1

Implementation of Application Portfolio Management

Governance, Process, and Execution(The What and Why of APM)

February, 2006

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Presentation Agenda

Topic Slides

Approximate Times

(Minutes)Perspectives and Overview

of APM

Concepts, Processes, and Practices of APM

Implementation of APM in NC State Government

Questions

Total Time 60

3 -10

10 - 24

24 -36

10

15

20

15

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Portfolio ManagementPortfolio Management is:

A collection of items grouped together to facilitate efficient and effective management and optimally allocate fiscal, staffing, and other scarce resources. The purpose is to meet strategic business goals and objectives in the most effective and productive manner by appropriately considering key factors, such as desired returns or public value, initial and life cycle costs, architectural directions, risk profiles, and the inter-relations among investments. The objective is to make fact-based, data-driven, and analytics -oriented management decisions, using a consistent and disciplined approach within a well-defined governance structure.

Major Portfolio Management Tasks are:• Inventory and classify items in the portfolios.

• Perform relevant analyses – identify problems and opportunities, develop viable options, determine relevant criteria, ask the right questions, evaluate alternatives using pertinent information, and make decisions.

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Status of Implementation of Portfolio ManagementPhase/Type of Portfolio

Management EffortImplementation Status

and Timeframe

Investment (IPM)

In process - initial efforts in winter and spring 2006 as part of applications endeavor; more advanced capabilities will be implemented later as agencies are ready and need them

In process - winter and spring 2006

Applications (APM)

Topic Research and Purchase of Tool

Completed – performed in 2004 and early 2005

Completed – performed summer and fall 2005

Project (PPM)

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Summary of Findings of Keane/Gartner Legacy Applications Study – December 2004

• In the portfolio of approximately 900 applications: 40% are considered critical for department mission/strategy; 17% are enterprise (statewide) applications; and 75 of the applications processed by the state data center require 1-day return-to-service capability.• The statewide portfolio is relatively young, with an average age of 7.5 years – since 1997, from 70 to 90 new or replacement applications have been added each year to bring down the average age.• Health status is: 23% presenting functional, technical, or both problems; 50% with some problems, but manageable; and 27% healthy, with a prescription for continuing on-going operations and maintenance.• Remediation timeframes are: 11% require action immediately (within next two years), 35% require action in the near term (2 to 4 years), and 54% require action in the long term (4 to 6 years).• Although the immediate needs of the portfolio appear to be manageable, projections of its future status, if no remediation actions are taken, indicate an increasingly deteriorating condition as the applications age.

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Framework for Managing IT InvestmentsI. Strategic Business I. Strategic Business and IT Planning and and IT Planning and Investment Selection Investment Selection

and Budgetingand Budgeting- Investment Portfolio - Investment Portfolio

Management (IPM) – Build, Management (IPM) – Build, Buy, and/or Implement the Buy, and/or Implement the

Right AssetsRight Assets

III. Investment III. Investment Operation and Operation and

Maintenance, and Maintenance, and Renewal, Retirement, Renewal, Retirement,

or Replacement or Replacement - - Applications Portfolio Applications Portfolio

Management (APM) – Maintain Management (APM) – Maintain and Operate Assets in the and Operate Assets in the Right Ways and Retire or Right Ways and Retire or

Replace Them at the Right Replace Them at the Right Times Times

II. Project ImplementationII. Project Implementation -- Project Portfolio Project Portfolio Management (PPM) – Build and Implement Assets in Management (PPM) – Build and Implement Assets in

the Right Mannerthe Right Manner

Life Cycle of IT

InvestmentsIdentify investments that best:

• Enable governmental initiatives or agency missions and strategies

• Result in financial returns – revenue generation or cost savings

• Provide better constituent services or program effectiveness

• Fit technical architectures

• Satisfy budget, staffing, and other constraints

• Meet risk profiles

• Clarifying roles and responsibilities

• Providing appropriate oversight

• Ensuring they are well planned and thoroughly researched prior to starting

• Defining, tracking, and evaluating project progress frequently to achieve budget, schedule, scope, and quality expectations

• Completing them successfully so that business goals and objectives are realized

