How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance

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1 How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance Optimizing your organization s information system A MEGA White Paper By François Tabourot, Operational Governance Expert and MEGA Co-Founder January 2013

2 This white paper provides IT decision makers with a deeper understanding of the distinct benefits of application portfolio management (APM) and enterprise architecture (EA) and how they can be used together to enhance IT governance. Today, CIOs must cope with increasing pressure to reduce IT costs. We want to help them understand: how both APM and EA can help CIOs meet today s challenges the best practices for implementing APM and EA as complementary approaches with discrete benefits Business globalization has made optimizing legacy IT resources almost as important as ensuring that the initial architecture is robust. When it comes to finding an approach that addresses both architecture and deployment, IT decision makers can look to other enterprise resource managers for inspiration functions like HR and finance have successfully overcome this challenge by establishing well-defined rules and best practices and taking advantage of appropriate tools and industry standards. This white paper shows the value that an integrated portfolio management approach an essential building block of modern governance can bring to an organization. Application portfolio management and enterprise architecture Unique contributions to a common objective Application portfolio management and enterprise architecture both aim to reduce the cost of an organization s IT assets. However, each approach addresses different IT challenges and leverages different resources to overcome those challenges. Because enterprise architects do not always manage their organization s application portfolio (and application portfolio managers do not always have control over EA), organizations often fail to correctly identify the unique contributions that both APM and EA can make, and to understand the potential synergies that can be created when the two approaches are integrated. In practice, EA projects are frequently limited to the inventory-taking phase of a broader APM initiative. And some APM projects, rolled out via EA tools, suffer from a lack of standard features that meet the needs of the different stages in the process. When APM and EA are perceived as overlapping or, even worse, redundant CIOs miss out on the unique contributions that each approach can make toward reducing IT costs. 2 How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January 2013

3 1 Using application portfolio management to optimize your organization s IT assets APM is a management framework designed to help IT decision makers optimize an organization s IT assets. It is used to align an organization s application portfolio with its business needs and the portfolio s infrastructure requirements. According to this definition of APM, an organization would implement the minimum architecture required by the data structure of the organization s legacy applications. However this minimum architecture would serve only to classify and structure a large amount of information. Business Capabilities Business Lines Application Core Systems Technology Processes Each application in an organization s portfolio contains attributes like version, lifecycle, cost, and user satisfaction, which are needed to analyze the portfolio and make decisions. Likewise, dependency on infrastructure must be assessed based on actual deployment of the application portfolio. While business aspects can be taken into consideration at a more general level, it is standard APM practice (as opposed to EA practice) to gather and manage a large amount of information, from thousands to tens of thousands of items. Users A large number of occurrences to collect and to manage Corporate Headquarters Regional Office office Departemental Departmental office Office Asian Office office European Office office American Office office Mexican... Office How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January

4 Moving your organization toward IT governance Rolling out a collaborative process broadly across an organization is an important element of APM projects. This type of decentralized process is useful for inventorying applications and gathering the attribute data needed to assess the application portfolio. Many APM projects get off track because IT managers underestimate the type and amount of information to be gathered. 1. Set up the right organization For an APM project to be effective, it is crucial to get people from across the organization with a wide variety of skills and responsibilities involved. Of course, the IT department will contribute resources, as will other corporate functions and IT staff from the organization s different business units. Securing the buy-in of all stakeholders is crucial, particularly during the inventory stage. The inventory must be as exhaustive as possible and must be completed within a relatively short timeframe before the gathered information becomes obsolete. Inventory Evaluation Transformation Application Managers Contributors Portfolio Managers Portfolio Managers Contributors Management Committee Project Team Portfolio Managers Management Committee APM projects raise the resource management issues common in most corporate-wide initiatives. If we take HR as an example, where basic employee data is used to calculate management indicators like average compensation per group, standard deviation, absenteeism, and breakdown of paid leave, the work required to collect this data should be performed by HR, but with the help of employees across the organization. 4 How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January 2013

