Dear Dr. Yeahbut …
Every time I turn around I read that IT needs application portfolio rationalization (APR).
I’m the newly appointed CIO in a mid-size (~$5B revenue) financial services enterprise. I’ve been reading the usual sources for these things and find the logic in favor of APR compelling. On the other hand(s) I find the logic in favor of another half-dozen or so management initiatives equally compelling. And I’ve been reading KJR long enough to remember your thoughts on the importance of maintaining focus (“Nailing governance,” 8/7/2006), which I find even more compelling.
I know we can’t do everything we really ought to do, which brings me to my question: What’s your take on APR? Should this make my top-three list?
You’re a consultant, so I know your answer will be “It depends.” What I want to know is what it should depend on.
– Seeker of Free Wisdom
Before I can answer we’ll have to wade through something that’s frequently misrepresented or misunderstood, starting with the phrase itself.
APR is built around a metaphor – that IT can manage its application portfolio the way investors analyze their financial portfolios.
If you’re an investor, you assess and constantly reassess the funds and individual equities that constitute your portfolio. You determine their health and anticipated future value, use that insight to assign a disposition – buy, hold, partially divest, sell – to each of them, and act according to those dispositions.
APR theory says you should do think about your applications portfolio the same way – assess each application’s health, assign dispositions accordingly, and act on those dispositions.
This theory isn’t so much wrong as it is, as someone once put it, insufficiently right.
The applications your enterprise relies on to get its work done do constitute a portfolio. But (I am, after all, Dr. Yeahbut) that isn’t all they constitute.
That’s because of a fundamental and retrospectively obvious difference between a financial portfolio and an applications portfolio: With financial investments, buying or selling shares in a particular fund or equity has little impact on your investments in any of the other funds and equities you own. But in a portfolio of applications, you can’t decommission an application or replace it with another with impunity.
Beyond the portfolio view of its applications, IT also needs to consider them from the perspective of holistic design.
Holistic design is the difference between a pile of lumber, Romex, screws, nails, and so on and a structure you can inhabit. (Okay, this isn’t the best metaphor I’ve ever come up with, but let it go – it isn’t a rabbit hole worth falling into.)
Holistic design is how you figure out which collections of applications the enterprise needs to support each of its major areas of functional responsibility, how the applications within each collection interconnect to provide complete solutions, and how the collections interconnect with all of the other collections to support the enterprise-level need for information integration and process standardization.
In theory, if you’re handling holistic design well you wouldn’t need APR, because your holistic designs would determine exactly which applications you need and where you need them.
But as Benjamin Brewster once said, “In theory there is no difference between theory and practice, while in practice there is.”
Bob’s last word: When it comes to an organization’s applications environment, it turns out the holistic and portfolio views aren’t just equally important.
More than that: APR is usually chartered as a once-and-done project. It takes the application inventory and, if you’re smart, your holistic application design as inputs, and produces a remediation roadmap as its primary output.
But (there’s that word again) … there’s a lot more to the story than that. But we’re out of our self-allotted space this week, so the rest will have to wait.
Bob’s sales pitch: This is a big, complicated subject, and there’s only so much I can handle in these weekly bite-size chunks. So more next week. And if you need a more in-depth conversation than what fits into this format, you know who to call.