Managing the IT Application Portfolio: The APAA matrix for analysis and action
By Daniel Tan, CIO, Acer Sales & Services
The demanding schedule and relentless pace for most CIOs often results in CIOs having scarce resources to reflectively contemplate sound and purposeful strategies for taking their organizations forward in their capacity as the organization’s lead IT executive. With information technology ubiquitous in almost all levels of most organizations, the day-to-day demands of keeping the information machinery chugging along while wrestling with unforeseen technology and people issues can easily consume almost all management resources of the CIO, leaving little time for the equally crucial role of strategic review and action formulation.
The articulation and implementation of the corporation’s IT vision and strategy is most obvious in the IT application portfolio of the organization. Arguably, the ability and the agility of the corporation depends much on the choices and strategies shaping the form and substance of the corporation’s IT application portfolio. Faced with limited resources, it is of significant importance that an objective and proactive approach be taken in the management of the IT application portfolio. The evolution (or in some cases pruning) of this portfolio may be one of the organization’s key business strategies in how they reinvent or redefine the way they will approach, enter or compete in new or existing markets.
"The definition of cost and benefits should be assessed both quantitatively and qualitatively"
Confronted with this daunting task – some CIOs may find it easier to maintain the status quo. However, this may result in sub-optimal IT application portfolios. While most CIOs are rational individuals, sometimes, emotional attachments can be formed for pet projects and personal beliefs – these having been shaped from intuition and emotion rather than objective analysis. To be fair, intuition and emotion are by no means faults in themselves – these leadership qualities are essential but they are best served when tempered with factual analysis and holistic discussion.
Enter the IT Application Portfolio Analysis and Action (APAA) matrix. This matrix in its simplest form allows CIOs to quickly analyse and classify IT applications and systems into one of four categories which are accompanied by a recommended action strategy. This matrix then serves as a useful objective discussion template when CIOs engage with business leaders and system owners in planning and
Figure 1: Application Portfolio Analysis and Action Matrix.
It is important to note that in this matrix, the definition of cost and benefits should be assessed both quantitatively and qualitatively – a list of soft and hard values may be derived to facilitate a more rounded discussion.
As mentioned, the primary utility of this matrix lies in that it drives the discussion of the IT application portfolio beyond traditional passive gauges such as technical benchmarks or traditional financial benchmarks. It also moves beyond simple one-time cost-benefit analysis and most importantly, it involves input from both business and IT leaders.
Briefly, the matrix categorizes IT applications into one of four major types:
- Low Cost and Low Benefit
- Low Cost and High Benefit
- High Cost and Low Benefit
- High Cost and High Benefit
Equipped with the perceived outcomes for these parameters, business and IT leaders can then objectively review and classify their IT applications, plotting their positions in the matrix. Even new, to-be-implemented applications can be reviewed on the same basis to ensure IT-business alignment. In the sections below, a brief discussion of the four major categories is provided with some real-world practical applications.
Low Cost, Low Benefit. These are typically utility-type, base applications that are commoditized, serve narrow purposes and have limited or focused utility. However, since the cost of maintaining these applications are low (i.e. accepted without concerns), they may be retained and reviewed by exception or eventually outsourced, if a service provider with greater economies of scale can fulfil this purpose more reliably and more cost-effectively.
Low Cost, High Benefit. These sometimes come in the form of “low-hanging fruit” that are easy to achieve and beneficial that also do not incur too much investment. Outsiders may sometimes perceive more easily than insiders. They can also be the result of true innovation within the organization. CIOs can foster greater opportunities for these to occur by welcoming diversity of views and allowing purposeful creativity amongst their teams.
High Cost, High Benefit. These are often strategic-level programmes and applications that require significant investment and require significant time before benefits may be reaped. Owing to the nature of such projects, it is therefore imperative to have periodic and impartial reviews to ensure the projects deliver as originally envisioned.
High Cost, Low Benefit. This is the category that no CIO or project manager sets out to achieve, however, it is not uncommon to find a CXO’s pet project or some result of biased decision-making gravitating towards this category. While it is painful to have to define applications or systems falling under this category, even more important is the subsequent action the organization must eventually take, post-classification.
In closing, it is beyond the scope of this article to exhaustively list every possible type of example or scenario for each category. Hence, this matrix is a general model or framework that can be used to provoke additional thinking and discussion on this important subject. CIOs and organizations are thus encouraged to form their own evaluations and conclusions having begun their discussion based on this matrix.
Headquartered in New Taipei City, Taiwan, Acer Sales& Services is an information and communication technology company focussed towards research, design, marketing ,and sales and support of innovative products. The firm is established in 1976.