portfolio after balancing thetransformation so important? newly optimized Ed Quinn, Vice President of Applications Management maintenance-to- at HP Enterprise ServicesEQ: First, let’s take a step back and think about innovation ratio they’vean applications transformation experience in its achieved throughentirety. Let’s face it, it’s not an easy thing to the transformation in order to sustain it, anddo. It requires a clear roadmap to understand continually improve on it. We find that effectivehow to get there. But HP has made it easier for management of the transformed applicationsorganizations to make the journey – transforming environment will yield ongoing efficiencytheir application environments to gain the control improvements and opportunities to eliminatethey need over aging applications and inflexible unnecessary costs and increase effectiveness wellprocesses that govern their responsiveness and into the future.pace of change. MF: This seems logical. But how doWith a newly transformed portfolio of applications, organizations actually do it?CIOs begin to see better alignment between thebusiness and IT with all the results – increased EQ: Well, it is often easier said than done. Weagility, improved security, improved business have seen many organizations struggle with thecontinuity, and your IT maintenance spend is management phase following an applicationsnow 50% or less of your IT budget. The last transformation because they seem to be stuck in athing they want is for their organizations to lose rut, doing things the same way.these transformational results. By rethinkingtheir approach, and by better managing those They tend to go back to managing and maintainingtransformed applications, organizations can their applications the way they did before thecontinue to realize the full benefits of their transformation because they simply do not havemodernization efforts, and can purposefully adjust the right level of visibility, flexibility, or controltheir portfolio as the business changes over time, to effectively manage over time. IT still has aminimizing or eliminating the need for future big- tendency to treat all applications as being equalbang transformations. – servicing and supporting them at the same level across the portfolio.MF: How can organizations better manageapplications to retain those transformational The ongoing manage phase following thebenefits? applications transformation calls for clients to rethink the way they are managing theirEQ: With a good understanding of the applications. Organizations must address thetransformation under their belts, clients need people aspect of these changes, because withto look at how to best manage the application new applications and the growth of mobility, theyportfolio. They should work to maintain the metrics will need new ways to develop and support thoseof each application by continually measuring cost systems.and performance. They should leverage the best
4 We have seen it too many times. Without a change As you will see, HP applies these two techniques in the way the portfolio of applications is managed, at both the application-level and portfolio-level. the maintenance-to-innovation ratio will almost The application-level or tactical-level activities “Whether you choose invariably creep back up on the maintenance will identify, diagnose, and develop improvement to manage then side if left unchecked, ultimately diminishing the recommendations that arise from the course transform or transform transformation’s return on investment. of ongoing operations. The portfolio-level or then manage, optimal strategic-level activities then review those portfolio management MF: Exactly how should organizations recommendations, using a strategic planning filter is where the rubber “rethink” the way they manage their to ensure the best course of action is taken after meets the road. You applications? considering alternative solutions. want to realize the full benefits of your EQ: We recommend two fundamental So this systematic approach – leveraging proven applications and techniques, which are based on our experience techniques and applying them at both themaintain those benefits helping organizations successfully manage strategic and tactical levels – is what we mean bywell into the future. HP their applications – both before and after a “rethinking” applications management. It really Portfolio Management transformation effort. is the key to creating and maintaining a healthier can help clients gain applications portfolio. that insight, flexibility, The first technique is what we call “dynamic and agility needed for service delivery,” and it includes underlying MF: What does this all mean for business ongoing optimization methods and tools to optimize costs and enable organizations? and continuous business change. This technique incorporates a improvement of their scalable delivery model. It allows services to be EQ: This is where the rubber meets the road portfolios.” assigned by applications, based on business need, for your newly transformed applications. CIOs and provides the flexibility to change that level of naturally want to realize the full benefits of a Ed Quinn, Vice President Worldwide Applications service as the business need changes. modernization program, and the success of that Management Services effort depends upon keeping the maintenance-to- Dynamic service delivery also provides application- innovation ratio in optimal balance. specific cost transparency, so IT and the business units can better understand and control expenses The techniques we’ve discussed keep the and investments. application portfolio optimized, and the underlying application-level and portfolio-level methods help The second technique is “data-driven portfolio to systematically sustain the benefits derived management,” which implements an ongoing from an application transformation. Plus, with the process for collecting data, analyzing metrics, and consolidated view of the portfolio and individual identifying improvement opportunities. Leveraging applications that HP provides, organizations gain this technique, organizations can maintain an the insight and agility needed to optimize their inventory of applications and their individual investments for the greatest business impact. support metrics. They can score and classify each application, which provides the necessary structure Source: HP Enterprise Services for analysis. This approach also supports the close monitoring of application data to spot developing trends and to perform root cause analysis.