Manage projects by:

Operate and maintain assets so that:

• Benefits/costs are optimized over their useful lives through astute and timely renovations, consolidations, or eliminations

• Services offered meet availability, reliability, security, quality, and recoverability expectations within acceptable budgets

• Retirements and replacements are effected when assets are no longer cost-justified or risk-acceptable

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Processes andInformation

Business

Data and Work Tools

Applications

Technical Infrastructure

Drives

Prescribe

Enabled by

Supported by

Business / IT Alignment

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NC is not Alone in Implementing APM - Gartner Prediction for 2006

Gartner predicts that 40% of large public and private enterprises will implement application portfolio management in the next two years. The reason for the rapid growth in the use of APM is other companies and government entities have achieved successes in cost reduction, managing the complexities of hundreds of established assets, and improving budget process effectiveness.

Applications portfolio management is critical to understanding and managing the 40 percent to 80 percent of IT budgets devoted to maintaining and enhancing software. Most organizations don’t track established applications over time to ascertain return on investment (or to determine which should be disposed of), and few manage application portfolios with tools. In other words, these organizations haven’t truly associated the substantial amount of money they’re spending with what they are spending it on.

Gartner Research Note “Predicts 2006 Reacting to Application Development Challenges With Management and Automation” dated November 15, 2005

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Reasons for Applying APM Concepts and Disciplines to Existing Applications

1. Identify and catalogue all applications – know what you have and what they do in order to manage them.

2. Track and communicate technical and business status of applications to identify problems and take advantage of opportunities.

3. Enhance the alignment of applications with agency strategies and technical architectures to improve support of business processes.

4. Identify and eliminate or replace applications that are redundant, high-risk, low-performance, or high-cost (especially O&M).

5. Develop a multi-year management decision roadmap to optimize benefits/costs and minimize risks over application useful lives.

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Primary Goals for Managing Applications• Reduce maintenance and support costs –

provide a source of funds for new investments.

• Align IT with business – better satisfy business priorities and evolving needs.

• Fund the right application remediation efforts – maximize benefits/costs for dollars spent.

• Coordinate and prioritize IT investments – there is not enough money to do everything, so do the right things.

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Seems to run forever, but ultimately has a finite business, economic,

and/or technical life

Sources of Risks

Issues Surrounding Systems ObsolescenceOver time, sustainability of applications becomes questionable due to age and

technology advances, combined with changed business needs. They no longer:a) support business goals and objectives, b) are cost-effective to operate or maintain, and/or c) are risk-acceptable by presenting too great a likelihood of failure with

cataclysmic consequences.Business Issues

Impediment to the implementation of new and more cost-effective service delivery models – unable to respond to demands for new functionality, support business processes, or provide adequate and secure information access

Becomes a constraint in meeting regulatory requirements

Staffing issues - Unavailability of Skills Unavailability of staff skills or expertise to maintain Unavailability of third party vendors Dependency on individual contractors

Technology issues Expired warranties, with no vendor support Can not handle increased usage or volumes of data Does not run anymore on available platforms Inefficient IT resource utilization Used beyond original intent, and cannot be enhanced Cannot meet security, privacy, or confidentiality requirements Are not easily recoverable for disaster recovery and business continuity System can fail, with untraceable error Inconsistent or inadequate information and data quality Not compliant with state or agency technical architectures

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Business

Technology Financial

Application Portfolio Application Portfolio Analysis PerspectivesAnalysis Perspectives

• Do we have the right capabilities in place?

• Are they aligned with business priorities?

• Where are potential synergies?

• Are there duplications?

• Are applications sustainable?

• Do they fit in the desired architecture?

• What is the technical migration road-map?

• Are they risk-acceptable?

• Do they present security, privacy, or disaster recovery vulnerabilities?

• How do we maximize overall value?

• Can costs be optimized across the organization?

• To what extent can innovation and new applications be funded by cost savings?

• Do they cost too much to operate or maintain?

