5.5 Balancing Tangible and Intangible Benefits

In making the business case for Application Portfolio Management (APM), it is essential to balance tangible and intangible benefits. While tangible benefits such as cost savings and operational efficiencies are often more straightforward to quantify, intangible benefits—such as improved agility, business alignment, and enhanced decision-making—play an equally critical role in demonstrating the strategic value of APM. By presenting a comprehensive view of both types of benefits, organizations can create a compelling argument that resonates with a wide range of stakeholders.

5.5.1 Understanding Tangible and Intangible Benefits

• Tangible Benefits:
  Tangible benefits are measurable outcomes that can be expressed in financial or quantitative terms. They include:
  • Cost Reductions: Savings from eliminating redundant applications, optimizing licenses, and reducing operational overhead.
  • Operational Efficiencies: Time saved by IT teams due to streamlined processes and reduced technical debt.
  • Risk Mitigation: Avoiding costs associated with data breaches, compliance penalties, or system failures.
  • Faster Time-to-Market: Shortened development or deployment cycles for new services.
• Intangible Benefits:
  Intangible benefits are harder to measure but significantly contribute to the organization’s long-term success. Examples include:
  • Improved Agility: Faster responses to changing market conditions or business needs.
  • Enhanced Business-IT Alignment: Greater alignment of IT initiatives with business objectives.
  • Better Decision-Making: Insights from APM data that drive smarter investment and prioritization.
  • Employee and Customer Satisfaction: Enhanced user experiences from modernized applications and reduced frustration with outdated systems.

5.5.2 The Importance of Balancing Both Types of Benefits

Focusing solely on tangible benefits risks overlooking the strategic and cultural advantages APM can deliver. Conversely, emphasizing intangible benefits without quantifiable outcomes may fail to convince finance-driven stakeholders. Balancing these two perspectives ensures the business case appeals to both operational and strategic priorities.

• For Executives and Decision-Makers: Tangible benefits help justify the financial investment, while intangible benefits demonstrate the initiative’s strategic importance.
• For IT Teams: Tangible benefits highlight workload reductions, while intangible benefits show the broader value of their efforts to the organization.
• For Business Units: Tangible benefits address immediate operational improvements, while intangible benefits connect APM to long-term business goals like innovation and growth.

5.5.3 Strategies for Quantifying Intangible Benefits

Although intangible benefits are harder to measure, several approaches can help articulate their value effectively:

• Use Proxy Metrics: Identify metrics that indirectly reflect intangible benefits. For example:
  • Agility: Measure the time to deploy new applications or respond to business requests.
  • Alignment: Track the percentage of applications directly tied to strategic objectives.
• Survey Stakeholders: Gather feedback from employees and customers to measure improvements in satisfaction, productivity, or experience.
• Reference Industry Studies: Leverage external benchmarks or case studies that quantify similar intangible benefits in comparable organizations.
• Scenario Analysis: Present “what-if” scenarios to show how APM drives intangible value. For example, demonstrate how improved decision-making could prevent missed business opportunities.

5.5.4 Creating a Balanced Value Proposition

To ensure that both tangible and intangible benefits are given proper weight in the business case, consider the following approaches:

• Develop a Holistic Framework:
  • Categorize benefits into tangible (financial and operational) and intangible (strategic and cultural).
  • Use visuals, such as charts or tables, to show the balance between the two.
• Leverage Case Studies:
  • Use real-world examples to illustrate both types of benefits. For instance, a case study might show cost savings from retiring redundant applications (tangible) and improved agility from migrating to modern platforms (intangible).
• Communicate the Interdependence:
  • Highlight how tangible benefits enable intangible ones. For example, cost savings can fund modernization efforts that improve agility.
• Tailor Messaging to Stakeholders:
  • Present tangible benefits to finance-focused stakeholders, while emphasizing intangible benefits to strategic leaders and business units.

5.5.5 Example of Balanced Benefits in APM

This balanced approach demonstrates how tangible and intangible benefits work together to deliver comprehensive value.

5.5.6 Overcoming Objections

When stakeholders prioritize one type of benefit over another, address their concerns by:

• Highlighting Interconnections: Explain how tangible benefits (e.g., cost savings) support intangible ones (e.g., agility and innovation).
• Using Scenario-Based Narratives: Paint a clear picture of how both benefit types will impact the organization’s future.

5.5.7 Conclusion

Balancing tangible and intangible benefits is critical to presenting a complete picture of APM’s value. Tangible benefits provide the financial justification for investment, while intangible benefits demonstrate its long-term strategic impact. Together, they create a compelling narrative that resonates across all levels of the organization, ensuring the business case is robust, persuasive, and aligned with diverse stakeholder priorities.