Report on the Management of

Legacy Application Assets

Report to the North Carolina General Assembly

January 2011
Office of State Chief Information Officer
Gerald Fralick, State CIO

[This page left blank intentionally]

Executive Summary
Since 2005, the State CIO has prepared a biennial report on applications used throughout state
government, as directed by law. This is the fourth biennial report.
Applications are a critical component of IT. Commonly referred to as computer programs,
applications are the drive train that links the underlying technical infrastructure with the states
business and program staff and the public. They provide convenient and quality services and
operate state government in a secure, reliable and predictable manner. Applications also
represent a large portion of the states IT budget. Spending by Executive Branch agencies for
application operation and maintenance totals almost $260 million annually.
Overall, the total number of active applications reported by state agencies decreased from
1,257 to 1,117. At least part of the decrease can be attributed to a change in how some
agencies reported. Instead of reporting each application module as a separate application, they
consolidated all modules of an application into one application record. To ensure consistency in
data, all agencies will be asked to report applications in the same format for the next report.
Highlights of the 2011 Report
Favorable trends:
Applications that are in use statewide or throughout an agency are considered critical
because of their widespread usage and the impact if they failed. Critical applications
have decreased from 46% to 31%. The decrease is a result of agencies gaining a better
understanding of what is truly critical.
Problem applications have high risk, low architectural fit or low operational
performance. Potential problem applications that are classified as critical have
decreased from 6.8% to 4.6% of the total. Problem applications more than 20 years old
make up a smaller percentage of the portfolio than in previous reports (28% in 2007 and
2009; now 24%).
High Cost applications which have costs > $250,000 yearly have decreased slightly
from 9.7% to 9.1%.
Unfavorable trends:
The age of the states application portfolio is beginning to increase. In 2007 and 2009
the average age of applications was 9 years. For 2011, the average age has increased
to 10.5 years. Applications over 10 years old have increased from 33.9% to 47.6% (455
applications to 532 applications).
While the application portfolio is aging, agencies have fewer plans to replace, remediate
or modernize:
o The percentage of mission critical applications potentially at risk with planned
near-term remediation has fallen from 5% in 2007 to 2%.
o The percentage of applications that agencies plan to modernize in the next three
years has decreased from 24.7% to 22.7%.
o The percentage of older applications (over 20 years old) with potential problems
that have remediation plans has fallen from 20% in 2007 to 3.2%.

The percentage of non-critical applications with high costs has increased from 4.6% to
10.8%. These are applications that were deemed non-critical to statewide/agency
operations that have annual operating and maintenance costs greater than $250,000.

While the data is self-reported by agencies, the unfavorable trends are beginning to show where
funding is scarce and investment in replacing or remediating aging applications has become
difficult for state agencies. Given the current State budget challenges, this will create future
need for spending on applications as the budget and funding landscape improves.

Background
Applications are the computer programs that deliver services and operate state government.
They represent a significant portion of the states IT budget because they are often complex,
expensive to develop and implement, and costly to maintain, upgrade and operate.
Accordingly, they must be closely monitored and managed to maximize value while minimizing
costs and risks over their life spans.
The State Chief Information Officer (CIO), administration and General Assembly launched a
comprehensive asset management program with the passage of legislation in 2003. The State
CIO purchased software in 2004 to assist in application management. Armed with information
in the tool, the State CIO and agencies can perform statistical analyses to help determine the
significant actions they should take, and the timing of those actions, to optimize benefits and
manage risks.
The initial report prepared in 2005 utilized an outside firm. The primary purposes of that study
were to identify applications that presented risks needing immediate attention and to categorize
applications by timeframes for remediation or replacement. The report indicated that while there
were some applications that merited close attention, in general, the states application inventory
was acceptable. The study provided baseline information and a framework for later reports, but
was limited because it did not include the costs to operate and maintain applications, focused
on fact-finding (where we stand and what may be required), and was a snapshot at a point in
time.
Recognizing that the evaluation and life cycle planning of applications is not a one-time,
sporadic event, but a sustained, and structured effort, the State CIO implemented in 2005 and
early 2006 a comprehensive portfolio management software tool, with a fully-featured
component for Asset Portfolio Management (APM). The intent was to:

Assist the State CIO in performing oversight duties and responsibilities.

Provide inventory, analysis, and life cycle decision-making support to agencies in

performing their responsibilities and accountability for the management of application
assets.

Recognize serious potential problems and high-risk/high-impact situations in a timely

manner in order to take prompt and appropriate actions for mitigation.