Key Concepts: Analysis PerspectivesBusiness, technology, and financial perspectives are combined to determine the posture of the application, indicate the appropriate remediation strategy, and to provide recommendations for managing the application portfolio over time

General idea – action is required when an asset is not cost-effective or risk-acceptable (it is worn out, no longer technically fits, or costs to much to keep)

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Applications Portfolio Inventory and Classification

• General – ID, business owner, age, etc.• Business processes enabled/supported• Business value/criticality• User information• Functional quality

– Present business requirements– Future business growth and new business needs

• Technical quality– Architectural compliance– Operations and maintenance – support of or detriment to

• Costs– Operations– Maintenance and technical support

• Risk profile• Disaster recovery/business continuity status

Key Attributes for Each Application

Attributes can be unlimited – use potential for compelling analyses (usefulness) and ability for consistent refresh as decision criteria for the selection of them.

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Applications Portfolio Inventory and ClassificationWho Knows About Particular Attributes:•Public Users (State’s Citizens and Businesses)•Users From Other Government Entities•Business Users•Managers and Executives•IT Managers•Technical Architects•Application Developers•Application Maintainers•IT Operations•Help Desk•Business and IT Security and DR/BC Staff•Financial, Accounting, and Budgeting Personnel

Sources of information can (and maybe should) be numerous – don’t overcomplicate, but ensure that all perspectives are offered and data is fact-based, reliable, and complete.

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Analysis of Applications Portfolio - Basics• Business leaders

– What are strategic business drivers?– Which apps fit drivers (contribute to business)? Which do not?

• Users– Which apps meet business needs? Which are lacking?– How many users are dependent on app? What are the

vulnerabilities and what are the impacts of outages.• Business analysts

– Which apps have accessible, complete, actionable, accurate, and timely data? Which do not?

– Which apps enable business process reengineering? Which do not?• Applications maintenance

– Which apps require the most maintenance effort and expense? Which are scalable and adaptable? Which are not? Which are most reliable and maintainable? Which are not?

• Help desk– Which apps generate the most trouble tickets?

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Analysis of Applications Portfolio - Basics• Technical architects

– Which apps contain components that comply with agency and statewide technical architectures? Which do not?

– Which apps contain components that are beyond vendor support – aged releases and/or removal of product support?

• IT managers– Which apps have reliable and dependable vendor maintenance support

– either in-house or outsource? Which do not?– Which apps do not integrate (share data) well? How critical are the

these apps to the performance of other applications supporting critical business processes?

– Which apps have performance problems? What are the business and cost impacts of these? Can they be rectified?

– Which apps are subject to determinable vendor mergers or acquisitions? What are the consequences, and how can they be mitigated?

– Which apps have questionable risk profiles – security; DR/BCP; vendor viability; regulatory compliance; HR risk from staff retirement; privacy and confidentiality; and/or information availability, quality, and retention?

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Application Portfolio Management -Approach for Assessing and Managing

Applications

Step 2 - Analyze Portfolio

No

Yes

Step 3 - Manage Portfolio

Step 4 – Optimize Portfolio

Near-Term Action

Needed?

Incorporate Results

in Business and IT

Planning and Funding Request

Processes - Investment

Portfolio Management

Next Steps

Data Collection, Analysis, and Decision-Making ProcessStep 1 - Build and

Maintain Inventory

Approximately 50% of UMT database updated from data used in Keane/Gartner study

Create and Maintain Inventory in UMT

Portfolio Management Software Tool

Assess Overall Posture of Application

Business Status?

Technical Status?

Determine if Remediation (Other Than

Regular Ongoing Support and Maintenance) Required and

Develop Life Span Transformation

Roadmap

Evaluate Business Importance and

Criticality of Problems or Opportunities – Prioritize, Specify

Timeframe for Action, and Determine Costs

and Benefits

ContinueRegularSupport & Mainte-

nance

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Expensive to operate or maintain None or decreasing vendor support for major components Insufficient or decreasing availability of staff support Can not enhance for new business requirements Inefficient IT resource utilization Inadequate data access and quality Vulnerable security Recoverability difficult or suspect Not compliant with state or agency tech. architectures