5 2. Implement easy-to-use tools Given the resource management challenges that APM projects create, it is important to implement easy-to-use tools at all phases of the project, from initial data gathering to standard operations. Data entry should be as simple as possible, especially for non-specialist users, so that a maximum number of employees can contribute to updating the database. 3. Use analytics to optimize the portfolio Once the necessary data has been gathered and analyzed, the following aspects of the application portfolio should be assessed one by one: Compliance with IT architecture and categorization rules. Again, the comparison with HR is useful. HR departments issue rules about gender equality, mobility, and career management, and an effective HR management system must be able to verify compliance with those rules and provide recommendations in the case of non-compliance. Economies of scale among the IT assets deployed, like different versions of applications or operating systems from one site or server to another. Lifecycle management scenarios for each component of the IT system. The assessment should be based on cost models for the items of the portfolio being assessed. At this point in the project, the organization s IT department should use a financial or management control type of approach to assess the applications in the APM project. Evaluation of application portfolio costs and comparison of transformation scenarios How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January

6 The results of such assessments will be useful in making go/no-go decisions on future IT transformations, and call upon a variety of competencies across the organization. The corresponding workload should also be taken into account in APM process implementation. It is only after these assessments have been completed that APM can become a fundamental component of corporate IT governance. APM or, continuous IT lifecycle management is a bottom-up approach to business intelligence that leverages realworld information to inform IT governance. 2 Harnessing enterprise architecture to optimize your organization s information system and pave the way for transformation EA projects aim to optimize the dependencies among different components of an information system, and are used to generate scenarios for IT transformation projects. With these goals in mind, the key goal of the enterprise architect is to develop a common representation of the IT objects deployed across an organization. While such a representation is a purely practical condition for successful EA implementation in terms of reducing the number of objects to manage, it is also EA s main challenge. It is hard to imagine an enterprise architect efficiently working from a list of, say, 5,000 applications, plus the same number of procedures in use across an organization. The sheer volume would be overwhelming, and much of the information crucial to APM is completely useless when it comes to EA. The central idea of EA creating a common representation of the IT objects deployed across an organization constitutes an enterprise architect s main added value and greatest challenge. Moreover, this common representation must be updated each time the organization makes a strategic change, like adopting new software, sourcing methods, or breakthrough technologies. The clearer this common representation is (i.e., the easier the map of the system is to read), the more likely it is that the system s architecture is optimized. It is still common for the efficiency of a system s architecture to be measured according to its surface area or the number of artifacts or links it contains. EA best practices are designed mainly to reduce the perceived complexity of a system, either for management or rollout purposes or to prepare for a transformation. These practices are always based on a systemic approach and modeling languages. 6 How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January 2013

7 Here it is useful to draw an analogy with equipment design. The engineer responsible for designing a new piece of equipment may work from a simple sketch, more elaborate diagram, or sophisticated digital rendering. However, the engineer (or designer or architect) is neither an electrician nor a mechanic. Likewise, with EA, architects have skills different from those of IT developers or IT managers. Reducing perceived complexity through pooled resources When it comes to the applications in an information system, those described by an EA are different from those managed by an APM system (at a given level of complexity). More specifically, an EA pools the individual applications managed by an APM system, based on the EA s optimization criteria. Returning to our HR example, the specific SAP modules and custom developments for different countries, once pooled, would become the organization s European Human Resources Information System (HRIS). This is the basic idea behind a systemic approach. 1. Pooling resources to optimize IT architecture Reducing the number of objects at a given architecture level makes it easier to understand the interfaces that need to be set up among different objects. And as you move from one layer of the architecture to another, similar needs for application sub-assemblies also become clear. Reduce complexity through a modeled view of reality Business Architecture Application Architecture 2. Pooling resources to optimize the architecture of individual applications EA also makes it possible albeit at a more detailed level than that used in APM to ensure that the structure of a given application or system optimizes the pooling of services or resources, that it reduces interfaces to a minimum, and that it ensures coherency in terms of data access. At this level of detail we are no longer dealing with APM issues, but rather with how individual applications are built. How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January

