Presentation on theme: "Implementation of Application Portfolio Management"— Presentation transcript:
1 Implementation of Application Portfolio Management Governance, Process, and Execution(The What and Why of APM)February, 2006
2 Approximate Times (Minutes) Presentation AgendaApproximate Times (Minutes)TopicSlidesPerspectives and Overview of APMConcepts, Processes, and Practices of APMImplementation of APM in NC State GovernmentQuestions3 -10102024 -361515Total Time60
3 Portfolio Management Portfolio Management is: A collection of items grouped together to facilitate efficient and effective management and optimally allocate fiscal, staffing, and other scarce resources. The purpose is to meet strategic business goals and objectives in the most effective and productive manner by appropriately considering key factors, such as desired returns or public value, initial and life cycle costs, architectural directions, risk profiles, and the inter-relations among investments. The objective is to make fact-based, data-driven, and analytics -oriented management decisions, using a consistent and disciplined approach within a well-defined governance structure.Copious amounts of data, quantitative analyses, and useful and actionable information are not enough to produce right (versus wrong) and good (versus bad) decisions. They only start and enable the conversations.Executive perspectives, management expertise, and healthy decision-making cultures are essential ingredients. Political understandings, business sense, governmental program knowledge, technical awareness, and an honest open atmosphere for discussion are absolute prerequisites. This is a debate-and-decide; not a review-and-approve process.Major Portfolio Management Tasks are:Inventory and classify items in the portfolios.Perform relevant analyses – identify problems and opportunities, develop viable options, determine relevant criteria, ask the right questions, evaluate alternatives using pertinent information, and make decisions.
4 Status of Implementation of Portfolio Management Phase/Type of Portfolio Management EffortImplementation Status and TimeframeTopic Research and Purchase of ToolCompleted – performed in 2004 and early 2005Project (PPM)Completed – performed summer and fall 2005Applications (APM)In process - winter and spring 2006Investment (IPM)In process - initial efforts in winter and spring 2006 as part of applications endeavor; more advanced capabilities will be implemented later as agencies are ready and need them
5 Summary of Findings of Keane/Gartner Legacy Applications Study – December 2004 In the portfolio of approximately 900 applications: 40% are considered critical for department mission/strategy; 17% are enterprise (statewide) applications; and 75 of the applications processed by the state data center require 1-day return-to-service capability.The statewide portfolio is relatively young, with an average age of 7.5 years – since 1997, from 70 to 90 new or replacement applications have been added each year to bring down the average age.Health status is: 23% presenting functional, technical, or both problems; 50% with some problems, but manageable; and 27% healthy, with a prescription for continuing on-going operations and maintenance.Remediation timeframes are: 11% require action immediately (within next two years), 35% require action in the near term (2 to 4 years), and 54% require action in the long term (4 to 6 years).Although the immediate needs of the portfolio appear to be manageable, projections of its future status, if no remediation actions are taken, indicate an increasingly deteriorating condition as the applications age.
6 Framework for Managing IT Investments I. Strategic Business and IT Planning and Investment Selection and Budgeting- Investment Portfolio Management (IPM) – Build, Buy, and/or Implement the Right AssetsIII. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement - Applications Portfolio Management (APM) – Maintain and Operate Assets in the Right Ways and Retire or Replace Them at the Right TimesLife Cycle of IT InvestmentsIdentify investments that best:Enable governmental initiatives or agency missions and strategiesResult in financial returns – revenue generation or cost savingsProvide better constituent services or program effectivenessFit technical architecturesSatisfy budget, staffing, and other constraintsMeet risk profilesOperate and maintain assets so that:Benefits/costs are optimized over their useful lives through astute and timely renovations, consolidations, or eliminationsServices offered meet availability, reliability, security, quality, and recoverability expectations within acceptable budgetsRetirements and replacements are effected when assets are no longer cost-justified or risk-acceptableII. Project Implementation - Project Portfolio Management (PPM) – Build and Implement Assets in the Right MannerManage projects by:Clarifying roles and responsibilitiesProviding appropriate oversightEnsuring they are well planned and thoroughly researched prior to startingDefining, tracking, and evaluating project progress frequently to achieve budget, schedule, scope, and quality expectationsCompleting them successfully so that business goals and objectives are realized
