The Buyer’s Guide to IT Transformation 

“All business is IT—all IT is business.” Today, as business success is increasingly defined by the speed of innovation, there’s more truth than ever to Gartner's findings that all business is IT—all IT is business. As the world becomes more digital, and customer expectations change at ever faster rates, your IT needs to change as well—to incorporate the new technologies that will make your enterprise stand out from the competition.

How, though, can you ensure your IT portfolio is in line with your business objectives? Increasingly, companies are turning to support their enterprise architecture management (EAM) and strategic portfolio management (SPM) practices with made-for-purpose software tools that can handle the massive complexity inherent in today’s IT.  A tool-based approach enables you to visualize the cost, complexity, and feasibility of a proposed IT change, and how it relates to your vision for the future.  

What is EAM/SPM?

As will be explained in the competitive landscape overview, integrating the enterprise architecture management (EAM) and strategic portfolio management (SPM) disciplines significantly increases the number and quality of IT insights. According to Gartner:

There are tools that span both practices, and it’s important to consider both. That’s why this guide often addresses both enterprise architecture management and strategic portfolio management “EAM/SPM”.

This guide is designed to help you find the right EAM/SPM tool to support your IT transformation endeavors. We will help you understand what an EAM/SPM platform does best, figure out what capabilities you want, and justify your choice within the scope of your organization’s needs and budget. It is divided into five sections.  

First, we’ll help you understand what enterprise architecture management (EAM) and strategic portfolio management (SPM) platform buyers are typically looking for. We’ll then explore some of the key differences between the solutions available on the market. After that, we’ll take a look at some common EAM/SPM use cases and probe deeper into the seven core capabilities you’ll want to have for use across your transformation projects. Finally, we’ll give you some tips to begin your EAM/SPM journey—and move toward the choice of a platform.  

With so many competing tools and providers on the market, identifying the solution that will best meet your enterprise’s needs can be difficult. From our experience, however, there are several things that users seeking IT transformation are typically after.   

• A “whole view” of the IT landscape. Users—especially those from large companies with IT scattered in multiple locations—want a central repository that captures all their applications, technologies, processes, business initiatives and projects. Only with an accurate, complete, and real-time view of their IT landscape can they begin to evaluate its performance and impact on business.
• IT that’s agile, less complex, and aligned with the goals of business. An EAM/SPM tool should make it easy to assess your IT’s performance—in terms of services, cost, and solution delivery—and optimize the IT portfolio accordingly. It should also allow users to create detailed roadmaps for change, based on demands of both IT and business.
• Lower risks and improved IT governance. An important decision criterion is a platform’s ability to manage the risks of IT change—to help you understand  interdependencies, ensure business continuity, and respond to demands from regulators with the right data.
• Comprehensive capabilities. The right EAM/SPM platform will prepare you for dozens of uses related to everything from application rationalization to M&A management to sustainability. Companies should ensure their tool of choice has enough built-in functionalities to support this full range of possibilities—even those uses that may not be on the radar at the time of purchase.
• Availability as SaaS and on-premises. Most enterprises today operate in a hybrid IT landscape, operating a mix of on-premises systems, SaaS solutions, and cloud-native applications. Users, therefore, are increasingly drawn to tools that offer a range of deployment options.
• Ability to start according to your size and maturity. The ideal tool provides users flexibility to invest their IT budget wisely with a low-cost, risk-free solution, and scale according to demand over time.   

An important step in finding the right EAM/SPM tool is assessing the strengths and weaknesses of the different players on the market. This process is often informed by past frustrations: many firms come to EAM/SPM after struggling for years to inventorize their IT, track projects and prioritize investments with PowerPoints or disconnected spreadsheets. Modeling tools, such as MS Visio, are another attempt to get visibility into the IT landscape, but they’re also incapable of handling large and diverse inputs of data that range from strategies to technology solutions, to investments, and KPIs.

The need to gather high quality data from a range of sources means that integration and data management are a key part of the picture. This leads some firms to look to business intelligence solutions, which often come with powerful data management capabilities. These tools, however, lack many of the core architecture capabilities of EAM/SPM itself—which means they need to be developed and maintained in-house, driving up costs and diverting attention from what matters most: building a thriving business.

You may also be enticed by software in other EAM/SPM “adjacent” markets, such as IT service management, configuration management database, or IT asset management. Often vendors of these products claim to cover EAM/SPM too—and if you’ve already installed their software for other uses, giving this a try could seem expedient and cost-efficient. For similar reasons, some users find it tempting to “sew together” EAM/SPM capabilities from multiple products they’ve already acquired.

If you’re considering either of these paths, we’d recommend you challenge vendors on the seven core capabilities discussed in the next section—and consider the advantages of having them natively integrated in one product. A decision to skimp on a made-for-purpose EAM/SPM solution won’t seem so cost-effective down the line if this mixed bag approach fails to deliver, and your enterprise is forced to start anew. If you’ve decided—wisely—to pursue an EAM/SPM-specific solution, you still have a choice between solutions geared toward each discipline and those that integrate the two into a single product. EAM-specific tools will give you a single source of truth—to simplify your IT landscape, understand the implications of IT change, and anticipate system disruptions before they do damage to your business. SPM-specific tools will help you connect the dots between IT change and your strategic goals—a process accomplished through portfolios that link all elements of your IT architecture to a clear functional purpose.

