Application Portfolio management – Few mandatory defintions.

Application portfolio assessment is one of the function an enterprise architect performs for IT budget analysis, bundling for sourcing strategy, technology migration, application retirement valuation etc. One of the challenge is to come up with globally accepted definition for an application.

There are at least three categories of defintion required for the application portfolio assessment.

  • Application
  • Tools
  • Services

Applications: The business processes of an enterprise shall be defined hierarchically with at least 4 levels. Level 1 will present the highest level of business process with in the organization. For example, if we take vehicle manufacturing as an enterprise, power train, stamping, components, procurement, assembly are the first level processes. In the second level, the first level process (for eg. power train ) will be broken down into sub processes. This process shall iterates for 3 lower levels minimum. Application (or a system) is a IT solution supports a level 2 or lower business processes directly or indirectly.

Tools: Utilities or tools used internally by IT organization to perform the IT functions like Project management, application management , demand management, SDLC, SOX etc. This does not directly support the business process.

Service: It is a service received from a service provider. It may support the business process directly or indirectly or does not support business process but support IT process. For the services, the enterprise does not have infrastructure, application development, maintenance activities within the organization. Application development and maintenance and infrastructure (Saas Model) will be provided by the service provider.

The definition requires fine tuning based on the size and type of the company. For example, if an enterprise which perform IT function as the core processes, then the tools definition should belong to application category since it serves the core business processes. The above definition will be suitable for the non core IT companies (like Insurance, education, Oil & Gas etc).

Once the definition are agreed up on, categorize the applications in the landscape and provide an unique identifier for each application. There will be always few gray areas. Those gray areas should be resolved by collaborating with the application stakeholders.

Application may require break down based on the type of users, location of the users, support of products etc. The break down is required for quantitative measurements of application performance. For instance, it will be challenging if ITM wants to analyze who makes more demand request in the data ware house, if the enterprise consists of lots of functional areas (like sales & marketing, finance, etc). For example, Date warehouse is a single application, however to track the number of demand requested by each functional area, data ware house application may have ‘n’ number of child represents each business functional area. When it comes to application portfolio assessment only the parent will be taken into consideration. When it comes to the IT operation metrics, the application identification of the child will be used.

As a key step of application portfolio assessment, categorize all the applications, tools and service in the landscape conforming to the above definitions.

Quantification of an application:
How many business processes, in minimum, an application should support? It depends. As long as the business processes all align to level 2 business processes, it can be defined as an application. It all depends on the size of the organization.

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