8 NC is not Alone in Implementing APM - Gartner Prediction for 2006 Gartner predicts that 40% of large public and private enterprises will implement application portfolio management in the next two years. The reason for the rapid growth in the use of APM is other companies and government entities have achieved successes in cost reduction, managing the complexities of hundreds of established assets, and improving budget process effectiveness.Applications portfolio management is critical to understanding and managing the 40 percent to 80 percent of IT budgets devoted to maintaining and enhancing software. Most organizations don’t track established applications over time to ascertain return on investment (or to determine which should be disposed of), and few manage application portfolios with tools. In other words, these organizations haven’t truly associated the substantial amount of money they’re spending with what they are spending it on.Gartner Research Note “Predicts 2006 Reacting to Application Development Challenges With Management and Automation” dated November 15, 2005
9 Reasons for Applying APM Concepts and Disciplines to Existing Applications Identify and catalogue all applications – know what you have and what they do in order to manage them.Track and communicate technical and business status of applications to identify problems and take advantage of opportunities.Enhance the alignment of applications with agency strategies and technical architectures to improve support of business processes.Identify and eliminate or replace applications that are redundant, high-risk, low-performance, or high-cost (especially O&M).Develop a multi-year management decision roadmap to optimize benefits/costs and minimize risks over application useful lives.
10 Primary Goals for Managing Applications Reduce maintenance and support costs – provide a source of funds for new investments.Align IT with business – better satisfy business priorities and evolving needs.Fund the right application remediation efforts – maximize benefits/costs for dollars spent.Coordinate and prioritize IT investments – there is not enough money to do everything, so do the right things.
11 Issues Surrounding Systems Obsolescence Over time, sustainability of applications becomes questionable due to age and technology advances, combined with changed business needs. They no longer:a) support business goals and objectives,b) are cost-effective to operate or maintain, and/orc) are risk-acceptable by presenting too great a likelihood of failure with cataclysmic consequences.Business IssuesImpediment to the implementation of new and more cost-effective service delivery models – unable to respond to demands for new functionality, support business processes, or provide adequate and secure information accessBecomes a constraint in meeting regulatory requirementsStaffing issues - Unavailability of SkillsUnavailability of staff skills or expertise to maintainUnavailability of third party vendorsDependency on individual contractorsTechnology issuesExpired warranties, with no vendor supportCan not handle increased usage or volumes of dataDoes not run anymore on available platformsInefficient IT resource utilizationUsed beyond original intent, and cannot be enhancedCannot meet security, privacy, or confidentiality requirementsAre not easily recoverable for disaster recovery and business continuitySystem can fail, with untraceable errorInconsistent or inadequate information and data qualityNot compliant with state or agency technical architecturesSources of RisksApplication modernization projects are created because: enterprises need to boost performance, make easier to access (through Internet), transition from technologies no longer being supported, or extend the reach of existing applications by integrating them with new programs being built by Java or other modern platforms.Extending legacy applications, rather than calling in the virtual bulldozer, appeals to some enterprises because these applications are proven after perhaps decades of battle hardening, and because they are full of important business and customer information.Seems to run forever, but ultimately has a finite business, economic, and/or technical life
12 Key Concepts: Analysis Perspectives Business, technology, and financial perspectives are combined to determine the posture of the application, indicate the appropriate remediation strategy, and to provide recommendations for managing the application portfolio over timeGeneral idea – action is required when an asset is not cost-effective or risk-acceptable (it is worn out, no longer technically fits, or costs to much to keep)Do we have the right capabilities in place?Are they aligned with business priorities?Where are potential synergies?Are there duplications?BusinessHow do we maximize overall value?Can costs be optimized across the organization?To what extent can innovation and new applications be funded by cost savings?Do they cost too much to operate or maintain?Application Portfolio Analysis PerspectivesTechnologyFinancialAre applications sustainable?Do they fit in the desired architecture?What is the technical migration road-map?Are they risk-acceptable?Do they present security, privacy, or disaster recovery vulnerabilities?
