Best Practices in Application Portfolio Optimization

August 28, 2023
Season 4, Episode 32

In this episode of the Business Excelleration® Podcast, In the evolving world of application landscape, enterprises are faced with the need to constantly optimize technology platforms to achieve their business and innovation goals. We discuss best practices in application portfolio optimization with Kyle Robichaud and Joe Nathan, Principals in our Technology Transformation Practice.

Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Gary Baker, Group Global Communications director at The Hackett Group. Today’s episode will discuss best practices in application portfolio optimization. His guests are Kyle Robichaud, principal at The Hackett Group, and Joe Nathan, associate principal and Technology and Digital Strategy leader at The Hackett Group.

To begin, Gary and his guests first discuss the definition of portfolio optimization. It has been in practice for a long time, but it is the way to optimize or migrate from old technologies to new ones. It can also be described as an assessment of the application and landscape for that organization, and to determine what changes should be put into place to optimize technology and make it as efficient as possible. The best framework for application portfolio optimization depends on the objective or why you are doing it. Some objectives include reducing complexity, the need to look at applications to start rationalizing it, organizing aging applications, and reducing risk and improving. There is also global relocation support and includes expenses or costs for migrating applications to the cloud. The data you capture is different, but data collection needs a current practice around application details.

Next, they talk about the objectives behind application portfolio optimization. Usually, application portfolio optimization occurs surrounding a big disruption in technology. In the beginning, most companies focused on cost savings, but now companies use portfolio optimization for technical complexity. There are many platforms within the environment and over years of acquisition through integrations or legacy platforms. The company also needs to manage risks and be confident in that. Many people also look at artificial intelligence (AI) capabilities, and how to get and leverage this in their organizations and replace existing applications with AI. There is no one single approach to start with portfolio optimization. Different companies and people have their own systems, and there are software platforms available for this as well. They recommend having a solid business case and knowing the reason why you’re going through this exercise, with a road map to execute and achieve the goals and values through it. You also have a financial responsibility to go through with this optimization and some organizations can self-fund. Companies can assess the application and start working alongside the technology teams. There are sustained funding initiatives, and companies can break the application down to move it to the right platform. Companies chunk this process and find multiple applications that require the same recipe that can be used across multiple applications. This makes funding easier and more viable.

Before wrapping up, Kyle and Joe explain the two different ways to execute application portfolio optimization. The first way is more of a one-time exercise and an ad hoc activity. The second way is continuous management where that process is managed by an enterprise group. Many companies don’t have the people or capabilities to have continuous optimization, so that is why there is only one time for this optimization. There is a different driver being used once than just maintaining. Finally, they share closing remarks.

Time stamps:

  • 0:49 – Welcome to this episode hosted by Gary Baker.
  • 1:33 – The definition of portfolio optimization.
  • 2:17 – Best framework used for portfolio optimization.
  • 4:05 – Why conduct application portfolio optimization?
  • 6:48 – How do you know where to start?
  • 9:25 – Two ways for portfolio optimization.
  • 11:11 – Closing remarks.