8 3. Modeling tools Enterprise architects need tools that can be used in a top-down approach that starts with identifying the needs and specifications for a particular system. These EA tools should employ modeling techniques and offer graphics capabilities that can be used to describe, analyze, and compare different scenarios according to a set of criteria. EA projects can support system design and help ensure that the system will be built optimally, once again, by pooling resources and reducing the number of interfaces among objects. This is a design-driven approach to EA, and requires a highly specialized IT skill set. Therefore, the number of EA practitioners in an organization is usually much smaller than the number of people involved in an APM project. 3 Better together: How APM and EA can make your information system more efficient To get the most out of any information system, IT decision makers need to optimize both architecture (through EA) and deployment (through APM). Imagine an organization running different OS and software versions on different server configurations from one site to another a maintenance nightmare. Or consider the impact on user skill levels when documentation is not uniformly available across an organization. And, these are just two examples. Conversely, imagine an organization that strives to optimize deployment on an architecture that is less than ideal. Aligning APM and EA solutions APM and EA are different, and so are the tools associated with them. They offer different features and are designed for use by employees with different backgrounds and skill sets. And yet, IT decision makers can draw upon established best practices to create a governance system that integrates both APM and EA, and the tools associated with each. When APM and EA solutions are aligned, an organization s IT assets are more likely to be optimized. 8 How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January 2013

9 1. When the number of applications is small When the number of applications deployed in an organization is small enough not to interfere with system design in other words, when it is not necessary to pool resources the enterprise architect s role is complementary to that of an APM solution. In such cases, all people involved in optimizing the information system work with the same set of applications; architecture and deployment, along with conception and implementation Enterprise architecture cannot be the only influence: a poorly controlled deployment significantly reduces the benefits of any optimal architecture How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January

10 can be approached together. Data visualization should be specific to each role, and each role should have the tools it needs. For example, the enterprise architect will have design tools with the features discussed above, as will the people involved in APM. Navigation through the different layers of the information system should be at the same level of abstraction in terms of the descriptions of IT assets. 2. When resources must be pooled When the number of applications deployed and therefore the number of combinations of different criteria needed to perform APM assessments exceeds a given level, the enterprise architecture can be designed only based on a pooled view of the organization s IT. In this case, the enterprise architect is responsible for pooling resources and ensuring that the pooled resources inherit the attributes of their applications in the architecture. Navigation through the different layers of the information system is done from a different viewpoint: the architecture is evaluated in terms of standard representations of applications and assets are optimized according to a deployed view of the architecture. A deployment model is often used to ensure overall coherence; i.e., that the architecture has been taken into account in the APM solution and that everyday use of the information system is consistent with the architecture. 3. Bringing people together Regardless of whether a deployment model is needed to align an information system s design and management in order to optimize its overall architecture, it is crucial to get the right people on board. At the corporate level, a team of specialists assigned to the project should work hand-in-hand with IT staff across the organization. By sharing their know-how, methods, and expertise, IT staff at the corporate and business unit levels can deliver tangible benefits to an organization. And, working with a shared tool built on a single vision of the organization s information system can significantly increase the chances of success. 10 How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January 2013

11 Conclusion If you look at the different support functions in charge of managing an organization s key resources finance, HR, and IT it quickly becomes clear how important efficient IT asset management is to the organization s success. Furthermore, IT asset management is where many CIOs shine, demonstrating a capacity to orchestrate vast, increasingly decentralized, and progressively complex information systems, often without specialized tools or practices. Taking the finance function as an example, it is hard to imagine a corporate finance department that is not required to comply with specific rules and regulations. A properly-run corporate finance function requires clearly-defined roles, processes, and procedures. Today, specialized finance-function ERP modules have been developed to help CFOs deploy established best practices. The same holds true for HR: can you imagine a VP of HR who isn t aware of his company s headcount, organizational structure, or compliance with labor laws in the countries where his company operates? Like finance, HR now has powerful software to automate payroll, ensure regulatory compliance, and track career development. In other words, HR has the tools it needs to optimize its assets with regard to the organization s strategy. Two means to the same end The examples cited above are simple illustrations of how addressing architecture and resource management together can bring value to an organization. Architecture is akin to determining a set of rules. In finance, this would be the accounting principles; in HR, it would be the corporate HR policy. Resource management looks at how resources are deployed with regard to an organization s rules. Both architecture and resource management are crucial to optimizing an organization s operations, especially when there is a large volume of resources to manage. In terms of IT assets, the same principles of effective governance apply. To streamline and optimize IT assets, you need both EA and APM solutions. Integrating APM and EA solutions via a single platform that covers all project roles, thereby letting all stakeholders work together effectively, ensures continuous optimization of their organization s information system, including through architecture-related design practices. How Application Portfolio Management and Enterprise Architecture Add Up to IT Governance - MEGA January

12 MEGA January 2013

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