Application Portfolio Management—An Integrated Framework and a Software Tool Evaluation Approach
Communications of the Association for Information Systems
Volume 26 Article 3
1-2010
Application Portfolio Management—An
Integrated Framework and a Software Tool
Evaluation Approach
Daniel Simon
act! consulting
Kai Fischbach
Department of Information Systems and Information Management, University of Cologne, XXXXXXXXXX
Detlef Schode
Department of Information Systems and Information Management, University of Cologne
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Simon, Daniel; Fischbach, Kai; and Schoder, Detlef (2010) "Application Portfolio Management—An Integrated Framework and a
Software Tool Evaluation Approach," Communications of the Association for Information Systems: Vol. 26 , Article 3.
DOI: XXXXXXXXXX/1CAIS.02603
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Volume 26 Article 3
Application Portfolio Management—An Integrated Framework and a Software
Tool Evaluation Approach
Daniel Simon
act! consulting
Kai Fischbach
Department of Information Systems and Information Management, University of Cologne
XXXXXXXXXX
Detlef Schoder
Department of Information Systems and Information Management, University of Cologne
Despite the growing number of organizations that have lost track of their application landscape and have suffered
from a sharp increase in application portfolio complexity, a comprehensive and systematic approach to Application
Portfolio Management (APM) still appears far from being adopted. To move the adoption process along, this paper
develops a comprehensive framework assimilating and extending previous research and presents an APM process
comprising data collection, analysis, decision-making, and optimization phases. This paper also presents an
approach for evaluating software tools for APM and identifies which software tool families are best able to provide
support for specific purposes. With this integrated conceptual guideline for APM and its translation into a model for
measuring appropriate practical support, this paper not only allows for a move more deeply into the research area
ut also offers advice for both researchers and practitioners.
Keywords: enterprise architecture, IT planning, IT architecture, information technology management, tool
Volume 26, Article 3, pp. 35-56, January 2010
Application Portfolio Management—An Integrated Framework and a Software
Tool Evaluation Approach
Application Portfolio Management—An Integrated Framework and a Software
Tool Evaluation Approach
36
Volume 26 Article 3
I. INTRODUCTION
Today many organizations face the challenges that come with a heterogeneous, nontransparent and vast application
landscape, mainly due to mergers and acquisitions and rapid growth [Betz 2007; Caruso 2007; Keller 2007; Molter
2005]. This complexity of the application landscape often entails several ―points of pain‖ with which a company must
cope, such as soaring application costs and insufficient support of business processes [Caruso 2007; Hafner and
Winter 2008]. As organizations realize their need to overcome these challenges, the concept of Application Portfolio
Management (APM) gains significance. Using APM, companies aim to reduce the application landscape‘s
complexity, especially through simplification and harmonization [Betz 2007; Kersten and Verhoef 2003; Molter 2005;
Swanson and Dans 2000]. The considerable savings on maintenance expenditures promised by APM have helped
spur awareness of its need and of the benefits that could accrue through its implementation [Kersten and Verhoef
2003].
While APM appears to have come to the forefront of many firms‘ attention, theoretical substantiation of APM has not
followed. For one, APM is not defined consistently, although discussion of APM is hardly new to the academic
literature. Moreover, publications dealing with APM have made little progress toward achieving an integrated view
that encompasses the concept as a whole. Hence, overall APM lacks a systematic and comprehensive approach.
Against this background, the paper‘s scope is the concept of APM and its integral elements, presented in a
comprehensive framework constructed according to the design science paradigm [Hevner et al. 2004]. The
framework includes these factors: drivers, objectives, risk factors, maturity, and, particularly, the APM process itself.
Our aim is to reduce the gap between APM in theory and practice. Furthermore, we aim to provide a
idge to the
APM software tools market by building a model, based on our framework, for evaluating software tools in terms of
their APM capabilities.
The remainder of this paper is organized as follows: Section II surveys research on the APM concept and related
issues. Section III provides a definition of APM. Section IV builds the APM framework step by step and, therefore, is
the essential part of this work. Section V builds on the framework and introduces the software tool evaluation model,
which we then apply to an initial set of eight tools. Finally, Section VI
iefly summarizes our findings and discusses
potential further research.
II. RELATED WORK
At its heart, the concept of APM stems from matrix-based portfolio approaches, classifying applications along
specific dimensions and deriving appropriate management action and investment allocation. A portfolio approach to
information systems was first introduced by McFarlan [1981], and there have been several subsequent attempts at
classification-based application portfolio analysis [e.g., Kwan and West 2004; Ward 1993; Weill and Vitale 1999].