13 Applications Portfolio Inventory and Classification Key Attributes for Each ApplicationGeneral – ID, business owner, age, etc.Business processes enabled/supportedBusiness value/criticalityUser informationFunctional qualityPresent business requirementsFuture business growth and new business needsTechnical qualityArchitectural complianceOperations and maintenance – support of or detriment toCostsOperationsMaintenance and technical supportRisk profileDisaster recovery/business continuity statusAttributes can be unlimited – use potential for compelling analyses (usefulness) and ability for consistent refresh as decision criteria for the selection of them.
14 Applications Portfolio Inventory and Classification Who Knows About Particular Attributes:Public Users (State’s Citizens and Businesses)Users From Other Government EntitiesBusiness UsersManagers and ExecutivesIT ManagersTechnical ArchitectsApplication DevelopersApplication MaintainersIT OperationsHelp DeskBusiness and IT Security and DR/BC StaffFinancial, Accounting, and Budgeting PersonnelSources of information can (and maybe should) be numerous – don’t overcomplicate, but ensure that all perspectives are offered and data is fact-based, reliable, and complete.
15 Analysis of Applications Portfolio - Basics Business leadersWhat are strategic business drivers?Which apps fit drivers (contribute to business)? Which do not?UsersWhich apps meet business needs? Which are lacking?How many users are dependent on app? What are the vulnerabilities and what are the impacts of outages.Business analystsWhich apps have accessible, complete, actionable, accurate, and timely data? Which do not?Which apps enable business process reengineering? Which do not?Applications maintenanceWhich apps require the most maintenance effort and expense? Which are scalable and adaptable? Which are not? Which are most reliable and maintainable? Which are not?Help deskWhich apps generate the most trouble tickets?
16 Analysis of Applications Portfolio - Basics Technical architectsWhich apps contain components that comply with agency and statewide technical architectures? Which do not?Which apps contain components that are beyond vendor support – aged releases and/or removal of product support?IT managersWhich apps have reliable and dependable vendor maintenance support – either in-house or outsource? Which do not?Which apps do not integrate (share data) well? How critical are the these apps to the performance of other applications supporting critical business processes?Which apps have performance problems? What are the business and cost impacts of these? Can they be rectified?Which apps are subject to determinable vendor mergers or acquisitions? What are the consequences, and how can they be mitigated?Which apps have questionable risk profiles – security; DR/BCP; vendor viability; regulatory compliance; HR risk from staff retirement; privacy and confidentiality; and/or information availability, quality, and retention?
17 Application Portfolio Management -Approach for Assessing and Managing Applications Data Collection, Analysis, and Decision-Making ProcessStep 1 - Build and Maintain InventoryStep 2 - Analyze PortfolioStep 3 - Manage PortfolioStep 4 – Optimize PortfolioNext StepsDetermine if Remediation (Other Than Regular Ongoing Support and Maintenance) Required and Develop Life Span Transformation RoadmapIncorporate Results in Business and IT Planning and Funding Request Processes - Investment Portfolio ManagementAssess Overall Posture of ApplicationBusiness Status?Technical Status?ContinueRegularSupport & Mainte-nanceCreate and Maintain Inventory in UMT Portfolio Management Software ToolNear-Term Action Needed?NoYesApproximately 50% of UMT database updated from data used in Keane/Gartner studyEvaluate Business Importance and Criticality of Problems or Opportunities – Prioritize, Specify Timeframe for Action, and Determine Costs and Benefits
18 Application Portfolio Management - Determining the Posture of Applications Generic criteria are defined to assess applications from a business and technology perspectiveGoodMeets present service delivery needsMeets anticipated needs for new services, business process reengineering initiatives, and information accessProtective of individual privacy and data confidentialityHighWarning Zone – High Technical RisksSafe ZoneSafe ZoneBusiness PerspectiveCreates inefficient and less effective service delivery processesConstraint on implementation of new services, expanded citizen benefits, and/or more efficient business processesIndividual privacy and data confidentiality at riskHigh Attention Zone – Both Business and Technical RisksWarning Zone – Not Making Best Use of In-Place Technology to Meet Business NeedsBadLowHighBadGoodTechnical PerspectiveExpensive to operate or maintainNone or decreasing vendor support for major componentsInsufficient or decreasing availability of staff supportCan not enhance for new business requirementsInefficient IT resource utilizationInadequate data access and qualityVulnerable securityRecoverability difficult or suspectNot compliant with state or agency tech. architecturesCost-effective to operate and maintainAdequate vendor support for major componentsAdequate availability of staff supportCan enhance for new business requirementsEfficient IT resource utilizationAdequate data access and qualityAdequate security protectionResilient to human-induced or natural disastersCompliant with state and agency tech. ArchitecturesEasily recoverableUnderstanding strengths and weaknesses of the existing set of applications from both a business and technical perspective can offer a good starting point for portfolio management. This starts with building profiles for each application (costs, business purpose/value, technology footprint, support, and architecture fit) followed by a business assessment that examines operational efficiency, business risks, and strategic importance and a technology assessment that examines capabilities, ongoing risks, and architecture issues. The results can be graphically displayed using a 4 sector quadrant that show poor performing applications, those with primarily technical issues, those with functional issues, and those that are doing a god job supporting business needs. Red zone applications are candidates for replacement or renovation. Orange zone applications are technically sound, but have shortcomings in providing effective business support and are god candidates for functional enhancements with relatively minor investment. Yellow zone applications are meeting business needs, but have technology shortcomings that probably require technical enhancements to address risk and prolong their life. Green zone applications are healthy and require regular support and maintenance.
