Application Portfolio Management (APM) Best Practices

Overview

Application portfolio investment naturally concentrates in one of three categories: run investments that maintain existing applications at their current capability level without significant change; grow investments that extend existing applications to serve expanded or evolved business needs; and transform investments that build fundamentally new capabilities or replace existing applications with significantly more capable alternatives. When portfolio investment is heavily concentrated in the run category, the portfolio maintains its current state but does not evolve at the pace that changing business requirements demand. When investment is concentrated in transform, operational quality suffers because run investments that sustain current capabilities are neglected and the organization attempts to change while simultaneously failing to maintain what already exists.

Best Practice

Analyze the distribution of portfolio investment across run, grow, and transform categories and compare it against the investment profile that the organization’s current strategic direction requires. Define target investment ranges for each category that reflect the organization’s strategic intent and current context - an organization in a period of aggressive digital transformation will invest a higher proportion in transform; one in a period of consolidation and operational stabilization will invest more heavily in run and grow. Review the actual investment distribution against the target ranges annually as part of the budget planning cycle, identify where the distribution deviates from strategic intent, and propose specific adjustments to bring the portfolio investment profile into alignment with organizational strategy.

Benefit(s)

Actively managing the run-grow-transform investment balance produces a portfolio that evolves at the pace and in the direction that organizational strategy requires rather than defaulting to whatever investment pattern emerges from individual decisions without aggregate awareness. Run investment maintains the operational quality of existing applications while transform investment builds new capabilities. The organization avoids both failure modes of unbalanced investment: operational quality decline from under-investment in run, and strategic stagnation from over-investment in run at the expense of the transform investment that moves the portfolio forward. Leadership can see and adjust the investment profile of the portfolio as a deliberate strategic lever.