5Best Practices: Portfolio Management TechniquesMichael Marzullo, offering manager, WW When used correctly, these techniques and methodsApplications Management at HP Enterprise allow organizations to effectively and continuallyServices balance the maintenance-to-innovation ratio. By doing that, CIOs better control their portfolios,Jim Johnson, product manager, WW Applications optimize costs, and accelerate positive change.Portfolio Management at HP Software & ServicesIn an increasingly instant-on world, organizations A solid portfolio optimization foundation built on two techniques, appliedreally need to rethink how they manage their at both the application- and portfolio-level to successfully transform theapplications. Gartner research confirms this way you manage your applications.observation in an October 2011 report onApplications Overhaul, which found that “Lack of • Dynamic Service Deliverya deliberate process for managing the applicationportfolio makes the application hole deeper.”1 • Data-Driven Portfolio ManagementTo support that new approach, HP has developedtwo proven portfolio management techniques: As noted, this approach can be usedthe implementation of a dynamic service delivery successfully by organizations that havestructure and the use of data-driven portfolio undergone transformation and by those thatmanagement methods. Figure 1 illustrates these have not. Enterprises that have undertaken thetwo key techniques and how they can be applied transformational journey can leverage theseat both the tactical application level and the more techniques to keep their applications in optimizedstrategic portfolio level. balance. Others can use these methods to gain visibility and control, to reduce costs and stabilize FIGURE 1 Portfolio Management levels and techniques Service Technique Portfolio Management Delivery Method Dynamic Service Inventory Classify Assess Business Case Delivery Application- • Scalable • List of • Maintainability • Dashboard • What-if analysis level delivery model applications score • Trending • Preliminary • Services • Application analysis business case assigned by app metrics • Metric detail • Cost • Root cause transparency by analysis app Portfolio-level • Application • List of • Application • Business and • What-if analysis portfolio applications health portfolio • Complete governance • Portfolio metrics • Strategic alignment business case • Project portfolio • Business process disposition • Architectural fit • Investment governance alignment • Opportunity prioritization development Source: HP Enterprise Services1 Gartner RAS C ore Research Note G00218816 Applications Overhaul: How to Get Out of the Hole and Not Fall Back In, Bill Swanton, 6 October 2011.
