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application portfolio management (APM)

What is application portfolio management (APM)?

Application portfolio management (APM) is a framework for managing enterprise IT software applications and software-based services. APM provides managers with an inventory of an organization's software applications and metrics to illustrate the business benefits of each application.

What is the goal of application portfolio management?

APM uses a scoring algorithm to generate reports about the value of each application and the overall health of the IT infrastructure. By gathering metrics such as an application's age, how often it's used, its maintenance costs and its interrelationships with other applications, a manager can use accurate, informative data to decide whether a particular application should be kept, updated, retired or replaced. Thus, the goal of application portfolio management is to monitor and track portfolio elements, keep what works well and replace what is underperforming or too expensive.

What are the benefits of application portfolio management?

The benefits of application portfolio management are as follows:

  • establishes, collects and tracks metrics to provide a rational, empirical and data-driven basis for evaluating and comparing applications;
  • provides an informed inventory of the application landscape that speaks to business capability, the total cost of ownership, applications supported and application lifecycle management;
  • requires business and project management professionals to attend to application usage patterns, values and costs over time; and
  • offers evidence to developers, stakeholders and management about the relative value, utility and costs of applications and services in use in the organization's IT environment.

All in all, APM provides important insights into what applications are in use, how well they're working, frequency of use, how much they cost and the interdependencies with other applications. This data is essential to manage an application portfolio and continuously improve its content and capabilities.

APM frameworks

Application portfolio management frameworks provide the infrastructure to support ongoing APM. This includes undertaking a complete inventory of applications and services in use. Each value needs to be measured and assessed according to metrics that include cost, frequency of use, perceived value to users and stakeholders, capabilities and unmet needs or desired -- but missing -- features and functions. Only applications that score well on all metrics and are perceived as best in class should remain; others should be altered, updated or replaced to improve ROI, productivity and perceived value. This involves removing or retiring applications that no longer meet user needs.

In other words, an APM framework provides the basis for inventory and evaluation of the current portfolio, along with mechanisms for improving or replacing its constituent components to meet current and planned business needs better.

How to get started with application portfolio management

Organizations without established APM can't jump right into a full scale deployment; they have to follow specific steps and a process.

  1. Establish a baseline for the current state of applications, current and future application needs, and future goals for application portfolio management.
  2. Create an inventory of applications and platforms about which metrics may be collected to guide and inform decision-making. Pay attention to both front-end -- user interface and access -- and back-end -- server-side, data handling, capacity and load handling, and more -- capabilities.
  3. Employ formal methods and analysis to align applications with business priorities and to evaluate and manage operational risks.
  4. Establish communications tools and mechanisms to facilitate interaction between application owners, managers and support staff.
  5. Provide regular reports on application metrics and information.
  6. Hold scheduled sessions to evaluate portfolio contents, recommend retirement for underperforming applications or services and solicit input on new additions or replacements.

APM tools and vendors

While several APM platforms are available, some of the most well-known include Datadog, Loupe, AppDynamics, Stagemonitor and Pinpoint. Regardless of platform, an APM tool should include the following key elements:

  • digital experience monitoring and reporting that provides insight into how users interact with and feel about using applications, along with information about issues, bugs, delays and more;
  • application discovery, tracing and diagnostics, which dig into the details of application software to uncover and diagnose potential -- and actual problems; and
  • purpose-built AI for DevSecOps that supports automation of processes involved in digital experience monitoring and application discovery, tracing and diagnostics to support continuous improvement.
This was last updated in April 2022

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