Application Portfolio Management: Analyze Your Portfolio

Last week, we talked about starting the journey with Application Portfolio Management: Building and Maintaining Your Inventory. We outlined a 9 step process for you to start engaging stakeholders more effectively and to introduce new ideas into your wider enterprise blueprint. In this blog post we look at what is required to effectively analyze the application portfolio.

As before, this blog series seeks to address the successful management of your Application Portfolio touching upon Enterprise Architecture and Innovation Management techniques. We sometimes give examples by referencing erwin software tools to show Application Portfolio Management in action. So lets get straight into it!

Analyze Portfolio is where your business problems and issues need to be identified. It’s useful to collaborate with a line of business stakeholder or technical expert to capture their input on the application components throughout the process.

Step 1 – Add associations

The first step is to add risks, issues and associations of each application to the rest of the portfolio. These can be in the form of associated applications, processes, actors, locations, data and technology components.

Associations are critical for impact analysis; understanding how a change to one application component will affect its associated components.

For example, an Application may comprise other Applications, or an Application may realize a Requirement.

erwin’s platform allows for additional associations to be recorded than those mentioned above, to provide a greater level of context and reasoning behind certain application components and concepts for users/stakeholders.

APM Associations

Step 2 – Chart attributes from your inventory

By visualizing attribute data in a simple chart its easier to make assessments on the application portfolio. For example, it can be valuable to visualize those application components with the lowest risk, highest functional quality, greatest business criticality and best technical quality.

Here’s an example of a chart produced using erwin’s software platform.

APM Attribute Data Chart

Application components are stacked, so that you can focus on the application components with the highest total. Users can filter the content on the chart if there are many concepts to analyze or create multiple charts for easy visibility.

It’s important to weight attributes according to their importance. Decreasing the value of one attribute will give more weight to the other attributes. For example, the Business Criticality attribute can receive a higher weight than the Functional Quality attribute.

APM Business and Criticality Attributes

In this chart, you can see that the application Bank System has a higher overall rating because we place less weight (importance) on the Risk attribute of the application components.

APM Bank System Chart

Step 3 – Evaluation attributes

Here, you need to look at the value of the application components to the organization, the health of the application components and the risk of unrecoverable failures.

To evaluate the health of an application, look at the Technical Quality and Functional Quality attributes. Visualize these attributes using the same chart technique described in Step 2. There are many ways to visual the chart data, so choose a way that provides the best representation to meet your needs.

Here’s an example of a simple chart showing the Technical Quality and Functionality Quality of different application components that can be used to understand Health.

Use this data to assign a Health Status attribute to the application components. For example, the Home & Away Policy Administration component would have a low Health Status since it has low Functional Quality and low Technical Quality.

erwin offers an automated scorecard function for calculating the Health Status of an application, utilizing formulas such as (Functional Quality + Technical Quality ) * Risk Profile.

Evaluate an application’s Organization Value by looking at the Business Criticality, Functional Quality and Technical Quality, with a heavy weighting on Business Criticality.

Evaluate an applications Failure Risk by looking at the Risk Profile and Technical Quality. For example, High Risk and Low Quality indicate an increased likelihood of an unrecoverable failure.

These attributes combined unlock another dimension to your Application Portfolio Management efforts. By placing Organization Value, Health Status and Failure Risk into a single chart you can start identifying areas that require your attention.

In this example, the Organization Value is on the Y axis, the Health Status is on the X axis and the color and shape of the Z axis indicate the Failure Risk.

Ideally, you are looking to see applications that exist in the lower left corner that have a cross shape as this indicates low value, low health and high risk. These are the potential remediation applications.

Step 4 – Build just enough documentation

Now is a good time to start documenting the results of your APM efforts. As you make important decisions about the portfolio, you must maintain documentation describing what you have done. These are critical for ensuring effective stakeholder communication and collaboration, and supporting further decision making.

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