The Executive Guide to
Application Management
Andy Kyte
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other
authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied,
distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.
© 2011 Gartner, Inc. and/or its affiliates. All rights reserved.
You Need to Know Because …
Applications Are Expensive
Applications Are Important
Applications Rust
Applications Can Help You Win!
You Need to Know Because …
For 21st Century Executive Managers,
a Firm Grasp of the
Principles of Application Management
Will Be a Critical Career Capability.
Key Issues
1. What are business applications, and why do
business managers need to understand them?
2. How should business executives participate in the
process of investing in business applications?
Applications Are a Large, Diverse Family
Planned Persistence
Systems of Innovation
1–3 Years
~$100,000
Refactor
Planned Persistence
Systems of Differentiation
8–10 Years
$1 million–
$10 million
Refactor
Planned Persistence
Systems of Record
20–25 Years
$10 million–
$100 million+
Application Sourcing:
Not Just Buy Versus Build
Buy and Customize
Build
Buy and Configure
Subscribe
Business Process
Outsourcing
An Application Is Part of a
Complex Ecosystem
An Application Is an Asset
• The Industrial Revolution
developed accounting standards
for fixed assets.
• In the "Information Revolution,"
accountancy practice is trailing
behind asset value delivery.
• Accountants use sophisticated
depreciation formulas.
• Applications are assets — in
many cases, the most-valuable
assets an enterprise owns.
• Shareholders are protected by a
"sinking fund."
• Shareholders have no
mechanisms to value assets —
and no "sinking fund."
An Application Is a Liability
The Application
The Stack
• Trained business users
•
•
•
•
•
•
•
•
•
Architectural compliance
Technology skills
Application server
Application integration
Operating system
Data and Information
Tools for management
Tools for testing
……
Example Range of Go-Live Costs as a
Percentage of 15-Year TCO
"Design for Life" Objectives
High
16%
6%
8%
8%
2%
High
Low
Application Volatility
This Year's CapEx Drives Next Year's OpEx
Budget
Project
B
New
Project
New
Project
Current
Year
Ops Increase for B
Maintenance for A
Project
A
Base
Maintenance for B
Ops Increase for A
Base
Next
Year
Requirements: It's Not What You Do —
It's the Way You Do It
Functionality
Reliability
Efficiency
Maintainability
Analyzability
Stability
Usability
Testability
Reference: IEC 25010 (Was ISO 9126)
Portability
Changeability
Maintainability
Applications Can and Will Change!
Birth
Infancy
Positive ROI
From Investment
in This Phase
Adolescence
Moderate
ROI
Maturity
Retirement
Likely Negative
ROI
Understanding Application Maintenance
The Four True Functions of
Maintenance
The False Function of
Maintenance
Corrective
Minor
Enhancements
Adaptive
Preventive
Perfective
a.k.a. "Back Door Development"
The Three Critical Application Attributes
High
Low
2013
2018
2023
Key Issues
1. What are business applications, and why do
business managers need to understand them?
2. How should business executives participate in the
process of investing in business applications?
Step Zero:
The Application Governance Process
Governance of the stakeholders, by
the stakeholders, for the stakeholders
Demand-Side
Stakeholders
Supply-Side
Stakeholders
Named
Owner
Enterprise
Architecture
Step 1: Monitor
Executive Application Portfolio Management
1. Line Item Costs for Each of Your Applications
2. Expected Future Costs Over 10 Years
3. Utilization — Business Units of Work
4. Utilization Trends — Historic and Predicted
5. Technical Risk Analysis — 10-Year Predicted
6. Gap Analysis — Current and Predicted
7. Market Testing — Internal and External
Technical Integrity
Step 2: Buy/Sell/Hold
Tolerate
Invest
Eliminate
Migrate
Business Value
Step 3: Generate Options
Option 1: Do Nothing
Option 3: SaaS
Costs
Costs
Benefits
Benefits
Risks
Risks
Option 2: Upgrade
Option n: nnnnnnn
Costs
Costs
Benefits
Benefits
Risks
Risks
Recommendations
 Allocate time to regular reviews of your
application portfolio
 Lead the culture change management to eliminate
bad acquired habits and develop best practices in
application value delivery
 Challenge your team to develop a strategic
approach to your application portfolio
 Implement "One In, One Out" as a minimum
standard when acquiring new applications
Related Gartner Research
 CFO Advisory: Application Portfolio Management
Overview Andy Kyte (G00206748)
 Guide to Application Essentials, August 2011 Update
Bill Swanton (G00214804)
 The 'Seven Deadly Sins' of Application Governance
Matt Hotle (G00210776)
 Recommendations for Improving Project Prioritization
D. Stang, D. Fitzgerald, J. Duggan (G00167598)
 How to Use Pace Layering to Develop a Modern
Application Strategy J. Shepherd, D. Gaughan, Y.
Genovese, V. Sribar (G00208964)
For more information, stop by Gartner Solution Central or e-mail us at [email protected]
The Executive Guide to
Application Management
Andy Kyte
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other
authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied,
distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.
© 2011 Gartner, Inc. and/or its affiliates. All rights reserved.
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