Importance of Application Portfolio Management and Its Process

by avinash v

Definition of Application Portfolio Management (APM)

Application Portfolio Management (APM) is the process of managing and maintaining a company's collection of software applications in order to optimize their performance, cost, and value to the business. It involves analyzing, classifying, and prioritizing the applications within the portfolio based on factors such as their business value, functionality, complexity, and risk.

The goal of APM is to ensure that the right applications are being used effectively and efficiently, and to reduce the costs associated with maintaining unnecessary or underutilized applications.

APM Process

Importance of APM In Modern Businesses

In today's digital age, businesses are increasingly reliant on software applications to manage their operations, serve their customers, and drive growth. However, managing a large and complex portfolio of applications can be a daunting task for any organization. This is where Application Portfolio Management (APM) becomes crucial.

APM helps businesses to gain a better understanding of their application landscape and to make informed decisions about how to optimize their portfolio to align with their business goals.

In addition, APM can help businesses to identify and mitigate risks associated with their applications, such as security vulnerabilities or compliance issues.

Overall, APM is an essential component of modern business management and can help organizations to stay competitive and achieve their strategic objectives.

APM Process

The APM process typically involves several stages, including:

1. Inventory and Classification: The first step in APM is to create an inventory of all the applications in the organization's portfolio, along with key information such as the business function they serve, the technology platform they run on, and the user base. Once the inventory is complete, the applications are classified based on factors such as their business value, complexity, and risk.

2. Analysis and Assessment: Once the applications are classified, a more detailed analysis is conducted to identify their strengths and weaknesses. This involves evaluating factors such as the application's functionality, performance, security, and scalability.

3. Prioritization and Planning: Based on the results of the analysis, the applications are prioritized according to their strategic importance, business value, and cost-effectiveness. A roadmap is then created to guide the optimization and management of the portfolio over time.

4. Implementation and Monitoring: Finally, the portfolio optimization plan is put into action, with applications being retired, consolidated, or upgraded as necessary. Ongoing monitoring is conducted to ensure that the portfolio remains aligned with business goals and that any new applications are assessed and classified appropriately.

The APM process is typically iterative, with ongoing refinements and adjustments made over time as the business evolves and new applications are added to the portfolio.

Role of IT governance in APM

IT governance plays an important role in the success of Application Portfolio Management (APM) initiatives. IT governance provides a framework for decision-making, risk management, and resource allocation that is critical for optimizing the application portfolio to support the business strategy.

In the context of APM, IT governance provides guidance on which applications to invest in, how to prioritize investments, and how to manage the portfolio over time. It helps to ensure that the portfolio is aligned with the business strategy and that risks associated with the applications are identified and managed effectively.

Furthermore, IT governance provides a framework for measuring the performance of the application portfolio and making data-driven decisions about how to optimize it over time.

By implementing IT governance in the APM process, businesses can ensure that their application portfolio is well-managed, efficient, and aligned with their overall business objectives.

Overall, the role of IT governance in APM is critical for ensuring that the application portfolio is optimized to support business goals while minimizing risks and costs.

APM Tools and Technologies

There are several tools and technologies available for implementing an effective APM strategy. Some common APM tools and technologies include:

  • Inventory and discovery tools.
  • Application performance management (APM) tools.
  • Business process management (BPM) tools.
  • Enterprise architecture (EA) tools.


In conclusion, Application Portfolio Management (APM) is critical for businesses to optimize their application portfolio and align it with their strategic objectives.

By implementing effective APM processes and leveraging appropriate tools and technologies, businesses can gain better visibility into their application landscape, reduce costs, improve efficiency, and achieve their desired business outcomes.