6 a challenging applications environment, and to Second. Services are assigned at the application ready their organizations for a more efficient and level based on measurable business value, and the successful applications transformation. level of service can be adjusted as the business needs change. This approach provides additional It may help to examine each of these techniques, service flexibility. and how they are applied at the application and portfolio levels. Third. Costs are transparent by application, allowing IT and business units to better understand Dynamic Service Delivery application-level costs and investments. Dynamic Service Delivery incorporates a scalable delivery model – enabling services to be assigned When applied at the more strategic portfolio level, by applications, based on business need – and the dynamic service delivery model supports offers the flexibility to change the level of service a governance process needed to ensure true as business conditions evolve. This approach also enterprise-class alignment. provides application-specific cost transparency, so IT and the business can have clarity into, as well as This requires a governance model that actively control over, expenses and investments. manages applications and projects based on both the opportunities identified by IT and by At the tactical application level, dynamic service the broader demands of the business. Requests delivery uses three key methods to optimize costs should be filtered and conceptualized from two and to support innovation. perspectives: First. A scalable delivery model creates a tiered One. The Application Portfolio Management view work structure that allows the higher-volume, assesses demands and opportunities based on a straightforward support activities to be aligned to strategic priority assigned to each application. lower-cost resources, and the more complex and Gartner recommends the use of its TIME strategic value work to be aligned to higher-cost methodology to characterize the strategic intent of resources. This tiered delivery model supports an application. Each application is classified as a more rapid addition and removal of applications target for transformation – tolerate (T), investment – a key capability in a changing business (I), migration (M), or elimination (E). As new environment. demand for work on an application is received, it is evaluated against this strategic intent designation. FIGURE 2 A scalable service delivery model, aligned services, and cost transparency Source: HP Enterprise Services
7Applications in the investment (I) category HP employs four methods to gain insight into andget high priority attention. Applications in the to develop the strategic intent for these enterpriseelimination (E) category will have to demonstrate a applications.very strong reason why any new investment shouldbe directed their way. One: Maintain an inventory of applications and their attributes.Two. The Project Portfolio Management viewassesses demands and opportunities based on Two: Classify applications to provide structure for As part of the APMproject charters, schedules, skills, risks, and cost. further analysis. process, use aThis ensures that even proposals to work on an methodology, suchinvestment (I) category application are assessed Three: Assess all applications for optimization as Gartner’s TIMEto ensure they meet standard business case opportunities. (tolerate, invest,requirements before funding is approved. migrate, eliminate), Four: Create a business case for investment to determineThis governance approach provides comprehensive consideration. your investmentvisibility, data-driven knowledge, and a strategic posture withperspective of the applications portfolio. HP Inventory. Portfolio-level dashboards provide regard to particularbelieves that forward-looking organizations can summary views of applications, the business applications.harness the resulting insights to better manage processes they support, the organizations that userisk, to reduce costs associated with applications them, their owners, and the servers they reside Gartner RAS Core Research Note G00218816that are not adding value to the business, and upon. Measures are defined for business value, Applications Overhaul:to tilt the spending ratio toward innovation and cost, risk, and quality. How to Get Out of the Hole and Not Fall Back In,growth. Bill Swanton, Classify. The classification of applications 6 October 2011Data-Driven Portfolio Management can be based on distributed, mainframe, or other architectural types, or on transactional,This second crucial technique provides a clearer informational, or other operational profiles. Thisview and a greater understanding of business method can be used to identify enterprise softwareapplications. This activity provides the original for sunset or decommissioning, to be sustained,strategic intent classification for each application, or as a candidate for strategic investment.and is reviewed periodically to ensure that thedesignation keeps pace with changing applicationand business conditions. FIGURE 3 Assess portfolio alignment to understand cost and value of applications Cost relative to quality and business value delivered Redundant support of business processes Source: HP Enterprise Services
