The Hartford and APM

Insurance and Technology magazine had an interesting brief on insurance giant The Hartford. The piece discusses plans by the CIO, Brian O’Connell, to slash costs and boost agility via application portfolio management. Prioritizing cost cutting versus agility creation, or projects within each category is not a trivial task. Application portfolio management aids in precisely this area.

I outline a selected few points here that describe how a business-centric approach to application portfolio management can aid The Hartford in their initiative:

• Spot Rationalization Opportunities: An effective strategy for advancing application portfolio management is to identify and eliminate systems with low business-value. For instance, duplicate order management systems, unused and high-cost packaged applications, or internally developed systems that could be replaced by commercial software. This step can generally be achieved via stakeholder surveys that collect information on value and risk. Placing survey results into appropriate business context helps to ensure that decisions are made intelligently.

As The Hartford’s CIO describes the results of assessing his portfolio,

“we're able to see what products we're using, how many people use them, what they're used for, etc., and we're in a position to ask questions such as whether we need to pay the maintenance, how much we actually tap into the support we're paying for, and whether it might be better to pay for something on a time-and-materials basis.”

• Stretch Business Flexibility: Effective portfolio management increases agility in many ways. First, by identifying and slashing unnecessary assets, complexity is reduced, making proposed changes easier to execute. Second, using dependency mapping and architectural quality metrics, managers can and correct identify architectural weaknesses that slow enhancements. Third, development priorities can be compared based on measures like business-value, complexity, developer skills, etc. These decisions should be again placed within the appropriate business context. This allows value for a revenue generating process to be properly compared with a G&A application.

O’Connell parallels this line of thought:

We have to make sure that we don't break the alignment between our business lines and the components of IT critical to differentiating them," O'Connell said.

• Increase Ongoing Efficiency: Application portfolio management is not a one-off activity. Data ought to be collected on an ongoing basis and presented to users throughout the organization and up and down the chain of command to enable diverse decisions. This could be for a CIO to spot additional rationalization opportunities; for a development manager to monitor code quality from large centers of excellence or outsourced teams; for business users to understand where IT priorities lie; or for developers to validate the quality of their output.

Application portfolio management transcends the entire IT organization and supports its interactions with business owners. It enables IT to make smarter decisions about where to prioritize. The Hartford plans to use this period to get to that position of strength. O’Connell said:

"Gathering that information would have been more challenging in the good times. That is one long-term objective that we should have been pursuing but the current environment is providing an impetus for it."

Planning for Application Modernization

eWeek just published a strong piece on how to plan Application Modernization initiatives. In the first paragraph industry expert Tim Pacileo identifies the key for any modernization activity: justify it. CIOs face a multitude of competing interests when determining where to allocate resources. The pressures are more intense now that IT has become so tightly interwoven with very visible business processes. As a result, it is critical that the CIO has the right information available to determine which priorities should be selected and why.

This is the role of Application Portfolio Management. It provides a framework to collect measurements and place them into business context. This allows CIOs to quickly determine which projects make sense to act on based on the strategy of overall organization and not just on the narrower needs of IT. Justifying projects is vastly simplified when the interests of IT are tied to the business.

Interestingly, Pacileo suggests using a chargeback model to ensure that costs are properly associated with the correct IT activity. The best approach for this method is via business-centric portfolio management. By placing application portfolios into business context (by operational unit, geography, etc) CIOs can match costs to the exact software (and IT infrastructure) that is incurring the costs.

Pacielo also points out that in the rush to solve problems, IT often will product multiple overlapping applications that drain resources. A business-centric Application Portfolio Management solution is again the ideal approach. When IT compels itself to match business-value, cost, and risk to IT assets these kinds of glaring issues become readily apparent. He cites the example of one company having three overlapping systems. We've seen cases with more than 2 dozen duplicate systems being maintained separately.

Application Portfolio Management is an increasingly rigorous discipline. Executives should turn to this framework when determining where priorities lie and how to justify them.