Most people simply assume that applications are beneficial or we wouldn’t have them. As a result, they conclude that applications are investments.
An investment is an expenditure of capital in order to gain value. Value is a difficult concept because it can involve subjective criteria as well as objective criteria (cost). What is the “value” of operating an old application after the replacement application has been implemented? Does it provide access to historical data or was the retirement of the application delayed or forgotten? Is there an alternative to operating both applications?
Application Portfolio Management should answer these questions. In order for this to occur, APM must span the entire life-cycle of an application from the decision to build or buy, operations and support, enhancement, and the eventual retirement of the application. Application Rationalization is one of the APM activities where capabilities and benefits of the applications are assessed against the costs and risks in order to recommend long-term strategies (continue to operate, re-platform, replace, retire, etc.). Without this type of periodic review, an organization cannot determine the benefits of their application portfolio and make appropriate strategic decisions.