8 Classifications should be reviewed and modified support, are overloaded with applications, are as architectural standards or business conditions high cost, or by some other measure suggest evolve. opportunities for improvement of the portfolio. Assess. To manage a complex application portfolio Business Case. A business case can then be environment, HP recommends the use of an developed to capitalize on the improvement assessment method that views the applications opportunities. That business case then becomes a within the context of the systems or activities they source of demand to be vetted through the project support. Visualizations may include heat maps review process described earlier. to identify process areas that require excessive Source: HP Enterprise Services New Levels of Visibility You need to have Doug Longer, WW Applications Management Several preparation and management steps are visibility to where consultant, HP Enterprise Services needed to gain the necessary insight as shown money is spent at the in Figure 4. At the application level, we take an application level so The best practice techniques for portfolio inventory of the applications and periodically that IT organizations management apply equally to a tactical, gather attributes for the applications. For and the business units application level view of the portfolio as well as example, we inventory all the applications that can better understand the strategic, or overall portfolio view previously make up a payroll system, as well as gather the and control expenses discussed. For the application level view, visibility number of lines of code and how many changes and investments. This into the drivers of cost allow organizations to have been implemented. application level first understand what those costs are and second, visibility provides One problem with those attributes is how to use the information to build a business case toactionable data for their manage them. In a comprehensive method such determine if there is an overall cost benefit to decision-making. as HP’s, the applications are grouped with a making a change.Doug Longer, WW Applications scientific algorithm that arranges the applications Management consultant, HP Enterprise Services FIGURE 4 Application-level methods enhance visibility, providing actionable data for decision-making Inventory Classify Assess Business Case 89::9;<=7 ! "#$% &%() ()"*+)"& ,#-.+)"& !"#/&00 ! ""#$%&"() )* ! ""#$%&"(+ *, , ! ""#$%&"(- ., ! ""#$%&"(/ , ! ""#$%&"(0 ./,, ! ""#$%&"(. , ! ""#$%&"(1 ! ""#$%&"(* 1 ), ! ""#$%&"(), ! ""#$%&"()) 23456/ 75 23 , ! ""#$%&"(4 ) ! ""#$%&"()- 1 !"#$%& ./ 01 (1)2 31042&00 5264"#2&2. ! ""#$ ! ""#% ! ""#& ! ""# ! ""#( ! ""#) ! ""#* ! ""#+ ! ""#, ! ""#$- ! ""#$$ ! ""#$% Source: HP Enterprise Services 1
9into classifications. This aids deeper understanding course of action from various alternative solutions.by consolidating the information so that you can An application portfolio repository, combiningbetter assess it. application-specific attributes with a portfolio-wide perspective, provides a comprehensive view ofUsing a dashboard as an overview to the classified both tactical and strategic options.applications provides the insight necessary tobegin understanding why an application costs Converging the tactical application-level detailswhat it does and how trends over time affect the with the strategic portfolio-level considerationscost of supporting the applications. For example, – and supporting those views with provenif an application in the dashboard is showing techniques – provides a truly deliberate approachsome significant change in its classification, the to applications management.attributes can then be investigated to determinewhich aspects of the support are changing. HP supports this proactive solution with a unique set of tools and capabilities, including an AppsOnce you’ve assessed the impacted cost drivers, Online applications inventory tool, the Applicationsthen you have the focus necessary to do real Management Metrics Portal, and HP Software’sroot cause analysis. And by finding the real root Application Portfolio Management solution.causes for support costs, you now have the unique The new HP Software-as-a-Service (SaaS)-basedability to change them. For example, if you find Application Portfolio Management (APM) softwarean application that has 30 changes in a month, suite provides a rich set of process, data capture,which is costing you significant release time as and analytic capabilities.well as higher levels of operational incidents,one cost reduction method would be to provide Results-oriented organizations can leverageonly monthly releases, which both stabilize the these tools to answer critical application-relatedapplication and significantly reduce the change questions, including:and release support costs. • How are applications performing over time?With that root cause in hand and potentialsolutions in mind, and in conjunction with the • Does the cost of an application align with theknown application costs, you can now objectively true business value of that asset?estimate the application level return oninvestment, or business case, for implementing • Are some application assets degrading, whilechanges. others improve?The tactical application-level inventory and • Is the applications portfolio evolving to meetassessment activities described here are related changing conditions?to ongoing operations, and serve to identify,diagnose, and develop specific recommendations • Which application investments will yieldfor improvements. HP builds these tactical maximum returns?methods into applications management bestpractices and delivery activities. By considering both the portfolio- and application- level perspectives, and by applying these provenBut visibility is also crucial at the strategic techniques across both levels, organizations can atportfolio-level perspective. To gain those higher- last fully realize the potential of their applicationsorder insights, HP applies specific portfolio- investment. Best practice-based Portfoliooriented methods designed to leverage the Management is a key aspect of any successfulinformation and recommendations gathered at the applications transformation journey.tactical, application level. For example, strategic Source: HP Enterprise Servicesplanning filters are used to identify the best