Although both types of tools provide value as stand-alone products, we strongly recommend a solution that incorporates both. Enterprise architecture management, after all, is most impactful when it’s used as a foundation for SPM-driven change impact discoveries. And strategic portfolio management works best when its portfolios are based on the interdependencies identified by EAM—enabling the enterprise to more boldly pursue business opportunities, defend its market position, and build greater resilience to operational risks. 

One of the main selling points of an EAM/SPM platform is its flexibility: the same tool that can help you streamline a bloated application landscape can also help you prepare for cloud migration, plan an entirely new operating model, or make complying with regulations like Europe’s GDPR a cinch. As the diagram below suggests, EAM/SPM use cases are numerous and varied. While your enterprise is unlikely to see relevance in all of them, at least at the start of your SPM journey, it’s important to keep in mind that new ones may crop up when you’re least expecting them—in response, say, to a new business or technology trend, a change in vendor, a merger, or a new government regulation. At Software AG, we advise our customers to think of SPM as something they buy into. It represents a set of possibilities—to prepare you for the use cases that will inevitably arise down the line.  

Whatever the use case, there are seven core capabilities that you’ll want your platform to deliver: 

1. Business strategy development:

This function pulls together information from various sources to build an iterated business strategy. The point is to generate a clear line of sight between the organization’s high-level vision and its implementation. Business strategy development includes:

• Business model definition: understanding how IT supports each aspect of the business model, which enables more targeted IT planning
• Business strategy validation: providing a framework to derive IT initiatives from business strategies
• Business demand management: filtering incoming demands into a manageable list that can be evaluated and translated into project proposals
• Innovation management: helping business transformation keep pace with new technologies

2. Operating model development:

Once you’ve built your business strategy, the next step is designing a more detailed operating model. Effectively, this is a road map for changes to your business capabilities, processes, and broader organization. This includes:

• Business capability management: viewing the enterprise as a map of business functional areas and their associated IT to better prioritize business demands
• Operating model planning: mapping needed changes to the enterprise IT landscape based on an evaluation of the operating model
• Organization and ecosystem planning: understanding how operating model changes will impact the organization, partners, suppliers, and the wider ecosystem—and how IT must adapt
• Value stream mapping: designing the value stream architecture and roadmap delivery to support the enterprise’s efforts in organizing its activities to create value

3. Agile transformation:

Today’s rapidly changing business environment requires agile delivery of IT services and products—with transparency, analytics, and feedback from stakeholders at all levels of the organization. An EAM/SPM approach to agile transformation offers:

• Resource management: assessing and allocating resource needs during solution and project planning
• Target architecture and scenario management: developing a clearly documented proposal for aligning IT solutions with business objectives
• Agile portfolio and feature management: planning and tracking agile portfolios for optimal delivery of products and features
• Tracking and issue management: prioritizing operative development work and identifying issues in the IT portfolio assessment
• Project portfolio governance: analyzing the value, strategic and technical alignment, resource priorities and risk across IT investment alternatives
  

4. IT portfolio management:

This function helps enterprises organize, and optimize, their IT to set the pace for change. Creating a tightly integrated IT portfolio reduces planning errors, helps stakeholders collaborate, and provides transparency that helps users avoid conflicts. IT portfolio management includes:

• Portfolio management for applications, technologies, and information: Business events such as acquisitions, divestitures, product launches, and entry into new markets can impact the IT portfolio in several ways. IT portfolio management enables a rapid impact and risk assessment of the application, technology, and information landscape—and facilitates  change planning and management accordingly
• Service portfolio management: optimizing the service product portfolio for standardization, greater agility, and delivering on business demand  

5. Enterprise architecture governance:

This capability provides the underlying tools needed to ensure effective EA discipline—which in turn leads to greater agility and reduced costs and risks. It includes:

• Policies and standards management: capturing and monitoring adherence to IT and EA policies, principles, and standards
• Integrated roadmap management: identifying and resolving conflicts in the roadmaps created for business transformation and optimization
• Insights, diagnostics, and reporting: providing the ability to analyze the large and complex data underlying the EA model and associated business and IT portfolios
• Data gathering and integration: ensuring the EA and portfolio data is complete, of high quality, and up to date
• Stakeholder management: configuring the EA and portfolio management user experience to match the needs of different stakeholders 
  

6. Finance management:

This function helps organizations optimize their IT with an eye toward cutting costs and ensuring new IT investments add value to their business. It includes:

• Cost driver analysis: understanding exactly where expenses are accruing by aggregating IT costs of processes, domains, and business services
• Contract and vendor management: understanding the implications of IT change decisions as they relate to existing service provider contracts
• Investment optimization: analyzing the business purpose of current and planned investments—and ultimately building a portfolio that gives the best value for money
  

7. Security and risk management:

An integral part of aligning business and IT is the management of risk—and achieving greater efficiencies in compliance control. Important capabilities include:

• Security architecture: aligning architecture and security strategy to better understand which parts of the IT landscape are most relevant to security considerations
• Threat and risk management: evaluating the IT vulnerabilities faced by the organization and determining what to prioritize
• Mitigation road mapping: planning actions to reduce the chances of a threat being realized
• Compliance management: ensuring enterprise-wide compliance by monitoring systems subject to external requirements, determining responsibilities for evaluation, and generating needed documentation

 

The number of capabilities outlined above may feel overwhelming. The broad scope of enterprise architecture management and strategic portfolio management can certainly be daunting. And, truth be told, there are rare instances of companies that execute fully on all activities. What’s most important is that you view these capabilities as a means to an end: supporting the job that needs to be done today. The job could be planning a cloud migration strategy, positioning the enterprise against cyber threats, or determining how a new technology might advance your business strategy. It doesn’t matter which: once you’ve captured your enterprise architecture as the basis for any of these or other uses, you’ve taken a critical first step that will lay the foundation for other “ends” in the future.

The most common entry point into EAM/SPM is application rationalization. Many companies want to cut costs and get rid of the clutter. A logical next step is to better understand the technologies supporting the application portfolio—to see where it’s possible to rationalize the technology portfolio, and standardize to increase agility. From there, many move on to a more critical examination of their business capabilities and processes before turning to their project and product portfolios: most, in other words, attempt to first get transparency. 

Build upon the basics

It's important to keep in mind, of course, that every enterprise is different. Some may begin their journey with a very specific goal; others may find it helpful to start with basic questions, such as: “What is in our application portfolio?”; “Who are our technology owners?”; or “What is our business IT alignment?” For companies with little or no prior experience in enterprise architecture or strategic portfolio management, it may make sense to seek out a vendor that offers an entry-level solution—one with a just a few functional capabilities, pre-configured views and prescribed data for these sorts of common questions. Tackling the basics will often lead to a desire to ask more complicated questions—say, “How do we realize greater cost efficiencies?” or “How can we make savvier IT investments?” At this point, you’ll likely want to upgrade to a tool with a broader scope of capabilities and more configuration options. Ideally, then, the solution that you start with should offer the ability to scale up as seamlessly as possible.  

What will I gain by buying the right product?

As we’ve already discussed, EAM/SPM acts like a guardian of IT change—one that helps you simplify your IT landscape and make decisions driven by insights to accelerate your business strategy. But what, exactly, does this mean in practice? A 2020 study by Aite Group, a technology advisory, offers some idea of what you’ll gain with the right product. Its research, based on deployments at 11 large organizations of Alfabet, Software AG’s industry-leading EAM/SPM platform, identified several direct benefits, including cost reductions brought on by the avoidance and elimination of redundant assets, increased purchasing power, decreased project rework, and reduced headcount. Indirect benefits included improved compliance, enhanced enterprise security, improved knowledge propagation, and reduced operational risk.

Users of Alfabet interviewed by Aite’s research team offer a sense of what this means at the individual enterprise level. One noted their organization was on track to reduce application costs by 50%. Others praised the platform for helping their firm “avoid costly technology sprawl” and noted its ability to provide “continuous course corrections,” while channeling investment into the systems and applications that matter most. As one user in the utilities sector put it best: “Here, every project and investment goes through an objective intake process, enabled in Alfabet, in which mission criticality is formally assessed. This way, cool, hyped, or favored technologies don’t take money from what we rely on.”  In other words, Alfabet allows this user’s enterprise to cut through the noise and focus on the IT that matters most.

Are you ready to finally take control of your IT? To ensure your IT landscape is agile, cost-efficient, free of risk, and, above all, a driver of business success? If you’re still reading this, we suspect the answer is yes. And we hope this guide has helped demystify the process—to unpack exactly what you want in an enterprise architecture management (EAM) and strategic portfolio management (SPM) platform and how the capabilities embedded in such a tool can prepare your enterprise for such a wide array of transformation projects.

The information in this guide should be of help no matter the EAM/SPM solution you ultimately decide on. That said, we suspect there’s a good chance that Alfabet could be the platform that you’re after—whether you’re a small business looking for a risk-free way to learn what EAM/SPM is all about, or a large organization ready to dive head on into an enterprise-class solution. Whether installed on-premises, or deployed as SaaS, Alfabet will help you invest wisely by optimizing your IT landscape and collaboratively planning for the future. And we’re not the only ones who’ll point you to it: in its 2022 Magic Quadrant^TM for Strategic Portfolio Management, Gartner named Software AG as a Leader.

Would you like to learn more about how Alfabet can kick-start your IT transformation journey? Get in touch: we’d be happy to share more of our expertise.