19 Options for Life Span Transformation Roadmap Technical renovation/enhancement, such as re-host, employ Service Oriented Architecture (SOA) or Web services architectures to modernize, recode, update database management software, etc.Functional enhancement.Replace (COTS, GOTS, or custom development) and retire.Sunset/eliminate.Consolidate with applications performing the same or similar business functions.Consolidate with multiple diverse applications as part of an agency wide or state wide initiative.Continue maintenance.
20 Application Portfolio Management - Remediation Approaches High/GoodGood Technical Reengineering Candidates:High business value means quicker ROIRenovation will improve support and maintenance costsLow Priority Technical Reengineering:Low maintenance and support costsProvides value as isRegular support and maintenanceBusiness PerspectiveReplace - if possible, with Commercial or Government Package:If low business value, probably doesn’t justify custom code renovation or replacementConsider elimination or consolidationNo Technical Reengineering:Re-host candidateFunctional enhancementTolerate or investLow/BadLow/BadHigh/GoodTechnical Perspective
21 Business/Technology Risk or Urgency Application Portfolio Management - Investment Selection and PrioritizationPrioritization and timeframe for action is driven by overall importance as well as risks.“At Risk/Critical” are highest priority were level of risks drive (broader) remediation activities“Limited Risk/Critical” applications are second priority compared to critical/at risk“At Risk/Less Critical” applications are also second priority for remediation, especially if risks can be mitigated“Limited Risk/Non Critical” applications should be reviewed to minimize technology investments and look for opportunities to consolidate or substitute for better solutionsHighLimited Risk / CriticalAt Risk / CriticalSecond PriorityFirst PriorityOverall Importance to OrganizationSelectivelySecond PriorityLowLimited Risk / Non CriticalAt Risk / Less CriticalLowBusiness/Technology Risk or UrgencyHighIn addition prioritization is driven by:Specific business initiatives, programs, and/or funding streams availableOverall risk issues, interrelationships between applications, and the general need for modernization of legacy systems
22 APM is an Ongoing Process – Not Just a Project Examples of How APM Information Will be Used by AgenciesIdentify expansion budget requests for:Long (biennial budget) session of General AssemblyShort (2nd year of biennial budget) session of General AssemblyAssist in preparation of BCPsProvide IT cost data to OSC for annual report submitted to General AssemblyIdentify funding needs from other sources, such as federal fundsAssist in making decisions for or documenting changes due to:New implementation projectsAdditions, renovations, or upgrades to technical infrastructureRenovations/modernizations to applicationsProvide answers to ad hoc questions
23 Overview of IT Portfolio Management Agency Missions and Vision and Business Goals and ObjectivesDevelop Business Drivers and Business CasesInvestment Portfolio ManagementIdentify Problems and OpportunitiesStatewide and Agency IT PlansAnalyze Candidate InvestmentsProject Proposals for Applications Renovations, Retirements, or ReplacementsSelect and Plan InvestmentsFunded New ProjectsManage PortfolioAdjust Project PortfolioAnalyze PortfolioApplication Portfolio ManagementOptimize PortfolioAssess Value of Projects and PortfolioProject Portfolio ManagementManage PortfolioNew or Renovated ApplicationsImplement ProjectsBuild and Maintain Inventory
24 ConclusionsApplications swallow cost, time, and management bandwidth, while increasing risks – unless they are well managed to reduce complexity and risk and retired or consolidated in a timely fashion, the entire IT budget will be operations and DR/BCP will be unaffordableCreating a portfolio view of existing applications does not have to be complicated; focus on the basics and the big picture – let the software tool highlight problem areas and offer improvement opportunities for management decision makingBenefits of APM are clear;Investment decisions for elimination, replacement, or remediation are made in a consistent manner considering application risks, value/importance to organization and its priorities, most effective use of personnel, and life span optimization of costs/benefitsIT complexity is reduced; thereby, maximizing business value received while minimizing IT cost incurredPlanning for DR/BCP is facilitated to ensure continuity of operationsRisks are managed, and stewardship for assets is facilitated