10 Real-World Examples Chris Alexander, WW Applications Management To prepare for the implementation of dynamic consultant, HP Enterprise Services application service delivery, another company worked with HP to analyze, inventory, and classify By “rethinking” how they manage their all enterprise applications. This HP evaluation All applications have applications, organizations can realize real and process revealed previously unrecognized business a cost and a value, measurable benefits. Companies are already applications, which were driving hidden IT costs.however, all applications leveraging the techniques and tools cited here to This discovery led to business value discussions are not created equal. generate the greatest business impact at the best and new rationalization strategies, a process By matching the possible value. that ultimately reduced the company’s overall appropriate support maintenance spend. services to the Those impacts often begin with insights. By business value of each controlling and exploiting information, CIOs gain Another organization modernized two core application, one client powerful visibility into their portfolios. They bring business systems by upgrading and updating immediately reduced new transparency into costs and sources of spend. outdated technologies. Those changes resultedspend in the appropriate And they can more accurately assess levels of in simplified processing methods, a reduction in areas and increased service and support. associated incidents, and lowered classification the effectiveness of metrics. As a result, the HP data-driven portfolio their ongoing portfolio That knowledge allows them to create and management approach supported an applications management decisions manage change. Well-managed applications allow cost model where the application prices for each organizations to scale up or down quickly, and to system were significantly reduced. Chris Alexander, adapt smoothly to dynamic market conditions. WW Applications Management consultant, Predictive pricing and adjustable contracting After implementing the dynamic service delivery HP EnterpriseServices lets them continually realign to meet changing model, a rapidly growing company gained business needs. transparency into the true cost drivers for each of its business-critical systems. That knowledge, Astute CIOs can then translate those qualities into coupled with the ability to execute “what- competitive agility, a more balanced maintenance/ if scenarios” using the HP tool set, provided innovation ratio, and optimized business value. accurate estimates for the cost of future system maintenance. Those projections allowed the In fact, HP has seen precisely those results in company to develop end-to-end ROI studies of the organizations across the globe. critical changes needed to drive continued growth. One company was experiencing significant Yet another organization sought to lower overall growth and leadership changes with three applications costs as part of its transformation. A CIOs in five years and stringent limits on its IT tiered services approach, assigned by application, budget. This dynamic environment coupled with allowed this organization to reach its savings associated IT philosophy changes presented the target. Based on the concept that “all applications challenge of rapidly adjusting IT spend without are not created equal,” the HP applications cost impacting service. Our applications management model enabled the matching of appropriate model allowed the organization to quickly and support services to the business value of the easily reprioritize dollars to preserve current applications and reduced spend in the appropriate spending levels, while realizing improved quality areas. performance and business service levels. Source: HP Enterprise Services
11Getting StartedHP agrees with Gartner – “when you are in a For portfolios that have already undergonehole, stop digging.” Get out of the rut of doing transformation, this approach allows IT tothings the same way and rethink the way you proactively monitor the health of the portfolio, andare managing your applications. Expand your to easily align and adjust support levels to meetapplications management strategy to stay out of changing business requirements.the hole. By IT organizations rethinking the way theyThe techniques and capabilities described here can manage their applications, they can balance thework for organizations that choose to “manage, maintenance-to-innovation ratio to fund andthen transform,” and for those that elect to support current and future business priorities.“transform, then manage.”For portfolios that have not undergone To learn more, visit the HP Applications Management Services site attransformation activity, these techniques provide www.hp.com/enterprise/applications/managementservices.the insight, control, and flexibility needed toidentify areas that are ripe for change, while also For access to a range of HP enterprise applications-oriented blogs andproviding a mechanism to adapt to evolving discussion boards, visit www.hp.com/go/apps-blog.business demands. To engage in a conversation, contact your HP consultant. Source: HP Enterprise Services
