Spreadsheets do not have the job of managing hundreds of applications. Only a structured plan can ensure your IT stack is not burdened with redundant or unused tools that waste funds and create security vulnerabilities.

An application portfolio management plan will assist you in:

Cut costs and save resources

Reduce security risks

Identify new opportunities

By doing this the proper way you can fit your applications to business objectives and make wiser investment decisions.

‍

What is application portfolio management?

Application portfolio management (APM) is the process of evaluating and managing an organization's software applications to optimize performance, reduce costs, and align technology with business goals. It ensures a streamlined, efficient, and strategic technology stack.

Application portfolio management is a framework that enables IT companies to strategically plan the roadmap for their application investments, accelerating your decision-making and reducing costs and risks. 

Application portfolio is a list of all the software applications you need to run a business. 

Managing these applications means making a decision based on core objectives, such as eliminating redundant applications, merging similar applications, retiring outdated applications, and optimizing security controls. 

An APM tool that adheres to these core objectives can effectively manage your application portfolio for success. 

‍

Why is application portfolio management important?

As companies grow, their IT environments become increasingly complex. More applications mean more licenses, integrations, and greater risks to manage. In the absence of structure, the cost increases and visibility becomes low. Application portfolio management (APM) is the solution to these issues because it helps to identify the application in business objectives and make sure that all of the tools provide quantifiable value.

‍

Here’s why it matters:

‍

• Deals with complexity: APM offers an organized system that helps IT teams to respond swiftly to evolving business requirements.
• Ensures visibility: Central view of all applications aids in the reduction of redundancies, monitoring activity in application and reducing the chances of risks associated with old or unnecessary tools.
• Store of information: The APM tools have a database of application information, dependencies, and usage, which is the source of the truth.
• Averts shadow IT: APM minimizes security and compliance risks by detecting unapproved applications.
• Maximizes cost and ROI: When data is correct, companies are able to negotiate more intelligent contracts, remove waste, and re-allocate the budget to more valuable uses.
• Promotes compliance and governance: APM provides controls, which allows the IT and finance teams to comply with regulatory mandates with ease.

Through APM, organizations have control, minimize risk, and have IT investments working hard towards growth.

‍

Benefits of application portfolio management

‍

Cost Reduction

 APM assists in getting rid of unnecessary and unused applications, which decrease the costs of licensing and maintenance. As IT leaders can monitor spend and utilization with dashboards, they can make wiser renewal decisions and can reshape budgets towards high-value applications.

‍

Business Innovation

 APM allows IT free capacity through the simplification of the application stack to concentrate on strategic activities. The ability of leaner portfolio to enhance agility also enables companies to embrace new technologies more quickly and be innovative without the burden of old tools.

‍

Risk Management & Compliance

 A current application inventory minimizes risks from outdated, unsupported, or shadow IT tools. APM tools often track lifecycle information, such as end-of-life dates, and support IT audits and compliance certifications.

‍

Strategic Alignment & Decision-Making.

 Having all the information on the portfolio such as the costs, lifespan, dependencies and business capabilities the leaders can assess the business value of each application. This allows making better decisions on what applications to retain, upgrade or retire in line with the organizational objectives.

‍

Operational Efficiency

 Application data can be centrally stored in one repository, which makes the overall governance and daily operations easier. IT teams have a clear picture of their application landscape, which can easily address the business requirements, integrations of new resources, and system performance.

‍

How to get started with application portfolio management

Application portfolio management (APM) is best achieved by dividing it into steps.

‍

Step 1: Gain Visibility of all Applications.

‍

•  This should start with a complete inventory of the IT assets.
• Establish the roles and responsibilities of the stakeholders.
• Organize and design data collection.
• Collect application data and augment it with cost, lifecycle, and usage data.
• Establish a mechanism of the introduction of new tools.

‍

Step 2: Evaluate Application Portfolio.

‍

 With the inventory, find out the redundancies, inefficiencies and optimization prospects.

• Objective analysis: Compare applications to KPIs such as lifecycle, cost, risk, dependency to vendors and supporting technologies.
• Subjective analysis: Obtain input regarding the application value and technical efficiency of the application by the owners of the business and IT.

‍

Step 3: Evaluate and Rank Applications.

‍

Rate applications and validate KPIs across departments. This helps prioritize investments and allocate resources to the most valuable applications for the business.

‍

Step 4: Integrate the Application Landscape.

‍

 Discontinue tools that are unnecessary or not used, combine overlapping applications, and phase out obsolete systems which are difficult to support. A slimmer portfolio enhances nimbleness and reduces expenses.

