Is your APM strategy a yard sale or a Beauty Pageant?

This and the next few weeks Carl Engel (Elyon Strategies CEO) and I are collaborating on a white paper about Enterprise Portfolio Management. The insight that we should do this came about a month or so ago at a Industry Vendor’s Conference where we saw some serious misalignment in presentations touting Agile and APM as the key to success. Our objective behind such is to give executives insight and tips how-to implement a beneficial portfolio practice beyond just APM.    My strategy creating this paper is to provide the “Cliff’s Notes**” on the Enterprise Portfolio Management practice I’ve been maturing over the decades for various consulting, technology firms and their clients.

During our brainstorming sessions one insight has continually come to the forefront.  The state of the art in APM is drastically behind the state of the industry in financial portfolio management.  Not only that but the practice in APM could actually be damaging to an enterprise.  Here is one insight from our brainstorming session:

Application Portfolio Management (APM)

APM as practiced by many IT organizations and consulting firms typically focuses on one of two strategies: Rationalization of Current or Curation of Potential.  In the first strategy the organization is seeking to ride itself of assets in its portfolio.  In the second strategy picking individual winners or highest winners is the goal.  Both of these objectives are well meaning however, if not accomplished in alignment to an enterprise’s business can prove devastating.

Portfolio Management was originally introduced as a strategy to balance risk and reward in the financial investment industry by Nobel Prize-winning economist Harry Markowitz.  As the concept of portfolio management migrated to IT the second factor, risk, seemed to have been dropped from consideration.  If a root cause analysis had been accomplished you’d likely find many of the serious issues within IT can be traced back to not considering the enterprise risk of the equation.

With regard to the first strategy Rationalization.  Lets consider why one is “rationalizing” the portfolio.  In several engagements I was brought in, was due to acquisition of multiple assets or copies of assets doing the same thing.  The root questions is why?  The other situation was the asset did not perform or no longer performs at the desired level.  The end result of such is these assets are like the tail end of a yard sale. The only thing left to do with them is box them up for charity (unlikely) or putting that ugly lamp into the trash to be hauled away and forget about them.  But why did this occur?  If it was an asset to the enterprise shouldn’t it have been managed as such?

In regards to the second strategy Curation of Potential, there are many books, consultants and firms touting how-to develop effective business cases for initiatives.   I’ve co-developed several of these for corporations such as IBM, Microsoft, and other consulting firms.  Unfortunately despite cautions to the contrary, these are often watered down to eliminate the interdependence risk portion of the equation.  This creates a popularity contest for funds.  This maybe due to self-interest by the initiative promoter, a lack of insight as to the interdependence of the initiative within the enterprise ecosystem or that no one wishes to discuss the potential downside: “You’re just being negative…”  In any of those cases the risk to an enterprise is an iceberg in the ocean the enterprise is sailing through.

The forthcoming white paper will provide some tips on effective Enterprise Portfolio Management, while the training course to follow will delve deeper into how-to establish and mature a portfolio management practice.  This will also help enterprise determine at what level they are and what level of practice is optimum for them.  That is not every enterprise needs to or should be at a Level 5  of capability/maturity.




**Shorter versions of Dummies books for those born later than Boomers