12 From the Gartner Files: Applications Overhaul: How to Get Out of the Hole and Not Fall Back In Years of underinvestment and ineffective simplification as tools for overhauling your governance have left many companies in an application portfolio and getting out of the Lack of a deliberate application hole. As you formulate a plan to hole. process for managing overhaul your applications, it is instructive to remember the first rule of holes: When you are in a • Use large business transformation projects asthe application portfolio hole, stop digging. an opportunity to think in terms of business makes the application projects to fund significant application overhaul hole deeper. Overview efforts. Expand the application Aging legacy and custom departmental • Expand the application portfolio management portfolio management applications, independent instances of packages (APM) to consider life cycle costs, and link (APM) to consider by each business unit, and countless small maintenance requirements to business projects life cycle costs, and database and workflow tools often add up to to stay out of the hole. link maintenance thousands of entries in the application inventory. requirements to As IT organizations try to support new business • Raise the maturity of your applicationbusiness projects to stay initiatives, including globalization and process governance processes by using Gartner’s out of the hole. harmonization, they find the application hole ITScore to assess your application they have dug makes it difficult to fund current Gartner RAS Core Research organization’s maturity. support, or take on a major transformation. As youNote G00218816 Applications Overhaul: How to Get Out of formulate a plan to overhaul your applications,the Hole and Not Fall Back In, Analysis it is instructive to remember the first rule ofBill Swanton, 6 October 2011. holes: When you are in a hole, stop digging. Tactical Application Acquisition, Understanding how you got in the application hole Compounded by M&A, Digs the Hole is critical to getting out and staying out. An application hole is dug with a small shovel over many years. Independent tactical business Key Findings requirements lead IT to develop applications or • Tactical application acquisition, compounded implement packages to solve the problem at by mergers and acquisitions (M&As), digs the hand. Each of these independent applications is hole by increasing the size of a company’s tweaked as required. A complex Web of integration application portfolio. develops and grows as the business tries to automate end-to-end processes. • Lack of a deliberate process for managing the application portfolio makes the application hole In addition, during the last two decades, we have deeper. seen an enormous amount of M&A activity as companies grow from national to multinational to • The budget is never enough for all requests for global powerhouses, and broaden their portfolios application work, so maintenance projects are with complementary products or services. Each often deferred. acquisition brings a long list of applications to make the hole deeper. Companies find they can’t • Maintenance projects are funded only when realize the M&A synergy without having common the risk becomes extremely high, or when systems in place. maintenance can be combined with a project that is a strategic business priority. Lack of an Application Strategy Makes the Hole Deeper Recommendations Many application development projects or • Start developing an application overhaul acquisitions are treated as one-time projects, strategy to improve your applications. with little planning for what it will cost to maintain the software. A support team must keep • Evaluate application rationalization, the application running, fix bugs, and change standardization, modernization and the application as business requirements or
13governmental regulations dictate. Packaged is going off support. A rise in transaction volumeapplications need periodic patching and upgrades, may require new hardware that won’t support theor vendor support will eventually be withdrawn. old versions of software. A change in regulationsIf the business isn’t asking for changes, it often or other outside event may force the issue –isn’t willing to fund these routine activities, and remember the urgency to address Y2K and thea maintenance backlog develops. The older the Sarbanes-Oxley Act?applications get, the more it costs to fix them,pushing maintenance further down the priority list But business isn’t senseless. While it may holdfor funding and deepening the application hole. off replacing that “roof,” it will expect to get the best long-term ROI once the project is approved.Essentially, companies at the bottom of the hole The business will usually opt to do the projectgot there because they lacked an application right, and, staying with the roof analogy, perhapsstrategy. The strategy is developed as part will use a long-lasting material and include addedof a deliberate process – i.e., consult with insulation