IT Operating Environments Best Practices

Overview

Application portfolio financial management - as described in the APM Best Practices document - aims to produce a complete Total Cost of Ownership for every application in the portfolio. TCO calculations that include only Production infrastructure costs are systematically incomplete: they undercount the true cost of maintaining and operating applications by excluding the infrastructure cost of all the non-Production environments that support each application’s development, testing, staging, and training lifecycle. For applications with complex environment footprints - dedicated environments at multiple tiers, mirror environments for DR, long-running TRN environments for ongoing user onboarding - the non-Production environment infrastructure cost can represent a significant and unaccounted fraction of the application’s true total cost.

Best Practice

Establish a formal connection between environment infrastructure cost data and APM portfolio financial management, ensuring that the non-Production environment costs of every application are included in its portfolio TCO calculation. For each application in the portfolio, identify all environment instances it occupies - DEV, SIT, UAT, TRN, PEN, PSTG, any mirror environments - using the environment-to-application connections maintained in the Environments Inventory. Attribute the infrastructure cost of each environment instance to the application or applications it serves, using the resource tagging established in the FinOps governance framework. Include the attributed non-Production environment costs in the application’s portfolio financial record alongside its Production infrastructure costs, license costs, and operational staffing costs. Review this complete cost picture as part of every application assessment and rationalization decision.

Benefit(s)

Connecting environment infrastructure cost to APM portfolio financial management produces TCO calculations that reflect the true cost of every application, including the non-Production environment costs that are invisible when financial analysis is limited to Production. Rationalization decisions are more accurate because the full cost of maintaining an application - including its environment footprint - is visible and included in the investment case. Retirement decisions account for the full cost savings of decommissioning an application including the elimination of all its non-Production environment costs, making retirement business cases more financially compelling and more accurately estimated. The organization develops a financially complete view of its application portfolio that enables better investment decisions at every stage of the APM lifecycle.