Cost-effective to operate and maintain Adequate vendor support for major components Adequate availability of staff support Can enhance for new business requirements Efficient IT resource utilization Adequate data access and quality Adequate security protection Resilient to human-induced or natural disasters Compliant with state and agency tech. Architectures Easily recoverable

Meets present service delivery needs Meets anticipated needs for new services,

business process reengineering initiatives, and information access

Protective of individual privacy and data confidentiality

Creates inefficient and less effective service delivery processes

Constraint on implementation of new services, expanded citizen benefits, and/or more efficient business processes

Individual privacy and data confidentialityat risk

Business Perspective

Low High

High

High Attention Zone – Both

Business and Technical Risks

Safe Zone

Warning Zone – Not Making Best Use of In-Place Technology

to Meet Business Needs

Warning Zone – High Technical

Risks

Application Portfolio Management - Determining the Posture of Applications

Technical Perspective

Safe Zone

Generic criteria are defined to assess applications from a business and technology perspective

Bad

Good

GoodBad

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Options for Life Span Transformation Roadmap

• Technical renovation/enhancement, such as re-host, employ Service Oriented Architecture (SOA) or Web services architectures to modernize, recode, update database management software, etc.

• Functional enhancement.• Replace (COTS, GOTS, or custom development) and

retire.• Sunset/eliminate.• Consolidate with applications performing the same or

similar business functions.• Consolidate with multiple diverse applications as part of

an agency wide or state wide initiative.• Continue maintenance.

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Application Portfolio Management - Remediation Approaches

Replace - if possible, with Commercial or Government Package:• If low business value, probably doesn’t justify custom code renovation or replacement• Consider elimination or consolidation

No Technical Reengineering:• Re-host candidate• Functional enhancement• Tolerate or invest

Low Priority Technical Reengineering:• Low maintenance and support costs• Provides value as is• Regular support and maintenance

Technical Perspective

Business Perspective

Good Technical Reengineering Candidates:• High business value means quicker ROI• Renovation will improve support and maintenance costs

High/Good

High/Good

Low/Bad

Low/Bad

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Application Portfolio Management - Investment Selection and Prioritization

•“At Risk/Critical” are highest priority were level of risks drive (broader) remediation activities

• “Limited Risk/Critical” applications are second priority compared to critical/at risk

• “At Risk/Less Critical” applications are also second priority for remediation, especially if risks can be mitigated

• “Limited Risk/Non Critical” applications should be reviewed to minimize technology investments and look for opportunities to consolidate or substitute for better solutions

Overall Importance

to Organization

Low High

High

Selectively

Second Priority

Business/Technology Risk or Urgency

Second Priority

First Priority

At Risk / Critical

Limited Risk / Non Critical

Limited Risk / Critical

At Risk / Less Critical

Prioritization and timeframe for action is driven by overall importance as well as risks.

In addition prioritization is driven by:

– Specific business initiatives, programs, and/or funding streams available

– Overall risk issues, interrelationships between applications, and the general need for modernization of legacy systems

Low

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APM is an Ongoing Process – Not Just a Project

• Identify expansion budget requests for:

– Long (biennial budget) session of General Assembly

– Short (2nd year of biennial budget) session of General Assembly

• Assist in preparation of BCPs

• Provide IT cost data to OSC for annual report submitted to General Assembly

• Identify funding needs from other sources, such as federal funds

• Assist in making decisions for or documenting changes due to:

– New implementation projects

– Additions, renovations, or upgrades to technical infrastructure

– Renovations/modernizations to applications

• Provide answers to ad hoc questions

Examples of How APM Information Will be Used by Agencies

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Overview of IT Portfolio ManagementAgency Missions and Vision and Business Goals and Objectives

Statewide and Agency IT Plans

Application Portfolio Management

Project Portfolio Management

Investment Portfolio Management

Identify Problems and Opportunities

Funded New ProjectsManage

Portfolio

Analyze Portfolio

Optimize Portfolio

Build and Maintain Inventory

Develop Business Drivers and Business Cases

Analyze Candidate Investments

Adjust Project Portfolio

Assess Value of Projects and Portfolio

Manage Portfolio

Implement Projects

Select and Plan Investments

New or Renovated Applications

Proj

ect

Prop

osal

s for

App

licat

ions

Ren

ovat

ions

,

Ret

irem

ents

, or

Rep

lace

men

ts

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Conclusions• Applications swallow cost, time, and management bandwidth, while

increasing risks – unless they are well managed to reduce complexity and risk and retired or consolidated in a timely fashion, the entire IT budget will be operations and DR/BCP will be unaffordable

