The Executive Guide to Application Management Andy Kyte

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 21 st 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% Low 2% High Application Volatility

This Year's Cap. Ex Drives Next Year's Op. Ex Budget Project B 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: Saa. S Costs Benefits Risks Option 2: Upgrade Option n: nnnnnnn Costs Benefits Risks

Recommendations ü Allocate time to regular reviews of your application portfolio ü Lead the culture change management to eliminate bad acquired habits and develop best practices in application value delivery ü Challenge your team to develop a strategic approach to your application portfolio ü Implement "One In, One Out" as a minimum standard when acquiring new applications

Related Gartner Research è CFO Advisory: Application Portfolio Management Overview Andy Kyte (G 00206748) è Guide to Application Essentials, August 2011 Update Bill Swanton (G 00214804) è The 'Seven Deadly Sins' of Application Governance Matt Hotle (G 00210776) è Recommendations for Improving Project Prioritization D. Stang, D. Fitzgerald, J. Duggan (G 00167598) è How to Use Pace Layering to Develop a Modern Application Strategy J. Shepherd, D. Gaughan, Y. Genovese, V. Sribar (G 00208964) For more information, stop by Gartner Solution Central or e-mail us at solutioncentral@gartner. com.

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.