Harnessing the power of technology portfolio management (TPM) for a resilient technology strategy

If you’re an IT leader today, chances are you’ve spent a great amount of time and energy dealing with disruption. The advance of the digital-first economy, the rise of mobile commerce, and the growing importance of sustainability mean consumer expectations are changing and intensifying. At the macro level, businesses must grapple with a tangle of new laws and regulations designed to stave off climate catastrophe, as well a new wave of protectionist policies that threaten to turn back the clock on globalization. Internally, they’re confronting shortages of skilled workers and ever-present cybersecurity threats—all the while adjusting to new remote or hybrid working paradigms that employees have come to expect. Many of these challenges existed prior to 2020 but were accelerated to warp speed by the COVID-19 pandemic and show little sign of letting up.

Meeting this disruption head-on, with the agility to stay competitive, is a task that places great demands on your IT—and the ability of your projects, technologies, processes, and applications to drive new ways of doing business. Yet too often, the size and complexity of the IT landscape hinder its ability to deliver on business demand in a way that’s cost effective. Too many enterprises, due to a history of rushed or ill-informed investment decisions, have emerged with bloated IT portfolios that are a burden to maintain, and eat up time and money that could be better spent researching—and adopting—newer, nimbler, solutions.

The unsung heroes of your enterprise

A big part of the problem lies in the technologies behind the scenes that form the backbone of the IT landscape: things like application servers, LDAP repositories, or BI engines used to manage data. When properly aligned, these technologies are the workhorses that allow the business application landscape to function. But their diversity and number also lead to challenges. Particularly for firms struggling to retain IT talent, maintaining the know-how to understand how these technologies operate, and relate to each other, can be a struggle. New technologies introduced through projects, or mergers and acquisitions, coupled with the constant release of new versions, only exacerbate the problem. Failure to get this under control means higher operating costs and the excess accumulation of technical debt, as well as an increased risk of security incidents and project failures.

How can your enterprise steer clear of these headaches, and ensure your technologies perform as intended: as unsung heroes rather than burdens? In the following paper, we’ll show you why your best bet lies in leveraging technology portfolio management (TPM) to define, maintain, and execute a technology strategy that’s tailor-made for today’s disruptive era. We’ll detail how TPM can connect the dots between technology and business change, and help you understand what a successful IT strategy looks like. We’ll also show how TPM can help you better manage technical debt, accelerate business innovation, boost cybersecurity, and hedge against the gap in skills that permeates today’s global IT industry.

Dwight D. Eisenhower, acclaimed military general turned U.S. President, was no technologist—but his wisdom on preparing for disruption offers lessons for today’s IT professionals. “Plans are worthless, but planning is everything,” he said in a 1957 speech. What he meant, in the context of war, is that it’s impossible to create a foolproof plan for battle when the on-ground dynamics are constantly changing. The planning process, though, demands a thorough investigation of the contingencies that make a strategy adaptable—and ultimately more likely to succeed.

The same is true of IT strategy. Just like Eisenhower, whose planning resume included the famed Normandy landings that marked a turning point in World War II for the U.S. and its Allies, IT leaders must view strategy as a moving target—one that can quickly adjust in response to the changing business environment. To do so, they require transparency: in the form of a complete, real-time view of the IT landscape and all the change activities in the pipeline. Just as an army general must coordinate units in pursuit of a geopolitical goal, IT strategist and planners, enterprise architects, and CIOs need to relate their technologies to the wider aims of business—and present them to business leaders in a way that they can understand and act on.

In IT, this is the aim of strategic portfolio management (SPM). SPM  ties together a range of tasks—including strategy execution management, program portfolio management, integrated IT portfolio analysis, Lean portfolio management, and agile financial management, that were historically carried out separately. Including the discipline of enterprise architecture (EA) in the mix enables firms to visualize the cost, complexity, and feasibility of changes to the IT portfolio. This “whole view” means that any change across the IT or business landscape is immediately visible and its impact is apparent. This, in turn, ensures agility and confidence in making decisions—vital during disruptive times when existing plans go out the window and businesses must pivot to stay competitive.

TPM is a sub-discipline of SPM and an essential part of this puzzle. TPM helps enterprises establish a continuous process to monitor the technologies being used and evaluate their value to the IT mission. It is also used to set and develop technological standards that provide guidelines for distributed Agile development teams and keep solution development on a set strategic path forward to avoid the accumulation of technical debt. It is the basis for innovation management, enabling IT leaders to grasp the current and future demand for technologies needed to implement future-fit business applications. When done right, TPM can help transform a bloated and costly technology portfolio into one that’s far more agile and better attuned to the evolving needs of both IT and business. In short, it’s a critical tool for the continuous planning that Eisenhower would call indispensable.