• Creating a portfolio view of existing applications does not have to be complicated; focus on the basics and the big picture – let the software tool highlight problem areas and offer improvement opportunities for management decision making

• Benefits of APM are clear;– Investment decisions for elimination, replacement, or remediation are made in a

consistent manner considering application risks, value/importance to organization and its priorities, most effective use of personnel, and life span optimization of costs/benefits

– IT complexity is reduced; thereby, maximizing business value received while minimizing IT cost incurred

– Planning for DR/BCP is facilitated to ensure continuity of operations– Risks are managed, and stewardship for assets is facilitated

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Inventory (Build and Maintain Inventory) Application identity and basic information

Financial (Analyze and Manage Portfolio) Detailed application-level costs and cost-effectiveness analyses

Assessment (Analyze and Manage Portfolio)

Risk, Operational Performance, Architectural Fit

Alignment (Optimize Portfolio) Process Inventory, contribution, function association Core Business Drivers, priorities, process

contribution

Application Portfolio Management Perspectives

Level I

(Ste

p 1

)

Level II

(S

tep

s 2

an

d 3

)

Level II

I (S

tep

s 2

an

d 3

)

Level IV

(S

tep

4)

InitialDeploymentFocus

Scope of Keane-Gartner Study

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Applications Portfolio Management ProcessTool Assisted Decisions Subjective Business Decisions

Transition to Executive Decision Making Process

Step 1 – Level I

Collect, Validate, and Maintain Data

(Build and Maintain Inventory)

Step 2 – Levels II & III

Perform Assessments

(Analyze Portfolio)

Step 3 – Levels II & III

Determine Dispositions and Life Span Transition

Roadmap

(Manage Portfolio)

Step 4 – Level IV

Determine Priorities, Timeframes, Costs, and

Benefits

(Optimize Portfolio)

Funding Requests

Investment Portfolio Management (IPM) Process

One-Time Work

•Transfer data from Keane/Gartner study

•Perform initial collection and validation of remaining data

Ongoing Work

•Perform data changes and validations as they occur

•Collect and validate data for implementation projects transitioning to applications assets

Major Data Elements

•ID•Costs•Business criticality

•Business processes enabled or supported

•Functional quality•Technical quality•Risk profile

Identify

•Business problems/issues

•Technical problems/issues

•Risk vulnerabilities, probabilities, and impacts

•Other problems/issues

Evaluate

•Status/Health (Good, Bad, Moderate)

•Value to organization (High, Moderate, Low)

•Risk of unrecoverable failure (High, Medium, Low)

Consider

•Cost-effectiveness

•Risk acceptability – status of

Identify

•Problems/opportunities

•Alternative approaches

•Best actions for managing application over expected life spans

•Mission criticality/importance to agency

Determine Whether To

•Invest additional funds (technical or functional enhancement or replacement)

•Sunset/eliminate

•Consolidate

•Replace and consolidate as part of an agency wide or state wide initiative

•Continue maintenance

Identify

•Dependencies on other applications and projects

•Costs/fiscal requirements

•Technical infrastructure requirements

•Benefits/value to accrue

•Alignment with state/agency priorities

Confirm and/or Develop

•Implementation approach

Determine Priorities and Timeframes

•Select priority for action (High, Medium, Low)

•Select timeframe for action (Immediate, Near-Term, Long-Term)

Potential Benefits for Selected Actions

•Cost savings from consolidate/eliminate applications

•Improvements in public service, reliability, recoverability, and security resulting from functional/technical renovation or replacement

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Comparison and Contrast of Keane/Gartner Study with APM Implementation Project

1. Database attributes for applications:

• K/G – all data collected by agencies and input by K/G staff from scratch

• APM – Approximately 50% of data elements transferred from K/G study and agency staff will both collect additional data and input it into UMT software tool