25 Application Portfolio Management Perspectives Level IV (Step 4)Alignment (Optimize Portfolio)Process Inventory, contribution, function associationCore Business Drivers, priorities, process contributionInitialDeploymentFocusLevel III (Steps 2 and 3)Financial (Analyze and Manage Portfolio)Detailed application-level costs and cost-effectiveness analysesLevel II (Steps 2 and 3)Assessment (Analyze and Manage Portfolio)Risk, Operational Performance, Architectural FitScope of Keane-Gartner StudyLevel I (Step 1)Inventory (Build and Maintain Inventory)Application identity and basic information
26 Applications Portfolio Management Process Transition to Executive Decision Making ProcessFunding RequestsTool Assisted DecisionsSubjective Business DecisionsStep 1 – Level ICollect, Validate, and Maintain Data(Build and Maintain Inventory)Step 2 – Levels II & IIIPerform Assessments(Analyze Portfolio)Step 3 – Levels II & IIIDetermine Dispositions and Life Span Transition Roadmap(Manage Portfolio)Step 4 – Level IVDetermine Priorities, Timeframes, Costs, and Benefits(Optimize Portfolio)Investment Portfolio Management (IPM) ProcessOne-Time WorkTransfer data from Keane/Gartner studyPerform initial collection and validation of remaining dataOngoing WorkPerform data changes and validations as they occurCollect and validate data for implementation projects transitioning to applications assetsMajor Data ElementsIDCostsBusiness criticalityBusiness processes enabled or supportedFunctional qualityTechnical qualityRisk profileIdentifyBusiness problems/issuesTechnical problems/issuesRisk vulnerabilities, probabilities, and impactsOther problems/issuesEvaluateStatus/Health (Good, Bad, Moderate)Value to organization (High, Moderate, Low)Risk of unrecoverable failure (High, Medium, Low)IdentifyDependencies on other applications and projectsCosts/fiscal requirementsTechnical infrastructure requirementsBenefits/value to accrueAlignment with state/agency prioritiesConfirm and/or DevelopImplementation approachDetermine Priorities and TimeframesSelect priority for action (High, Medium, Low)Select timeframe for action (Immediate, Near-Term, Long-Term)Potential Benefits for Selected ActionsCost savings from consolidate/eliminate applicationsImprovements in public service, reliability, recoverability, and security resulting from functional/technical renovation or replacementConsiderCost-effectivenessRisk acceptability – status ofIdentifyProblems/opportunitiesAlternative approachesBest actions for managing application over expected life spansMission criticality/importance to agencyDetermine Whether ToInvest additional funds (technical or functional enhancement or replacement)Sunset/eliminateConsolidateReplace and consolidate as part of an agency wide or state wide initiativeContinue maintenance
27 Comparison and Contrast of Keane/Gartner Study with APM Implementation Project 1. Database attributes for applications:K/G – all data collected by agencies and input by K/G staff from scratchAPM – Approximately 50% of data elements transferred from K/G study and agency staff will both collect additional data and input it into UMT software tool2. Annual maintenance and support costs:K/G – not included in data collection or analysesAPM – included in data and an important part of analyses3. Perspectives for analyses and future actions for applications:K/G – Single point-in-time assessment, analogous to annual physicalAPM – Long-term management plan, analogous to lifetime health/fitness plan