to save energy.stakeholders to determine how to develop theportfolio to provide the business capabilities for For applications, this means linking knownthe business to win. maintenance needs with specific business projects. For example, ERP upgrades are often scheduledThe Budget Is Never Enough for All when the business needs functionality that’sRequests, so Maintenance Projects Are in the latest version of a specific application.Often Deferred Because 40% or more of the cost of an upgrade isWhile many IT people would like to see money regression testing, testing would also be requireddedicated to application maintenance, this for a functional expansion. Combining the upgradeis not how businesses allocate limited funds. and testing projects reduces the incremental costThe argument that you have to maintain IT of the upgrade.applications, like the roof of a building, falls ondeaf ears. The business effectively tells IT, “Call me Evaluate the Application Overhaul Toolswhen it starts to leak.” Usually, the business case can be made that it is more cost-effective to replace five or more agingBusinesses typically are based on an operating applications with fewer new applications or amodel that allocates operating and capital funds packaged application suite.based on a percentage of revenue. The amountsmay change slightly year to year based on The tools of application overhaul are:priorities and profits, but there is a fixed budgetand more than enough proposed projects to • Application rationalization – Consolidation,consume it. migration and retirement of applications improve the business value delivered by theDepending on the application portfolio governance application portfolio and reduce the cost.maturity of the company, different things mayhappen. The worst-case scenario is a political • Application modernization – Transitionfree for all, when the strongest or loudest an application portfolio to more-modernstakeholders get their projects funded – often languages, architectures and runtimedigging the application hole deeper. More-mature environments.organizations rank projects based on businesspriorities, risk and ROI, among other things, to • Application simplification – Meet users’gain consensus on what to fund. Regardless, expectations by understanding the context ofmaintenance projects with no immediate business their requirements and eliminating superfluousvalue will fall to the bottom of the funding list. features that make applications difficult to use. • Application standardization – StandardizeTie Maintenance Activities to Current business processes and performance measuresBusiness Priorities across the organization, incorporating the bestThe reality is that maintenance will be deferred ideas from across the enterprise, and drive auntil the business has no choice but to step change in performance.acknowledge the problem. Typically, the businesswaits until an application, database or OS version
14 Use Business Transformation Projects to • Make sure the inventory information and Fund Maintenance deferred maintenance are linked to proposed Major filling of the hole often requires a major business application projects where there is a business transformation project. Massive overhauls synergy to combining the projects. and standardization of business processes will require significant change to the software that • Guarantee that the full life cycle cost of the old supports those processes. For example, major ERP and proposed applications is understood so that implementations or consolidations are often part of the long-term benefits of doing the right thing an effort to become “one company” and leverage are apparent. a company’s size and global reach better than it can with autonomous business units and country As part of the APM process, use a methodology, organizations. such as Gartner’s TIME (tolerate, invest, migrate, eliminate), to determine your investment posture A best practice is to tie applications to a with regard to particular applications. Based on transformation that the business leaders the technical state and business fit of the existing desperately want to accomplish. The application application, you may decide whether to tolerate, change is a catalyst to the more-critical business invest in, migrate or eliminate applications. and process change. Employees are forced to relearn how to do their jobs with the new Conclusion application. As more of the process is embedded in Getting out of the hole requires learning how the application, the change is more likely to stick. to work the corporate funding mechanisms. IT This creates a powerful incentive for the business organizations have to show the business that to fund the project and fully engage to ensure its filling the application hole is necessary in the success. long term, but can also deliver immediate benefits as part of current business priorities. Done right, Expand APM you will not only get out of the hole, but also IT organizations have to take a long-term approach strengthen your engagement with the business to staying out of the hole. Rather than continuing and your APM process. to propose maintenance projects or allocations Source: Gartner RAS Core Research, G00218816, B. Swanton, only to be shot down, they must: 6 October 2011 • Create a complete application inventory, identifying ownership, user base, annual costs, technical risk, business risk, and how well the application can meet current and anticipated business needs.