2. Annual maintenance and support costs:

• K/G – not included in data collection or analyses

• APM – included in data and an important part of analyses

3. Perspectives for analyses and future actions for applications:

• K/G – Single point-in-time assessment, analogous to annual physical

• APM – Long-term management plan, analogous to lifetime health/fitness plan

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Comparison and Contrast of Keane/Gartner Study with APM Implementation Project

4. Responsibilities for application assessments and action plans:

• K/G – K/G staff performed all analyses with agency review

• APM – Agency staff responsibility for performing assessments and developing life-span transition roadmaps

5. Follow-up to initial assessments and updating of attributes, analyses, and transition plans over time:

• K/G – Not within scope of study and little/limited follow-up to date

• APM – Frequent and regular, especially in response to budgeting and funding cycles and development of BCPs

6. Project planning, management, and reporting:

• K/G – K/G staff and State CIO project team

• APM – Each agency responsible for its performance and the meeting of schedules and quality, while the State CIO project team will provide overall coordination, training, and assistance to agencies

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Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 NC Holiday 3

Training Materials Review

4

Legacy Study roadmap complete

5 6

Training Materials ready for Beta

7

8 9 10

Beta Kickoff Meeting

11

Beta Basic Training

12

Beta Basic Training

13 14

15 16 NC Holiday 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

January 2006

Beta Implementation

Beta Implementation

Beta Implementation

Beta Implementation

APM Rollout Preparation

30

February 2006Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4

5 6 7 8 9 10 11

12 13 14

DENR Business Objectives

DPI Business Objectives

15

DENR Business Objectives

DPI Business Objectives

16

DENR Business Processes & Functions DPI Business Processes & Functions

17 18

19 20 21 22

DENR Level IV Advanced Training

23

DPI Level IV Advanced Training

24 25

26 27 28

Beta Implementation

Beta Feedback – Revise Configuration & Training

Beta Feedback – Revise Configuration & Training

Beta Implementation

Beta Implementation

Beta Implementation

31

March 2006Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3

Training materials ready for rollout

4

5 6 7

Wave 1 Kickoff

8

Wave 1 Basic Training

9

Wave 1 Basic Training

10 11

12 13 14 15 16 17 18

19 20 21 22 23 24 25

26 27 28

Wave 1 Business Objectives

Wave 2 Kickoff

29

Wave 1 Business Objectives

Wave 2 Basic Training

30

Wave 1 Business Processes & Functions

Wave 2 Basic Training

31

Wave 1

Wave 1

Wave 1

Wave 2

Wave 1

Beta Feedback – Revise Configuration & Training

32

April 2006Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1

2 3 4 5

Wave 1 Level III Charting Analysis

6

Wave 1 Level IV Advanced Training

7 8

9 10 11 12 13 14 NC Holiday 15

16 17 18

Wave 2 Business Objectives

Wave 3 Kickoff

19

Wave 2 Business Objectives

Wave 3 Basic Training

20

Wave 2 Business Processes & Functions

Wave 3 Basic Training

21 22

23

30

24 25

Wave 2 Level III Charting Analysis

26

Wave 2 Level IV Advanced Training

27 28 29

Wave 3

Wave 2

Wave 2

Wave 3

Wave 2

Wave 2

Wave 1

33

May 2006Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4 5 6

7 8 9

Wave 4 Kickoff

Wave 3 Business Objectives

10

Wave 4 Basic Training

Wave 3 Business Objectives

11

Wave 4 Basic Training

Wave 3 Business Processes & Functions

12 13

14 15 16 17

Wave 3 Level III Charting Analysis

18

Wave 3 Level IV Advanced Training

19 20

21 22 23 24 25 26 27

28 29 NC Holiday 30 31

Wave 3

Wave 4

Wave 4

Wave 4

Wave 4

Wave 3

Wave 3

34

Agency “To Do” List Before Start of APM Implementation – We Will Help Accomplish

• Develop approach for collecting and inputting application attribute data:– Application independence and autonomy (minimum central

control of data integrity or completeness)– More centralized input and quality control (managed approach)

