Microsoft IT Experience in Application Portfolio Management

Paul SlaterThis is the second and final part of a guest post from Paul Slater, an intellectual property development architect from the Enterprise Strategy team within Microsoft’s Services organization. In this part of the series he discusses important considerations for successful application portfolio management.
One of the best parts of being an architect in the Enterprise Strategy Program is that we get to work directly with customers, and learn from the challenges and solutions they face. In part 1 of this blog post I focused internally on Microsoft IT’s journey in application portfolio management. For this second part I’m going to provide four key recommendations for successful application portfolio management, drawn from our experience consulting with internal and external customers.
In no particular order, the recommendations are as follows:
  • Build a competency, not a tactical function
  • Create a consistent repeatable process
  • Rapidly iterate portfolio management cycles
  • Don’t run before you can walk
Build a competency, not a tactical function
All too often, application portfolio management is linked to a specific tactical technology initiative, such as moving applications to the cloud, or moving to Windows 8. Organizations do just enough portfolio management to allow them to conduct these changes successfully, and then revisit the problem the next time that a forcing function occurs. The result? The approach to portfolio assessment is reinvented each time, and business groups are bombarded with requests for the same information. Portfolio assessments effectively become a tax on any IT-lead change.
By contrast, if you build application portfolio management as a core competency of the organization, you can be prepared for any unexpected business or technology change, such as a rapid merger or divestiture. You also can use your in-depth understanding of the application portfolio to prioritize IT investments, produce actionable roadmaps, and conduct effective workforce planning.
Perform bottom-up and top-down analysis
There are two fundamental approaches that can be used to gather an application portfolio inventory. The top-down approach answers the questions, “What is the business supposed to do?” and “What would the business like to do?” It starts with a set of defined business capabilities and then identifies all of the portfolio assets that fulfill those capabilities.
In contrast, the bottom-up approach answers the question, “What does the business actually do?” and involves gathering a raw list of all assets in the environment. Much of this can be done automatically, with tools that scan the environment for registered applications, devices and data, but it should also include manual registration of assets from the user population.
Most organizations need to combine the top-down and bottom-up approaches to ensure that they obtain a full picture of the IT environment.
Rapidly iterate portfolio management cycles
Application portfolios frequently change, and potential future states for the portfolio will evolve. Amidst this uncertainty, some organizations will spend months, even years, locked in ongoing analysis and not generating results. We encourage customers to move towards rapid assessment of the portfolio, identify urgent issues that must be dealt with - such as risk mitigation - and important areas that can provide added value, then close the cycle with value realization, and assessment against pre-defined KPIs. Each time the organization moves through a cycle, it can update those KPIs against improved competencies and new drivers.
Don’t run before you can walk
While this recommendation seems obvious, almost every customer with experience in application portfolio management has learned this lesson the hard way. In the world of portfolio management, this typically surfaces in the form of big goals for portfolio management, sometimes accompanied by the purchase of an expensive toolset. Internal resistance, poorly defined metrics, and immature processes will then frequently lead to failure, and increased resistance from the organization the next time around. As we work with customers, we focus on generating conditions for success. One of the first activities is to understand their capabilities in application portfolio management, and agree on a plan to execute at that level of capability, demonstrate success, and then build on that success.
As you consider these four recommendations, consider that these are a means to a greater end - that of generating additional business value through IT investments. Organizations with a strong core competency in application portfolio management have a base on which to improve their IT decision making, and to improve the value of their IT portfolio over time.
If you would like to learn more about the Microsoft approach to IT portfolio management, we recommend you contact your account representative about the Enterprise Strategy Program, or visit The Microsoft Enterprise Strategy Program is designed to help customers create a clear line of sight between their current and planned IT initiatives and their most important strategic goals. By combining expert support from an Enterprise Architect with direct access to Microsoft consulting and technical professionals worldwide, the Enterprise Strategy Program enables customers use IT resources more effectively to support business transformation goals.