APM: The Analysts' View

Industry analysts are united in their view that Application Portfolio Management (APM) has the potential to bring huge value to organizations seeking to achieve optimal business value from its applications.

As far back as December, 2005, Gartner remarked that “Application portfolio management (APM) strategies can reduce IT costs” (“Meshing Architecture, Project and Application Portfolio Processes for Effectiveness”, December 2005) and also explained that APM strategies can improve the accuracy and effectiveness of planning application development investment.  Furthermore, when looking at the future, Gartner suggested that by 2007, “20 percent of large enterprises will implement a disciplined application portfolio management strategy” and that this will significantly reduce IT software portfolio-related expenses - by at least 10 percent and future application transformation costs and even greater margin.

Forrester, themselves strong advocates of APM since 2002, have recently highlighted the value of APM to one particular global bank as it sought to cut IT costs by 10% (“APM Trends: Board-Mandated Cuts To The IT Budget Spur Global Bank To Adopt APM”, January 2008), stating how the CIO “ turned to application portfolio management (APM) for the answers.”

Early adopters of APM are finding ROI in the first year, with savings ranging from 10 – 30 % of their maintenance budgets. 

A 2004 Forrester report stated that companies pioneering the use of APM have reported savings of 20 percent to 30 percent and more on their maintenance resources alone and ROI in 12 months or less. It claimed that Merrill Lynch, for example, saved millions by using APM to eliminate over-allocated DB2 files, do away with obsolete batch jobs, reduce CPU cycles, and cut the number of emergency break-fix migrations.

The same report observed that the market for application portfolio management (APM) software would skyrocket over the coming years, believing that the APM market space will grow from approximately $15 million in 2003 to exceed $400 million by 2008.

Too valuable to eliminate, too costly, complex, and interdependent to replace, existing IT applications consume a staggering 73% of application budgets. Organizations are embracing APM because it develops fact-based application metrics to drive intelligent decisions, aligns application strategies to business strategies, and increases maintenance productivity by 10% to 30%.

The APM market is growing rapidly, expected to hit $400 million by 2008

Another Forrester report (“Building the business case for APM”) also highlights the enormous benefits available: 

“In a small number of firms today, IT management is using application portfolio management (APM) tools to shave 10% to 30% or more from the maintenance budget, achieving ROI within the first 12 months. These savings provide the opportunity to increase innovation capacity by 30% to 95%. Detailed application metrics allow IT management to discuss spending in business terms with system stakeholders, resulting in greatly improved business/IT relationships in these firms. CIOs of medium-size to large organizations really can't afford not to make APM a top priority in the next budgeting cycle.”