• Develop approach for conducting application analyses work, reviewing results, and making decisions regarding life span transformation roadmaps

• Determine agency personnel that will participate in the project, and ensure each is scheduled for training, has the time availability to contribute to the effort, and calendars are updated to reflect time commitments

35

Agency “To Do” List Before Start of APM Implementation – We Will Help Accomplish

• Develop high level project plan, with key responsibilities, schedule/milestones, organization chart, etc.:– Appropriate to size, business and IT complexities, number of applications,

governing structure/relations, and culture of agency– Include sufficient numbers of personnel and appropriate representation from

business, IT, senior executive/management, and other types of agency staff• Determine whether agency desires to participate in Level IV (step 4) implementation –

voluntary option:– Significant participation and commitment from top executives, business managers,

and senior IT staff– May introduce needs for major cultural changes and considerable modifications to

long-standing business unit-to-business unit relations and business-to-IT interactions– May not be appropriate/useful for all agencies, and must request this optional

implementation effort through the State CIO

36Date Modified

3/15/2006

Major ActivitiesIdentify

Dependencies on other applications andprojects

Costs/fiscal requirements Personnel resource requirements Technical infrastructure requirements Benefits/value to accrue

Applications Portfolio Management (APM) Process

Identify

Major Activities

Problems/opportunities Alternative approaches Best actions for managing applications overexpected life spans

Determine Whether To

Step 1Collect, Validate

and Maintain Data(Build and

Maintain Inventory)

Step 2Perform

Assessments(Analyze Portfolio)

Step 3Determine

Dispositions andTransition Roadmaps

(Manage Portfolio)

Step 4Determine Priorities,

Timeframes, Costs andBenefits (Optimize

Portfolio)

Iterative Steps for Analysis of Applications

Tool Assisted Decisions Subjective Business DecisionsTransition toExecutive DecisionMaking Processes

Invest additional funds Technical renovation/enhancement Functional enhancement Replace (COTS, GOTS, or custom) and

retire Sunset/eliminate Consolidate Replace and consolidate as part of anagency wide or state wide initiative

Continue maintenance

Cost-effectiveness

Risk acceptability - status of :

Current and projected O&M costs andreasonableness with industry standards

Support for current business process andenabling of future business needs

Opportunities for savings in businessprocess operations (process efficiencies)

Opportunities for citizen serviceimprovements

Opportunities for savings in systemsmanagement and operations processes

Opportunities for savings in duplications ofbusiness functions

Opportunities for savings in the use ofshared technical infrastructure andcommon technical services

Opportunities to move to target agency andstatewide technical architectures

Opportunities to standardize andconsolidate technical infrastructure

Opportunities to eliminate or consolidateapplications

Opportunities to support / improve DR/BCP

Consider

Technology / Operations risks Business risks Continuing funding risks DR/BCP risks Regulatory compliance risks Security, privacy, and/or confidentiality risks

InvestmentPortfolio

Management(IPM) Process

IdentifyMajor Activities

Business problems/issues

Relations to and support of business processes Support of key business or political drivers Criticalities to agency missions and business goals

and objectives Key users and importance to them Resident business knowledge Enable/support regulatory compliance Dependences on and support for other applications Business continuity preparedness Gaps in business support - current and future

Technical problems/issues

H/W and S/W vendor support Resident technical knowledge Warranty expirations Availability, reliability, and maintainability Obsolete or dated technology Information availability and data quality/integrity Usability Enterprise architecture fit Adequacy of supporting technical infrastructure Use of shared technical infrastructure and/or common

technical services Security, privacy, and confidentiality Recoverability from disasters/failures (DR status)

Risk vulnerabilities, probabilities, and impacts Funding dependability and reliability Technical / Operational Business DR/BCP

Other problems/issues Cost performance (excessive costs and areas for

potential savings) Duplications of business functions among applications

Evaluate Status/Health (Good, Bad, Moderate)

Business Technical / Operational DR/BCP Funding

Value (High, Moderate, Low) Strategic for agency mission or governmental initiative Essential for business criticality or regulatory compliance Enterprise architecture fit

