Application Portfolio Management Ensures Efficiency and Transparency in Information Technology Management

Project and programme portfolio principles can also be utilised in the management of organisational applications and information technology services.

Every application of the entire organisation, not just those of the IT department, can be grouped into a portfolio just like projects. In this event, all the applications of an organisation are compiled and a set of common comparison criteria are designed for them. The criteria may include definitions as, for example, a service produced by the application, its business value, processes supported by the application, users of the application, application availability and service level agreement, required resources, expenses, etc.

When the criteria are carefully designed and the applications are compiled into one application portfolio on the basis of these criteria, the IT investments and resources of the organisation can be correctly allocated according to criticality and service level requirements of the applications.

Describing applications in this way facilitates the executive functions of the director responsible for the application portfolio, while improving business and information technology discussions regarding their management and areas of focus. Information technology management will become transparent as business management is able to have clearly defined information regarding the business benefits of every information system, as well as the required resources and the cost-benefit ratio of various applications. Subsequently, the management is able to discover any overlapping or unnecessary applications. Applications under various organisational units can be combined into a standardised management.

The application portfolio also enables data administration to allocate information technology management and maintenance resources correctly. This is a key point, as most of the information technology resources are focused on running the current information technology environment. However, during the planning of organisational investment budget, discussions between information technology and business management are often focused on new information systems and related projects.

Furthermore, correct allocation of resources will also facilitate the definition of resources for new information technology projects, as their basic work load is known and allocated.

Creating portfolios for applications facilitates drawing up service level requirements and agreements, as the applications are focused on business needs and requirements. This enables, for example, the determination of the operating time and availability requirements of applications by examining the criticality of the business operations they support. This also enables the creation of new availability requirements for applications supporting the same business process according to their actual necessity. For example, the availability requirement for an online order collection system may differ from that of the order handling system.

Compiling application portfolios can be carried out using the same principles and utilities as for project or investment portfolios. This is because many of the application definitions are similar to project and investment definitions.

Text: Mr. Seppo Pahta, Associate, Senior Advisor, MSc, eMBA, Thinking Portfolio, AE Thinking Business Group, seppo.pahta@thinkingportfolio.com

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