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A Simple Tool for Analyzing Your Enterprise Application Portfolio

Every year, in every enterprise, budgets are approved, and resources are spent to procure and implement new enterprise applications. We have pretty good processes for this, including steering committees, architecture reviews, and CAPEX approval processes.

What we DO NOT have are similarly structured processes for retiring and decommissioning legacy applications. What to do with an existing application and the content it holds, that is being replaced is often left out of the initial planning and approval process when we seek to replace it.

The result is that we acquire new applications faster than we retire those we don’t need. As a result more and more of our budget and resources are expended on applications that are no longer in active use.

Buying Enterprise Apps is Like Buying Clothes

If you are like me, it is like buying clothes.  If I were smart, every time I buy a shirt I would throw out one I do not wear anymore…, or better yet, I would throw out two!  Instead, my drawers are stuffed with old tee shirts and college sweatshirts that I have not worn in a decade. In the case of my drawers, the result is some disorder.  But with enterprise IT applications, the result is wasted budget and resources, and a constraint on our ability to invest in new technologies.

There is a simple tool that will almost immediately help drive the decisions and actions needed to keep your enterprise applications “closet” organized: an application portfolio assessment.

Here is how it works.

Application Portfolio Assessment

Identify every application currently running in your organization; identify it by department, function, owner, number of users and other attributes. Most important, determine the costs associated with application, both direct (payments to vendors) and indirect (staff hours and hardware allocated to it).

Score each application on the benefits and value it delivers.  Is it critical to the business or enabling new business? Is it used to house old content but no longer in use?  A one to five scoring system can be used to rank the value of each application.

Now calculate some metrics. What is the cost of the application divided by the value? For example, you may have a relatively low-cost application, but at the same time, it may score a one on value. If the cost is per year $100,000, but the value is a one, our cost/value metric is $100,000.  

A much more expensive application might deliver better value because a $250,000 application ranked as a “5” results in a cost/value metric of $50,000. Obviously, with this metric lower is better. And if an application is delivering no value at all, then, well, the metric results in a divide by zero error, and no matter how inexpensive the application is in terms of costs, it is actually your worst-performing application.

The Application Portfolio Matrix

An easy way to look at your application portfolio is in a two by two matrix. Your X axis represents your value scores from 1 to 5, and your Y axis groups your applications in lower and higher cost groups.

The applications delivering the lowest value per dollar will be on your lower left. You can label those applications the “budget suckers,” as in the example below, because they are consuming vastly disproportionate budget and resources for the value they are delivering.

application portfolio analysis matrix

Application Archiving Gets Rid of Your Budget Suckers

What to do after your application portfolio analysis?  Well, it is pretty obvious, though it can be a little challenging in execution.  Usually, the reason those budget suckers are still in place is to play the role of very expensive record storage — they are used to house content that is still required by the business or for regulatory and compliance reasons but are no longer in production use.  

A better solution to the need to retain content is to leverage an application archiving strategy, where inactive content is moved to a lower cost environment where it is still accessible. In the case of everteam.records, inactive content can be easily migrated from legacy applications to a lower cost environment and remain available for search, access, and reporting. At the same time, retention management and legal hold capabilities are enabled, which means that there is a reduction in compliance risk as well as a reduction in cost. A two-fer!

Coming Next

A portfolio approach to enterprise application management pays off in a number of ways.  Quickly identifying budget suckers is just one of them. In my next blog, I will talk about using application portfolio management techniques to ensure the budget for enterprise applications is continuously monitored, assessed and optimized.

Ken Lownie
VP, Customer Success

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