However, there is little evidence of a
oader approach to managing the application landscape. MÃ¥rtensson [2006],
Hirvonen [2004], and Ward [1988] discuss part of the traditional approaches in detail. A more comprehensive
examination of APM is that of Maizlish and Handler [2005], which discusses the concept of APM as one pillar of
Information Technology Portfolio Management (IT PM) and offers a wide set of criteria for application analysis.
Fa
iek et al. [2007] make further contributions, proposing a method for application portfolio rationalization
comprising three major steps: assessment, evaluation, and planning. Similarly, Dern [2006] offers an extensive set
of criteria for analyzing applications, along with a process for portfolio analysis and planning. Like Dern [2006],
Riempp and Gieffers-Ankel [2007] delve into APM from an Enterprise Architecture perspective, emphasizing APM‘s
integrative nature by proposing different APM viewpoints, such as information technology (IT) strategy and IT
infrastructure.
Interest in APM has risen in recent years. Kersten and Verhoef [2003] stress the importance of a portfolio approach
to IT, with applications playing an integral part. Verhoef [2003] points to the role of source code analysis within a
portfolio approach to IT, particularly to estimate the cost of changes. Likewise, Caruso [2007] emphasizes the
necessity of APM for future IT, while Bahadur et al. [2006] stress the enormous impacts of application portfolio
configuration on business value. Similarly, van Wegen and de Hoog [1996] point out benefits that can accrue from
changes within the application portfolio. According to Swanson and Dans [2000], portfolio complexity is related
directly and positively to maintenance efforts, and increased maintenance efforts go hand in hand with a greater
overall life expectancy. Thus, organizations seeking to reduce portfolio complexity need a balanced approach:
Volume 26 Article 3
37
investing both in application maintenance, which prolongs the life expectancy of applications, and in new
applications. Groot et al. [2005] describe a ―picture approach‖ for analyzing, redesigning, and combining an
organization‘s applications to reduce complexity. In addition, Molter [2005] dives into portfolio complexity and
emphasizes the need to establish a process-oriented application landscape.
APM has also been a subject of discussion within a
oader research context that stretches across a wider set of IT
issues. Betz [2007] introduces the concept of the ―IT value chain,‖ in which ―Architecture, Portfolio and Service
Delivery‖ is an integral activity. Benson et al. [2004] develop the ―Strategy-to-Bottom-Line Value Chain‖ for
integrating different IT practices, such as ―Alignment‖ and ―Performance Measurement.‖ ―Portfolio Management‖ is
among the concepts that provide support for these practices, with APM serving as a major component. Bloem et al.
[2006] discuss how IT Governance may work in the face of cu
ent compliance pressure and identify the principles of
IT PM as promising great support. In particular, they present some practical lessons for IT PM.
As already indicated, APM is tied closely to the concept of Enterprise Architecture.
1
Keller [2007] provides further
evidence of the utility of approaching APM from an architectural point of view, advocating APM as a major Enterprise
Architecture process. Hafner and Winter [2008] are also concerned with an organization‘s application architecture
and propose a generic process model for its management, though this appears to stop short of offering any
comprehensive advice on how to analyze applications along multiple dimensions and then put that analysis to use in
making decisions on a portfolio-wide level—advice we consider essential in our approach.
It is interesting that Longépé [2003] promotes an ―u
anization‖ approach to information systems, that is, drawing an
analogy between the building, improvement, and maintenance of an organization‘s information systems and those of
a city. Similarly, Namba and Iijima [2004] advocate a ―city planning‖ approach to information systems. In addition,
the field of ―Software Cartography,‖ which deals with systematic visualizations of the application landscape,
deserves closer attention. This is detailed, for example, by Buckl et al. [2007b]. To create such visualizations and
manage the portfolio effectively, Buckl et al. [2007a] describe a pattern-based approach for constructing
organization-specific architecture information models. From a practical point of view, Ernst et al. [2005] and Matthes
et al. [2008] present a fine-grained tool evaluation in the field of ―Enterprise Architecture Management.‖
All in all, though, a systematic assimilation of APM methods, issues, and its practical application still seems to be
lacking. This motivates the development of our approach presented in this paper.
III. CONCEPTUAL FOUNDATION
Generally speaking, a portfolio can be considered a collection of items grouped together to facilitate their efficient
and effective management [Benson et al. 2004; IT Project and Portfolio Office, University of Utah 2008]. Considering
an application as a special class of software that provides direct support for business processes [Maizlish and
Handler 2005; Riempp and Gieffers-Ankel 2007; Lankes and Schweda 2008], an application portfolio simply
describes the sum of all applications run by a specific organizational body [Riempp and Gieffers-Ankel 2007].
2
The literature offers a variety of views with respect to a definition of