IT Application Portfolio Management (APM) is a practice that has emerged in mid to large-size information technology (IT) organizations since the mid-1990s.
Likely the earliest mention of the Applications Portfolio was in Cyrus Gibson and Richard Nolan's HBR article "Managing the Four Stages of EDP Growth" in 1974.
Nolan, Norton & Co. pioneered the use of these concepts in practice with studies at DuPont, Deere, Union Carbide, IBM and Merrill Lynch among others.
These measures provided a comprehensive view of the application of IT to the business, the strengths and weaknesses, and a road map to improvement.
In many organizations, the value of developing this list was challenged by business leaders concerned about the cost of addressing the Y2K risk.
For that reason, many organizations bypass using commercial tools and use Microsoft Excel to store inventory data.
Many reasons may exist for this duplication, including the former prominence of departmental computing, the application silos of the 1970s and 1980s, the proliferation of corporate mergers and acquisitions, and abortive attempts to adopt new tools.
Regardless of the duplication, each application is separately maintained and periodically upgraded, and the redundancy increases complexity and cost.
[8] Using this information, the portfolio manager is able to provide detailed reports on the performance of the IT infrastructure in relation to the cost to own and the business value delivered.
[10] A measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit (adjusted for taxes on a cash basis).
In a TCO model, costs for hardware, software, and labor are captured and organized into the various application life cycle stages.
TEI was developed by Forrester Research Inc. Forrester claims TEI systematically looks at the potential effects of technology investments across four dimensions: cost — impact on IT; benefits — impact on business; flexibility — future options created by the investment; risk — uncertainty.