28 Comparison and Contrast of Keane/Gartner Study with APM Implementation Project 4. Responsibilities for application assessments and action plans:K/G – K/G staff performed all analyses with agency reviewAPM – Agency staff responsibility for performing assessments and developing life-span transition roadmaps5. Follow-up to initial assessments and updating of attributes, analyses, and transition plans over time:K/G – Not within scope of study and little/limited follow-up to dateAPM – Frequent and regular, especially in response to budgeting and funding cycles and development of BCPs6. Project planning, management, and reporting:K/G – K/G staff and State CIO project teamAPM – Each agency responsible for its performance and the meeting of schedules and quality, while the State CIO project team will provide overall coordination, training, and assistance to agencies
29 APM Rollout Preparation January 2006SundayMondayTuesdayWednesdayThursdayFridaySaturday12 NC Holiday3Training Materials Review4Legacy Study roadmap complete56Training Materials ready for Beta78910Beta Kickoff Meeting11Beta Basic Training1213141516 NC Holiday171819202122232425262728293031APM Rollout PreparationBeta ImplementationBeta ImplementationBeta ImplementationBeta Implementation
30 February 2006 Sunday Monday Tuesday Wednesday Thursday Friday Saturday 1234567891011121314DENR Business ObjectivesDPI Business Objectives1516DENR Business Processes & Functions DPI Business Processes & Functions171819202122DENR Level IV Advanced Training23DPI Level IV Advanced Training2425262728Beta ImplementationBeta ImplementationBeta ImplementationBeta ImplementationBeta Feedback – Revise Configuration & TrainingBeta Feedback – ReviseConfiguration & Training
31 Beta Feedback – Revise Configuration & Training March 2006SundayMondayTuesdayWednesdayThursdayFridaySaturday123Training materials ready for rollout4567Wave 1 Kickoff8Wave 1 Basic Training910111213141516171819202122232425262728Wave 1 Business ObjectivesWave 2 Kickoff29Wave 2 Basic Training30Wave 1 Business Processes & Functions31Beta Feedback – Revise Configuration & TrainingWave 1Wave 1Wave 1Wave 1Wave 2
32 April 2006 Sunday Monday Tuesday Wednesday Thursday Friday Saturday 12345Wave 1 Level III Charting Analysis6Wave 1 Level IV Advanced Training7891011121314 NC Holiday15161718Wave 2 Business ObjectivesWave 3 Kickoff19Wave 3 Basic Training20Wave 2 Business Processes & Functions212223302425Wave 2 Level III Charting Analysis26Wave 2 Level IV Advanced Training272829Wave 1Wave 2Wave 2Wave 2Wave 3Wave 2Wave 3
33 May 2006 Sunday Monday Tuesday Wednesday Thursday Friday Saturday 123456789Wave 4 KickoffWave 3 Business Objectives10Wave 4 Basic Training11Wave 3 Business Processes & Functions121314151617Wave 3 Level III Charting Analysis18Wave 3 Level IV Advanced Training1920212223242526272829 NC Holiday3031Wave 3Wave 3Wave 4Wave 3Wave 4Wave 4Wave 4
34 Agency “To Do” List Before Start of APM Implementation – We Will Help Accomplish Develop approach for collecting and inputting application attribute data:Application independence and autonomy (minimum central control of data integrity or completeness)More centralized input and quality control (managed approach)Develop approach for conducting application analyses work, reviewing results, and making decisions regarding life span transformation roadmapsDetermine agency personnel that will participate in the project, and ensure each is scheduled for training, has the time availability to contribute to the effort, and calendars are updated to reflect time commitments
35 Agency “To Do” List Before Start of APM Implementation – We Will Help Accomplish Develop high level project plan, with key responsibilities, schedule/milestones, organization chart, etc.:Appropriate to size, business and IT complexities, number of applications, governing structure/relations, and culture of agencyInclude sufficient numbers of personnel and appropriate representation from business, IT, senior executive/management, and other types of agency staffDetermine whether agency desires to participate in Level IV (step 4) implementation – voluntary option:Significant participation and commitment from top executives, business managers, and senior IT staffMay introduce needs for major cultural changes and considerable modifications to long-standing business unit-to-business unit relations and business-to-IT interactionsMay not be appropriate/useful for all agencies, and must request this optional implementation effort through the State CIO