Whereas Eisenhower was planning troop movements with pen and paper, today’s IT strategists have the luxury of sophisticated software. Tools that support SPM, like Software AG’s Alfabet, are an increasingly popular way for enterprises to understand the relationship between IT and business change and manage the complexity inherent to strategic planning in complex environments.

What, exactly, does continuous IT planning entail? From Software AG’s experience, when it comes to managing the technology portfolio, there are five essential challenges that IT leaders face—all of which can be improved with the right TPM practices.

• Technology inventory
  To effectively plan for technology change, enterprises first need a clear view of the portfolio at present. A central technology inventory, which supports both single and composite technologies and multiple taxonomies, provides this foundation. It should include information on technology vendors, associated contracts, and usage by applications,  and other information giving decision makers necessary context.
• Lifecycle management
  Continuous planning demands knowing, at any time, which technologies are approaching their sunset phase, and which ones are coming after to replace them. This is especially important when mapping out a transformation strategy and negotiating contracts with technology vendors.
• Standards/exceptions
  Having a robust set of standards speeds up the process of developing technology solutions, while introducing less complexity, cost, and risk into the IT landscape. It also provides a stable environment on which to base decisions on change. Clearly-defined approval processes ensure all stakeholders are involved in technology decisions and document these processes for later reference and learning.
• Portfolio analysis
  Keeping the portfolio sleek and state-of-the-art requires a continuous assessment of each technology and its value: in other words, perpetual optimization. This is where enterprises can apply the KPIs they need to achieve market differentiation.
• Data oversight
  IT leaders need an in-depth understanding of where and how their data is being processed. This is critical for complying with regulations and understanding how system failures might impact business.

Not all tools are created equal

Embracing a tool with TPM capabilities can be a great first step toward overcoming deficits in these four aspects of managing the technology landscape. Yet that alone won’t guarantee success. Research in 2022 by Gartner found that 84 percent of organizations surveyed displayed “moderate to low effectiveness at portfolio management.” Many of these firms had purchased some type of portfolio management software but still failed to achieve a “true picture of performance.”

Companies in this camp tend to lack the hallmarks of good TPM practice: Without a real-time view of their technologies in use, they have difficulty assessing the enterprise-wide impact of technology and application changes. Creating and enforcing standards becomes a constant source of headaches. IT planners, moreover, struggle to differentiate the emerging technologies that can provide clear-cut business benefits from those that are only likely to increase costs and add to systemic risks.

How can your enterprise do things better? Knowing what to look for in a tool is a great way to start. Since achieving a “whole view” is of upmost importance, we strongly suggest a solution that offers a single repository—for technologies, technology usage, and standards. It should come with robust capabilities to identify redundant technologies and technical debt and have built-in standards enforcement using governance processes and reports. We also suggest a tool with intuitive dashboarding and reporting capabilities—to document technologies and their lifecycles, and map out transformation programs.

The Alfabet advantage

If you’re in the market for a platform that offers all of this, we encourage you to see what’s out there. We have a strong feeling, though, that you’re likely to be drawn to Alfabet. Part of this is due to its wider SPM capabilities: it’s the only product on the market that has native integration between the project portfolio and the enterprise architecture, enabling decisions on technology and project investments with a clear picture of what needs to change in the IT landscape. At the same time, it's tailor made for TPM—with a central technology inventory, catalogs to define standards and exceptions, reporting tools to aggregate KPIs and synthesize data, and dashboards to support lifecycle management.

As an IT leader, you’re likely familiar with the concept of technical debt. In short, it refers to the cost of future work that will need to be done to keep a company’s existing technologies up to date. This includes maintenance and upgrades, modifications to comply with data standards, and, in many cases, bespoke customizations to keep software running after the vendor no longer offers support.

Nearly every enterprise accumulates some technical debt and a bit of it isn’t a bad thing: it is a necessary side effect of IT change and inherent to Agile development methods. When a business adopts new technologies to drive digital transformation, boost customer centricity, enable remote operations, or meet demands for sustainability, its old systems don’t disappear overnight. Instead, they must be integrated into the new and ever-evolving IT landscape.

Technical debt that’s managed poorly, however, can eat up IT budgets and shackle companies’ ability to compete. Challenges created by old, outdated systems often emerge with little warning, causing projects to run over cost and IT teams to miss important deadlines. Debt can accumulate from poorly planned investments, too: in an effort to save time and money in the present, an enterprise may choose a limited solution that will demand rework within a year or two, rather than something that’s more durable. Like financial debt, technical debt also generates “interest:” over time, companies tend to build new integrations and features on top of sub-optimal solutions, which only increases the cost of getting it right later on. All of this adds up. A 2022 Software AG survey of more than 700 IT decision makers around the globe found that 25% of firms’ technology budgets, on average, is diverted to resolving technical debt issues.

