erwin Expert Blog

Application Portfolio Management: Optimize your Portfolio

In the third post of our blog mini-series we looked at the Effective Management of your Portfolio, and learned where you need to consider the cost effectiveness of applications and the risk acceptability.

This fourth and final phase of the process is to Optimize your Portfolio, and it’s here that must you begin to examine the dependencies between other applications and projects. You must also add into your portfolio the costs and fiscal requirements of each application. Technical infrastructure requirements are identified and costed and you can start to examine in detail, the benefits and value that is accrued through the exercise. The important final step is to align the portfolio with business priorities and goals.

Optimize Portfolio

So for the final time, lets get stuck in!

Step 1 – Identify dependencies

Look at the dependencies on other applications and projects. An Enterprise Architecture may already be available for you to utilize and view the application portfolio in a broader context of its architecture. If not, then you need to associate each application with identified dependant goals, drivers, application dependencies, technologies, work packages etc.

Corso software allows users to view the list of concepts and details of an Application Component, and see all of the dependencies/associations that exist or can be created.

If you possess enough domain knowledge to associate this application to other concepts such as business processes and other applications, then you should go ahead and add the associations. Otherwise, you should collaborate with someone in the organization who is an expert on the application.

You should associate work packages (projects) in the same way. Now to see the full dependencies of an application (or group of applications), work package or any other type of concept, you need create diagrams that visualize the associations.

This example shows an application and all of its associations (using an ArchiMate Layered View).

An Application and its associations

You can see the application’s dependant business processes, data objects, other applications, technology, projects and roles. The work package (project) called Upgrade Claims Handling also has associated business goals, drivers and deliverables which impact this application.

This type of diagram allows you to view the complexity of the application and the impact it has on the rest of the organization and IT, and is a valuable for decision making in prioritization meetings.

If we dig into the detail here, this close-up diagram example shows a driver named Claim handling. It has a dependant Goal named Improve claims handling, and as assessment named Sloppy claims archiving. The Claim reviewer is the role related to the Claim handling driver.


The above techniques will help you build up a good understanding of the dependencies in your application portfolio.

Step 2 – Determine priorities and timeframes

To help determine where to prioritize your efforts within the application portfolio, use a roadmap view to visualize your application portfolio and its dependent concepts over time.

Now you can start to adjust the lifecycle dates of each application and the Goal dates and other dependent concepts according to your action priorities and anticipated timeframes.

For each application component you look to set a required action, any cost savings you may have identified, the time frame for the action and any improvements that this action will deliver. Typical actions include:

  • Invest additional funds in the application
  • Sunset or eliminate the application
  • Consolidate the application with another application
  • Replace and consolidate the application
  • Continue maintenance

You should complete this process for each of the application components in your portfolio and don’t forget to apply values to each attribute that work best for you. For application components that require additional work to complete the attributes, you should create a work package and associate your application components to it.

Step 3 – Potential benefits for selected actions

Work packages represent an action that needs to be completed on the application portfolio, and often produce an improvement or benefit when completed. A work package can be small task or a large project, and can require collaboration with other stakeholders in order to be completed.

For work packages in your portfolio you should record the estimated Costs and the anticipated Gains that this work package will produce to calculate its Value or importance. Value is often monetary but it doesn’t have to be. For example, reduced risk is a positive Value!

You can calculate the total Costs of your work packages and also total the Gains which are achieved by consolidating or sunsetting applications etc.

Now you can use pivot table reporting to summarize your portfolio that helps to produce a business case for your APM findings.

Step 4 – Pivot tables reports

By creating what we call an Application Portfolio Action Plan pivot table you can visualize the costs of an application over its lifetime and its action plan (work packages to be completed). In this example heatmap pivot table, the applications in the portfolio with the highest cost savings potential are highlighted. This type of information is vitally important for communicating your plan with stakeholders and decision-making.

Application Portfolio Heatmap Pivot Table

By creating a Work Package Risks and Costs pivot table you can understand the budget assigned to different work packages, the rough order of costs and the risks associated with not completing the work package. Again this level of detail is valuable for decision making and communicating with stakeholders.

Step 5 – Workflow, sign-off and produce funding requests

Use pivot tables to drive the Return on Investment of work packages in your application portfolio and track their status, like this example below.

Application Portfolio Work Packages Return on Investment

Also utilize a kanban board to track the status of applications, with the columns of the kanban board representing the four stages of the APM process. Application components and other related concepts are positioned on the board in the corresponding status. This is an incredibly effective way to visualize and share the status of your APM efforts with stakeholders and collaborate on different concepts to ensure they continue to move forward.

For example, you can track when an application component has completed the initial Build and Maintain Inventory stage of the APM process and progressed into the Analyze Portfolio stage.

You can also use a kanban board to show the approval lifecycles for application component and work packages. In any organization of any size, its unlikely that one person is the sole decision maker on such decisions.

It’s also useful to create a kanban board for the APM approval process too. Set up your Kanban, set the goals and set the roles involved in decision-making and approvals. It’s also a good idea to filter the concepts that are included on the board initially to keep it simple, and then add concepts to the board at a later stage. Its incredibly useful to create a notification system for when an application component or one of its related concepts moves between stages, the relevant stakeholders (financial or IT etc) will be informed.

The final step is to produce the material required for additional funding requests etc to support you APM efforts. It may well be the case that you can fund the rationalization of your portfolio simply through existing work packages (projects) attached to your applications.

Any request for funding or resources must be built around a solid business case. This is where the multiple techniques and outputs covered above prove their true value. You must be able to publish the reports and diagrams created throughout this four-stage process, for presentation to senior stakeholders/decision makers.

That’s it. You now know how to do effective Application Portfolio Management from start to finish. We’ve taken you though building and maintaining your inventory, analyzing your portfolio, the effective management of your portfolio and the optimization of your portfolio.