What is Application Portfolio Management, and is it part of the Application Lifecycle Management process?
Just like the physical assets of IT, hardware, building and infrastructure, the software we own and develop has intrinsic value to our organization. It is common today to see the software research and development (R&D) in progress to be shown on the balance sheet alongside the R&D that goes into the products we make and sell. It is natural then that we manage software just as we would manage any other asset. We need to know when its value is declining, when it has become obsolete and what it costs each year to maintain and sustain.
After a confused and fragmented beginning, application portfolio management (APM) tools are now reaching a level of maturity where informed business decisions can be made about the disposition of the software assets in the organizational portfolio.
Let’s begin, though, by making it clear that application lifecycle management (ALM) is a term that is sometimes used as well, even though we more usually apply this term to the business of developing and maintaining an application. Gartner is beginning to use the term ADLM, Application Development Lifecycle Management, in order to disambiguate the uses of ALM.
I mention this because it is important understand the difference between the lifecycle of the application and the lifecycle of changes to the application.
APM is the business of deciding if an application should be created, how and when it should be improved and when it should be replaced: the birth, life and death, the lifecycle of the application. Those choices occur due to requests from the business which are, in turn, costed, evaluated and, sometimes, funded. The prioritization of these requests, the organizing of the requests into releases and the management of the activities are all part of APM.
The main task of APM is to determine the value of the software assets. It does this by tracking the cost of the development and maintenance of the system over time. By estimating the value the system delivers to the business and by determining the exposure the business has if the system fails. There are tools available that will measure the complexity and difficulty of enhancing a system and this should be factored into the value. With these, and many other parameters, it is possible to assign a dollar amount to each system. As a result of this it becomes possible see the point at which the value of the existing system is less than the cost of replacing it with a new one.
ADLM defines the processes and activities we go through to satisfy those requests and to create, modify or decommission an application. ADLM is about decomposing those requests into increasingly more detailed requirements, about the project planning and resource utilization, the business of creating code, testing, packaging and deploying it. It is about turning the requests into tasks and executing them: it is not about deciding if the task should be done.
So ALM is really part of the APM process. If we compare them to the government, APM is the cabinet making policy and deciding priorities, and ALM is the agencies and departments delivering the will of government.
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