Why debt thrives in the dark

When technical debt accumulates to the extent that it hinders transformation, it’s often a sign of sub-optimal planning. Many enterprises in this situation have data that is siloed: information on their technologies and how they’re used is not all in one place, which means it’s near impossible to make informed choices on technology strategy. Without an overall view of what they’re trying to manage, they’re easily overwhelmed by change—and by the constant rush of new releases and new IT products. When technical debt begins to mount, leaders often hesitate to address the issue: after all, they’d rather focus on what’s new, and on getting new products to customers.

It's in these types of situations that TPM can help. With a portfolio management tool like Alfabet you can:

• Establish baseline transparency—through a central repository for technologies 
• Optimize those technologies by developing standards to reduce complexity and focus future investments
• Manage innovation—by introducing new technologies that improve the user experience, make the architecture faster and more scalable
• Roadmap change, and create a transparent view of when new technologies will be added and older ones phased out  

Tackling technical debt in this manner will invariably involve some trade-offs: For example, there will always be an inherent tug-of-war between standardization, which seeks to reduce IT complexity, and innovation, which involves introducing new types of technologies that tend to increase it. TPM, by design, can help you manage this with flexibility, with a process-based approach that helps you get the balance right. This will help you understand why some technologies are better bets than others—and share that know-how across the entire organization.

Just as TPM can help enterprises optimize their existing technologies, it has a key role to play in the adoption of new ones—and in the wider quest for innovation. This is especially important in today’s era of disruption, where competition is no longer just on cost or quality, but on new business models and experiences.

The need to make fast decisions on new products or services can be daunting, especially for industry incumbents. Yet evidence suggests that doubling down on innovation can help firms navigate especially disruptive periods. For example, the firms listed by the management consultancy BCG as the fifty most innovative in 2007, greatly outperformed the market during and after the subsequent global financial crisis.

A 2017 study by the MIT Center for Digital Business of 400 large firms from across the globe found the most successful were those that responded to digital disruption with a high level of “intensity” in two areas: technology investments, and vision for change among management. On average, the study found, these firms were 26% more profitable than their industry competitors.

Building the right road map

It's this alchemy of technology adoption and strategic vision that enables firms to be innovation drivers. But the process needs to be done right. Companies must ensure that IT change is continuously aligned to the business environment and strategy. To maintain proper execution, and cost effectiveness, they demand a high degree of IT governance, and collaboration, across the entire organization.

This is a task that’s tailor made for TPM. With the right implementation, a tool like Alfabet can nurture innovation by helping enterprises:

• Gather and road map technical innovations
  Change can be overwhelming, and organizations still adapting to the last big innovation may be tempted to let the next one pass them by. Missing out, though, can quickly lead to the loss of a competitive advantage—which is why road mapping change is so important. TPM helps give structure to the innovation process, from the evaluation of new technologies, to incubation, to commercialization and reporting on their impact. It provides the transparency needed for different teams to avoid duplication, and for the whole organization to understand why certain innovations are being prioritized ahead of others.
• Assess impact and potential
  TPM can also help evaluate the impact of technologies that underpin new innovations—and the potential that they offer business. It gives decision-makers a clearer sense of when new technologies will arrive on the market, whether their firms have the existing IT architecture, and skills, to utilize their full potential, and what the costs are likely to be of acquisition and implementation.
• Road map innovation implementation
  Once a firm has assessed this impact, it can then use TPM to calibrate the technology to specific projects and plan its deployment across the organization. This can help decision makers understand its impact on the wider IT landscape—avoiding conflicts that can cause project overruns and result in unexpected costs. TPM can also roadmap IT consolidation, whether the result of a merger, the presence of too many applications, or negligence in retiring unused systems. In this case, roadmaps ensure the precise timing of shutting down applications, rolling over to new technologies and introducing new IT support for business.
• Involve people and listen
  Innovation works best as a collaborative process: not every business or IT leader will immediately grasp a new technology’s potential, and some are likely to have bold visions with little grounding in what’s possible. A TPM tool like Alfabet can share knowledge across the organization and foster the collaboration needed to evaluate new ideas, encourage experimentation, and create ideal conditions to make informed investment choices.

Accelerating innovation is difficult enough when an enterprise’s IT systems are working as intended. Yet today’s IT leaders also need robust protection for the times they’re not—including through malicious actions. Cybercriminals and hackers determined to steal sensitive data, thwart the operations of critical infrastructure, or extort companies by holding their IT ransom pose a threat to every industry. They’re also growing more sophisticated by embracing innovations of their own, including AI tools that exploit vulnerabilities in threat detection systems.

In today’s digital environment, cyber-attacks pose an existential threat to firms’ operations, reputation, and their bottom line—and as more companies create breakthrough products and services that leverage cloud computing and the Internet of Things (IoT), these risks will only accelerate. One poll by Deloitte in October 2022 of more than 1,100 senior executives found that 35% of organizations had experienced cyber events targeting accounting and financial data over the previous 12 months and nearly half expected a rise in such attacks over the year ahead. According to Cybersecurity Ventures, a global watchdog, the cost of cybercrime worldwide is predicted to hit $8 trillion in 2023 and rise to $10.5 trillion by 2025.

