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This content is part of the Essential Guide: Project prioritization and portfolio management guide for CIOs
Definition

application portfolio management (APM)

Application portfolio management (APM) is a framework for managing enterprise IT software applications and software-based services. APM provides managers with an inventory of the company's software applications and metrics to illustrate the business benefits of each application.

An APM system uses a scoring algorithm for generating reports about the value of each application and the health of the IT infrastructure as a whole. By gathering metrics like an application's age, how often it's used, the cost it takes to maintain it and its interrelationships with other applications, a manager can use more than just an educated guess to decide whether or not a particular application should be kept, updated, retired or replaced. 

According to NASA's Office of the Chief Information Officer :

"[APM] is really about implementing a repeatable process to assess what we have, and, if an application is not performing or does not meet our architectural requirements, eliminating it and replacing it with a better performing application. We’re doing it to try and reduce the money we spend on maintaining existing applications (that don’t perform well) and freeing up that money to invest in new and better performing applications."

 

See also: balanced scorecard methodology, IT MOOSE management

 

Learn more:

Wikipedia says the two main categories of Application Portfolio Management solutions are generally referred to as 'Top Down' and 'Bottom Up' approaches.

Mike Walker writes about the Integration of Enterprise Architecture and Application Portfolio Management for the Microsoft Developers Network website.

The NASA Office of the Chief Information Officer website provides more information about the importance of application portfolio management.

"[APM] is really about implementing a repeatable process to assess what we have, and, if an application is not performing or does not meet our architectural requirements, eliminating it and replacing it with a better performing application. We’re doing it to try and reduce the money we spend on maintaining existing applications (that don’t perform well) and freeing up that money to invest in new and better performing applications."

 

This was last updated in April 2011

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Like the way Nasa describes what APM is for them. I don't necissarly think that the saving you find when rationalizing and optimizing your aplication portfolio - shouldgo to investin in new applications. It should be used to support business value wherever it coimes from (might be new invesmens in applications).
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