‍

Application portfolio management: Best practices to achieve results using an strategy

Here are some best practices to make your APM strategy effective:

Aim for comprehensive monitoring

• Form a core APM team with defined roles
• Regularly track and report on key application metrics

Build rapport with internal teams

• Collaborate with program managers, resource managers, portfolio managers, and finance
• Align with teams leading digital transformation initiatives

Finalize key metrics and transactions

• Define the essential metrics to run analysis
• Add more as needed to improve decision-making

Build a communication plan

• Involve decision makers and data owners
• Ensure quick and effective responses to issues

Develop clear terminology for audits and surveys

• Standardize terms used in surveys and audits
• Save time by clarifying expectations upfront

Start with training a small group of data suppliers

• Test with a pilot project before scaling
• Collect feedback, resolve bottlenecks, and refine processes

Broadcast outcomes at every step

• Share both successes and failures with stakeholders
• Keep everyone informed to build transparency and trust

Leverage industry benchmarking data

• Compare your application portfolio health with peers in your industry
• Use benchmarks on cost per application, average number of apps per employee, and renewal cycle efficiency to identify improvement areas

Set the right review frequency

• Conduct quarterly reviews for tactical decisions like renewals and redundancies
• Run annual portfolio reviews to re-align IT with business strategy and innovation priorities

Define success metrics and KPIs

• Common APM KPIs include:
  
  • % of applications mapped to business capabilities
  • % reduction in redundant apps year-over-year
  • Average cost savings from rationalization
  • Time taken to approve or retire applications
• Track ROI from APM by measuring spend reduction and IT agility gains

Prepare for common challenges

• Data gaps: Start with available data and refine with each review cycle
• Resistance to change: Run workshops and highlight cost savings to get buy-in
• Tool sprawl: Use automation and centralized dashboards to simplify visibility

Resource constraints: Start small with critical apps, then scale

‍

Application portfolio management for SaaS tools

Considering the state of businesses today, more and more applications are moving to the cloud—mostly SaaS. Access to applications is easier, so is their adaptation. 

You must catch up with the latest release to stay competitive and functional. This dynamic nature of SaaS complicates application portfolio management and stresses its criticality. 

SaaS sprawl and lack of a centralized system makes it crucial for SaaS companies to have a SaaS-conscious application portfolio management. This entails incorporating SaaS into enterprise application portfolio management, allowing companies to have complete visibility and control over their application portfolio.

However, the decentralization of SaaS solutions has given rise to shadow IT, where employees can easily purchase and upgrade SaaS tools for productivity and efficiency as needed. Without oversight and approval from IT teams, it becomes challenging for them to effectively manage costs and address vulnerabilities in their security systems.

To address this issue, the SaaS application portfolio should have a consistent program in place. This should be an ongoing process integrated into the company’s operations to ensure continuous management. This process ensures that all applications, including SaaS, comply with the rules and provide the best value for money.‍

‍
Use Spendflo as a SaaS Solution for managing your application portfolio 

Spendflo is an all-encompassing SaaS procurement platform. It enables companies to establish effective application portfolio management systems that tackle the challenges posed by SaaS. 

Spendflo enables you to:

• Gain full visibility of your SaaS portfolio
• Streamline existing and available licenses
• Optimize your SaaS portfolio to save costs
• Oversee renewals to weed out redundant applications
• Implement a governance and compliance framework across your business.

without any decline in performance. You will be able to utilize the evidence-based insights to achieve higher ROI without sacrificing the advantages that come with SaaS.

‍

Wondering how you do that? Book a call today and get a free analysis.

‍

Frequently Asked Questions

‍

1. How does APM align with IT strategy?

‍

Aligned with business and IT goals. Mapping apps to business capabilities will enable IT leaders to make decisions regarding which tools will propel growth and which will introduce unnecessary expenses. This is the alignment, which brings IT to the strategic partner rather than the support feature.

‍

2. What's the difference between APM and application rationalization?

‍

 APM refers to the constant monitoring, evaluation, and maintenance of all the applications within the company. Application rationalization is a part of APM, which is concerned with deleting redundancies and lowering the expenses. In simple terms, APM is a continuous governance whereas one of the products of such a process is rationalization.

‍

3. How frequently should portfolios be reviewed?

‍

 Portfolios must be reviewed annually to ensure that they are aligned with business strategy, and quarterly reviews should be done to check in on renewals, costs and risks. More frequent reviews might work in companies with high growth or SaaS-intensive businesses. Constant cycles maintain your IT landscape lean and relevant.

‍

4. How does APM support digital transformation?

‍

 By freeing up budgets tied to unnecessary tools and enhancing agility. It also provides a view of the existing IT stack and will lead to the quicker uptake of emerging technologies. APM can be a source of digital transformation by making sure that applications are aligned with business objectives.

‍