Turning to TPM with a solution such as Alfabet can help you get ahead of threats in three main ways:

• Complete technology portfolio data
  Companies with a large catalog of hardware and software can be especially vulnerable to attacks, especially when many technologies and applications are out of date. By providing current and correct information, TPM helps decision makers know exactly what they need to defend—and understand the interdependencies of systems at risk.
• Phasing out obsolete technologies
  Outdated technologies, especially those vendors no longer support, are a hacker’s goldmine: often they contain vulnerabilities that can threaten the entire enterprise. TPM can help you retire them with confidence—in a way that ensures continuity of operations and minimizes external risks.
• Comprehensive threat management
  Innovations like IoT and cloud computing are essential to staying competitive—though they also expose companies to heightened levels of risk. With TPM, business and IT leaders can integrate threat management into every stage of the IT planning process—and rate threats based on the severity or risk they impose and the architectural components they affect. This helps them make smarter decisions on which technologies to adopt, and helps stakeholders respond to attacks with greater confidence.

A final use of TPM involves its ability to help IT staff be more productive—and help firms fill gaps in areas where skills are in limited supply.

Despite a recent wave of job cuts, today’s IT job market is as tight as ever. In the last quarter of 2022 and first quarter of 2023, tech firms around the globe laid off more than a quarter million workers, as persistent inflation and higher interest rates ate into profits and led to fears of recession. Many of the positions cut, however, impacted business, sales, and marketing professionals, rather than workers with more technical skill sets. Previous hiring binges during the height of the pandemic means that demand for those personnel is often greater than supply. 

One survey by Gartner in December 2022 found 86 percent of CIOs reported it was getting more difficult to find qualified candidates, particularly those with skills in application development, AI and machine learning, software engineering, and enterprise cloud architecture. Many reported taking four to six months to fill open positions. 73 percent, moreover, worried they’d be unable to hold on to their existing IT talent, due to the range of opportunities, and high salaries, available elsewhere.

If this sounds like a familiar struggle, TPM can help. In particular, a tool like Alfabet can take the sting out of today’s prevailing skills gap in two fundamental ways:

• Streamlining the technology portfolio
  A single, transparent, technology repository, that’s optimized to minimize complexity, will not only rein in costs and technical debt—it will also reduce demands on the workforce. Staff equipped with a tool like Alfabet can operate with greater efficiency and have access to deeper insights, enabling the enterprise to cover more ground without hiring additional help. Phasing out redundant technologies also eliminates the need to monitor them, further reducing labor requirements and easing pressure on HR.
• Road mapping new hires
  Just as TPM-enabled road maps can help drive innovation, they also enable enterprises to create a structured, transparent, and data-driven process for planning out new hires. By knowing exactly what your technology portfolio is made of, and where you want your technology strategy to take you, you’ll have a better sense of the skills your enterprise requires. You’ll also have greater confidence that those you bring on board will have a tangible impact.

Are you looking for a way to finally take control of IT change? To ensure the technologies your company adopts will leave you best equipped to thrive, rather than be left behind, by innovation? If so, we appreciate the difficulty of the task: in a world of constant disruption, it can be tricky to separate innovations that are paradigm shifts from ones that are passing fads; or those that will drive revenue for years to come from those that will merely represent a burden.

Luckily, you don’t have to go it alone: with the right TPM tool, your enterprise will gain the visibility you need to make informed IT investment decisions—and build a technology portfolio that’s leaner, more cost effective, and in lock step with the demands of business. TPM can help you get on top of your technical debt, build technology roadmaps with greater precision, protect your IT from malicious actors, and drive worker productivity. Above all, it gives you a direct line of sight between technology and business change—enabling the continuous planning that forms the bedrock of a resilient technology strategy. 

Now is the time to act

Is your enterprise ready to ensure your technology portfolio becomes a driver of business success—and positions you to navigate the age of disruption with confidence? If so, we’d encourage you to learn more about Alfabet, and the many reasons it’s an ideal tool for the task. We’re not alone in this assessment: In its 2023 Magic QuadrantTM for Strategic Portfolio Management, Gartner named Software AG as a Leader, repeating its assessment from the previous year. Of all the products on the market, Alfabet has the richest repository covering business, technology, finance, and risk aspects of the organization. It’s also flexible, with both entry-level and enterprise solutions: Its “go-as-you-grow” offering, Alfabet FastLane, can easily be scaled into the full Alfabet product.

If you think that TPM, and Alfabet, could be right for your business, get in touch: we’d be more than happy to help guide you.