What is Application Portfolio Management?
Application portfolio refers to a collection of software applications that an organization uses to meet its varied business objectives like improving operational efficiency, differentiating within the market, streamlining costs, or executing digital transformation.
Much like investment portfolio management, application portfolio management is the art and science of identifying, developing, monitoring and managing enterprise software applications that align with business goals and deliver maximum value to the organization.
The importance of building an application portfolio management strategy
What happens if an investment portfolio is not actively managed? Depending on the size of the portfolio, an individual may risk running into huge financial losses. Similarly, if companies don’t have an active application portfolio management strategy in place, it may risk running into several expensive, and sometimes irreversible issues like technical debt, cost overrun, compliance and governance challenges, resource wastage, and more. In fact, with 68% of IT projects failing, it is important to build and manage an application portfolio that actively contributes to business goals rather than being a dead investment.
Furthermore, with Gartner projecting the demand for apps to grow 5x times than IT’s ability to deliver, having the right application portfolio management strategy can help companies successfully build new apps and manage the existing ones.
“Where we have gaps in our architecture, or gaps in our application portfolio, low-code enables us to build them very quickly and bring them to market.”
- Matt Rogers, CIO of Suez UK, a waste management company, looked for a way to quickly address gaps in his application portfolio. Using Mendix, he and his department were able to do so.
Business benefits of application portfolio management
Building and managing the right portfolio of applications can help companies:
Businesses can tap into emerging technology like augmented reality (AR)/virtual reality (VR), artificial intelligence (AI), internet of things (IoT) to build innovative apps for its customers.
Enhance customer engagement
Organizations can invest in apps that create new products or services to attract new customers or enhance an existing product to prevent churn. For instance, self-service portals, specific mobile services.
Using technology like low-code, companies can build apps that are compliant and easy for IT to govern; protecting the business from shadow IT and building technical debts.
Create new products & business models
Companies can build apps that enable strategic programs to reach business objectives like launching new business models, entering new markets, and staying ahead of the competition.
Prioritize projects and resource allocation
Application portfolio management helps organizations to identify and prioritize resource allocation to those apps that deliver business value while eliminating the ones that are redundant.
Increase operational efficiencies
Companies can decrease operational and IT costs through apps that support process automation and infrastructure improvements.
How to start with low-code application portfolio management
General Fit Decision
This step is to decide which business initiatives fit the low-code technology swim lane, and then build a broad portfolio of applications that from a business perspective has a low time to market and, from technical perspective has apps that are data-driven, user-friendly, and multidevice.
Largely apps fall in these three use cases - first, the innovation apps based on new technology like AI, IoT, blockchain, etc., second, the apps of differentiation like self-service portals or specific mobile services that are focused on customer engagement or operational efficiency, and third, the systems of record apps like billing systems, CRM and payroll.
Companies can map the above three use cases on two parameters: pre-defined requirements for building an app and rate of change - the likelihood of how fast and often the requirements of an app will change. Based on the nature of the use cases, innovation apps will have the least pre-defined requirement but the highest rate of change, while the systems of record app will have the most detailed pre-defined requirement but the least rate of change.
Since Mendix low-code platform follows an agile methodology, apps with a lower level of predefined requirements and a high expected rate of change – innovation apps and apps of differentiation - will be a perfect match for building the application portfolio.
Additionally, for successful apps of innovation or differentiation, it’s likely the app will need to source data from the existing systems of record. With Mendix technology this is really simple, and it will accelerate the app development drastically.
Define top candidates to start with
The purpose of this step is to identify the top five-to-ten apps from the broader application portfolio built in step 1 and to ensure the delivery of these applications will fulfill the value promised to the organization. The process of selecting your top candidates consists of asking (per app) five simple validation questions.
- Will the app deliver a wow response from its end-users?
- Does the app have clear business value?
- Can the first release be a minimal viable product (MVP) with enough features to satisfy the end-users?
- Does the app have high exposure among its end-users and low/medium complexity to build?
- Is the app a t-shirt size Small or Medium in terms of a few predefined categories like teams involved, integration requirement, MVP functionality expected, etc.?
If the answer is “yes” for all of them, that app is a top candidate. Ask the five questions until the portfolio is narrowed down to the top candidates.
The final step is to further narrow down the choices from the application portfolio built in step 2 and choose the best possible app to begin the app development journey. This step also arranges the remaining applications in the portfolio (from step 2) in the right order, creating a portfolio roadmap for the future.
Map the top candidates against the same five validation questions from step 2, but this time weigh and mark each app with a value for all the five questions. The mapping below shows the absolute winner considering “wow” factor, business value, complexity, and exposure level, as well as defines the roadmap for the remaining apps.