Application Portfolio Analysis framework can help improve return on IT Assets

Globalization and the dilution of trade boundaries have forced industries to evaluate various options for cost-effective operations. Industries now face the challenge of channeling resources to meet organizational objectives in continuously changing environments. Information Technology plays a major role in such a dynamic business environment. However, with the advent of new technological tools and continuous advancement, the IT environment has become very complex.

Chief Information Officers (CIOs) regularly add new assets to their IT portfolio, making the portfolio more and more complex. In addition, they face the task of aligning business needs and IT assets. Cost consideration is becoming increasingly important. The challenge is to do more for less.

In such a dynamic situation, the Management of the IT Portfolio has become an increasingly important and crucial task. Increasing number of CIOs are now pursuing IT Portfolio Management as a tool to prioritize investment decisions, decide the location of various activities, evaluate the various assets with the value it delivers, and much more.

Each asset in the portfolio is evaluated against parameters like cost of procurement, cost of managing, and indeed the cost of replacing the same. “Total cost of ownership” is seen in conjunction with the value delivered by the asset. Optimal Management of the assets leads to minimal TCO.

A study by Gartner states that, “Approximately 30 percent of the total cost of ownership during the life of an application is for its maintenance and management.” One can achieve a significant degree of cost reduction by maneuvering the costs associated with maintenance and management.

Portfolio Management is the process of managing assets and investments in order to achieve desired organizational goals. The portfolio is a combination of assets that are expected to provide certain returns. It has risks associated with it. Portfolio Management includes selecting a set of assets congruent with the set goal, managing the economic lifecycle of those assets, dynamically divesting and investing in different assets to optimize gains. In the IT context, the portfolio includes application software, hardware, infrastructure, resources, processes, and so on. While financial Portfolio Management has been in practice for many years, IT Portfolio Management is relatively new and gaining ground. An integrated framework that helps in investment, divestment, modifications, and movement of application assets has become a necessity to align business and IT goals of an enterprise.

There are applications to help manage IT portfolio for a CIO. I think it may be prudent to get into the habit of understanding IT Portfolio as a concept before investing in expensive Software. A heuristic method for managing IT Application Portfolio is very helpful and cost effective. It is easy to implement. The framework has been implemented at several places and has given enormous benefits to the clients. The detailed methodology is available at http://www.codeproject.com/info/search.aspx?artkw=bishram.