Risk of unrecoverable failure (High, Medium, Low)

Select priority for action (High, Medium, Low)Determine Priorities and Timeframes

Risks to be avoided/mitigated Strategic value Criticality to operations Savings generated Other benefits/value offered Costs Funding availabilities

Transfer and validate selectedrelevant data from Keane/GartnerStudy to software support tool

Perform initial collection andvalidation of remaining data

Major ActivitiesOne-Time Work

Ongoing Work

Perform data changes andvalidations as they occur

Collect and validate data forimplementation projects transitioningto applications assets

In-house or outsource COTS, GOTS, or technical or

business enhancement Phases of work

Confirm and/or Develop Implementation approach

FundingRequests

Select timeframe for action Immediate (with in next 2 years) Near-term (between next 2 to 4 years) Long-term (after next 4 years)

Major Data Elements

ID Name and description Business and IT owners Application type Business processes

enabled Business value/criticality User information

Costs (Internal Personnel,External Personnel, Hardware,Software, Other External Costs)

Functional quality

Data quality Application business

quality Technical / Operational quality

Architecture Operational

Risk profile

Security DR/BCP Vendor viability Regulatory compliance Business and IT staffing Information Privacy and confidentiality

Potential Benefits for Selected Actions Consolidate/eliminate applications

Operational cost savings (licenses, staff, etc.) Simplify DR/BCP, security, privacy, and

confidentiality Remove deviant from agency/state technical

architecture - reduce complexity Create funds for new projects/investments from

savings Functional/technical renovation or replacement

Transition to agency/state technical architecture Operational cost savings Better availability, reliability, and maintainability Improved citizen services Improved/reengineered business processes Improved data accessibility, action ability, and

quality/integrity Improved DR/BCP, security, privacy, and

confidentiality Easier adaptability and scalability Better enable/support regulatory requirements More reliable, available, and economical vendor or

agency support Enable/support business drivers or political

initiatives

37Adopted and Modified From: PMO Executive Council research.

PortfolioManagement

(PM)Components

Investment PortfolioManagement (IPM) -Build the Right things

(skill mix is 75%busines/financial and

25% technical)

Investment/project idea screening Portfolio definition Portfolio segmentation and prioritization Business drivers identification Risk identification and probability/impact analysis Technical and business architecture fit Business case development Investment/project evaluation and prioritization (strategic fit, financialanalysis, and value assessment)

Fiscal and personnel resource availability, prioritization, and allocation Investment governance structure and process

Required Competencies for Comprehensive and EffectivePortfolio Management

Revision Date11/22/2005

Project PortfolioManagement (PPM) -

Build Things Right(skill mix is 75%

technical and 25%business/financial)

Project management methodology and standards (PMI) System development methodology and standards (IEEE) Project governance and organization structure and process Project planning and management Project manager coaching and development Compeititive bidding readiness Business/user readiness assessment Business case realization tracking Status tracking and reporting Requirements definition Fiscal and personnel resource estimation Stage-gating and ongoing reviews Design and technical architecture review Test planning and management Rollout planning and management Risk management and mitigation Quality assurance management Vendor and outsourcing management Service/operations management Security review Data confidentiality and personal privacy review Disaster recovery and business continuity planning Post implementation review

ApplicationsPortfolio

Management (APM) -Operating,

maintaining, andrenovating/retiring thethings in the inventoryof applications stock(skill mix is equallydivided between

business/financial andtechnical)

Service/operations management Technical and business architecture fit Vendor assessment for hardware/software support Technical and business knowledge availability Current and future strategic fit Business needs suitability Cost-effectiveness analysis Disaster recovery and business continuity planning Risk acceptability analysis Asset life cycle planning and management Investment governance structure and process

38

Contact Information

• Tom Runkle – Tom.Runkle@its.nc.gov– 754-6677

• Jim Tulenko– Jim.Tulenko@its.nc.gov– 754 – 6606

• Charles Richards– Charles.Richards@its.nc.gov– 754 - 6612

• Barbara Swartz– Barbara.Swartz@its.nc.gov– 754 - 6657