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Presentation on theme: "This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner."— Presentation transcript:

1 This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2011 Gartner, Inc. and/or its affiliates. All rights reserved. Andy Kyte The Executive Guide to Application Management

2 You Need to Know Because … Applications Are Important Applications Rust Applications Can Help You Win! Applications Are Expensive

3 You Need to Know Because … For 21 st Century Executive Managers, a Firm Grasp of the Principles of Application Management Will Be a Critical Career Capability. For 21 st Century Executive Managers, a Firm Grasp of the Principles of Application Management Will Be a Critical Career Capability.

4 Key Issues 1. What are business applications, and why do business managers need to understand them? 2. How should business executives participate in the process of investing in business applications?

5 Applications Are a Large, Diverse Family Systems of Record Systems of Differentiation Systems of Innovation Planned Persistence 20–25 Years Planned Persistence 8–10 Years Planned Persistence 1–3 Years ~$100,000 $1 million– $10 million Refactor $10 million– $100 million+

6 Application Sourcing: Not Just Buy Versus Build Subscribe Business Process Outsourcing Buy and Configure Build Buy and Customize

7 An Application Is Part of a Complex Ecosystem

8 An Application Is an Asset The Industrial Revolution developed accounting standards for fixed assets. Accountants use sophisticated depreciation formulas. Shareholders are protected by a "sinking fund." In the "Information Revolution," accountancy practice is trailing behind asset value delivery. Applications are assets in many cases, the most-valuable assets an enterprise owns. Shareholders have no mechanisms to value assets and no "sinking fund."

9 An Application Is a Liability The Application Trained business users Architectural compliance Technology skills Application server Application integration Operating system Data and Information Tools for management Tools for testing … The Stack

10 Example Range of Go-Live Costs as a Percentage of 15-Year TCO 2% 6% 8% 16% Application Volatility Low High "Design for Life" Objectives High 8%

11 This Year's CapEx Drives Next Year's OpEx Current Year Next Year Base Ops Increase for A Maintenance for A Ops Increase for B Maintenance for B Project A Project B New Project New Project Budget

12 Requirements: It's Not What You Do It's the Way You Do It Reference: IEC 25010 (Was ISO 9126) Functionality ReliabilityUsability EfficiencyMaintainabilityPortability Analyzability Changeability StabilityTestabilityMaintainability

13 Applications Can and Will Change! Positive ROI From Investment in This Phase Moderate ROI Likely Negative ROI Birth AdolescenceRetirementInfancyMaturity

14 Understanding Application Maintenance The Four True Functions of Maintenance Corrective Adaptive Preventive Perfective The False Function of Maintenance Minor Enhancements a.k.a. "Back Door Development"

15 Low High The Three Critical Application Attributes 201320182023

16 Key Issues 1. What are business applications, and why do business managers need to understand them? 2. How should business executives participate in the process of investing in business applications?

17 Step Zero: The Application Governance Process Supply-Side Stakeholders Enterprise Architecture Demand-Side Stakeholders Governance of the stakeholders, by the stakeholders, for the stakeholders Named Owner

18 Step 1: Monitor 1.Line Item Costs for Each of Your Applications 2.Expected Future Costs Over 10 Years 3.Utilization Business Units of Work 4.Utilization Trends Historic and Predicted 5.Technical Risk Analysis 10-Year Predicted 6.Gap Analysis Current and Predicted 7.Market Testing Internal and External Executive Application Portfolio Management

19 Step 2: Buy/Sell/Hold Eliminate Migrate Invest Tolerate Technical Integrity Business Value

20 Step 3: Generate Options Option 1: Do Nothing Costs Benefits Risks Option 2: Upgrade Costs Benefits Risks Option 3: SaaS Costs Benefits Risks Option n: nnnnnnn Costs Benefits Risks

21 Recommendations Allocate time to regular reviews of your application portfolio Lead the culture change management to eliminate bad acquired habits and develop best practices in application value delivery Challenge your team to develop a strategic approach to your application portfolio Implement "One In, One Out" as a minimum standard when acquiring new applications

22 Related Gartner Research CFO Advisory: Application Portfolio Management Overview Andy Kyte (G00206748) Guide to Application Essentials, August 2011 Update Bill Swanton (G00214804) The 'Seven Deadly Sins' of Application Governance Matt Hotle (G00210776) Recommendations for Improving Project Prioritization D. Stang, D. Fitzgerald, J. Duggan (G00167598) How to Use Pace Layering to Develop a Modern Application Strategy J. Shepherd, D. Gaughan, Y. Genovese, V. Sribar (G00208964) For more information, stop by Gartner Solution Central or e-mail us at solutioncentral@gartner.com.solutioncentral@gartner.com

23 This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2011 Gartner, Inc. and/or its affiliates. All rights reserved. Andy Kyte The Executive Guide to Application Management


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