Aware that the APM software tool alone would not be sufficient for agency executive, business,
and technical staff to adequately manage applications, the State CIO sponsored a
comprehensive education program focusing on the theories and best practices for APM.
Processing templates, logic models, and detailed instructions were developed to assist
agencies in applying key APM concepts, and training was given for performing relevant
analyses, asking pertinent questions, and developing appropriate management plans.
The second report, published in 2007, indicated that the agencies had progressed in their
capabilities for managing their applications. They had used the software tool to assist in
creating a detailed inventory of these assets; performing assessments of their status from
business, financial, and technical perspectives; and developing individual five-year management
plans. The statistical analyses performed by the State CIOs staff showed that the states

applications were in relatively good shape, with an average age of 9 years, close to the industry
average. However 85 of the 1,257 applications indicated the need for close attention due to
potential problems and the fact that they were critical for operations.
The third report, published in 2009, (the second using the data from APM software tool) enabled
some trend observations. Some favorable trends were observed. The number of lowvalue/high cost applications decreased and the number and percentage of applications that
agencies indicated would be modernized or replaced in the next three years increased. There
were also some unfavorable trends observed. The number of applications potentially at risk
grew as well as the number of mission-critical applications potentially at risk.
This document follows much of the focus, scope, and intent of the previous reports. In
summary, it is concerned with the status of the states portfolio of applications and the intentions
of agencies for their remediation, elimination or replacement.

Statistical Summary
The table below offers some key statewide statistics for the 2011, 2009 and 2007 reports from
the applications portfolio management software. For this report, more detailed information by
agency and statewide totals are presented in Appendix 1. This report presents data as of Fall
2010.
Description
General Information
Total number of active applications
Applications that have been
classified as critical due to
statewide or departmental use of
the application.
Applications that agencies indicate
will be modernized or replaced over
the next three years
Potential Problem Applications
Total applications with potential
problems
Potential problem applications that
are classified as critical to
statewide or department operations
Potential problem applications that
are classified as critical and have
plans to remediate or replace within
the next three years
Age Exception Applications
Average age of statewide portfolio
Applications over 20 years old
Applications over 20 years old and
with potential problems
Applications over 20 years old with
potential problems and have plans
to remediate or replace within the
next three years
Cost Exception Applications
Applications with high costs
Applications with high costs that
are classified as non-critical
Total Statewide Costs
Total annual operations and
maintenance costs for all
applications

2011
Report

2009
Report

2007
Report

Trend
Observations

1,117
343
30.7%

1,341
623
46.4%

1,257
625
49.7%

Decreasing
Decreasing

254
22.7%

332
24.7%

248
19.7%

188
16.8%

215
16%

196
15.6%

52
4.65%

92
6.9%

85
4.6%

23
2%

50
3.7%

58
4.6%

10.5
years
149
13.3%
36
24.1%

9 years

9 years

Increasing

172
12.8%
48
27.9%

154
12.2%
43
27.9%

Slight
Increase
Decreasing

9
6%

17
9.8%

31
20.1%

102
9.1%
11
10.8%

130
9.7%
6
4.6%

108
8.6%
9
8.3%

Decreasing

$259.2

$266.2

$239.7

Decreasing

Decreasing

Slight
Increase
Decreasing

Decreasing

Decreasing

Increasing

Significance Comments
See Note 1
Decrease in critical applications result in less support
and cost to the agency.

Percentage of applications with plans to be

modernized in the next three years has decreased by
2%.
See Notes 2 and 3
Percentage of applications potentially at risk has
increased slightly.
Percentage of portfolio that requires close attention is
decreasing.
Percentage of close attention applications with
planned near-term action is trending downward over
the last three reports.
See Note 2
Trend showing slowing of investment in application
portfolio.
For all three reports percentage of portfolio subject to
potential problems due to age is increasing slightly.
Percentage has decreased from previous years 2009
and 2007.
Percentage of older applications with potential
problems that have plans is trending downward over
the last three reports.
See Note 4
Percentage of high cost applications is decreasing
from 2009 report
Percentage of low-value/high-cost applications is
increasing.
See Note 5
Total cost decreased from FY 2007-08 but is still
greater than FY 2005-06

Note 1: Some agencies changed the way they report applications. Consolidating application modules,
previously reported separately, into one application record; therefore the total number of applications has
decreased. Agencies will be asked to report in a uniform manner in the future.
Note 2: Potential problem applications are those that have low architectural fit scores, low operational
performance scores, and/or high risk scores.
Note 3: Critical applications are those considered important to statewide or departmental operations.
Note 4: High costs for analysis purposes are annual operating and maintenance costs > $250k.
Note 5: Costs are in millions and the two fiscal years correspond to the 2007 and 2009 reports.

Appendix 1 Key Application Statistics

The following seven tables provide statistical information from the APM software by agency and
statewide totals. Descriptions and definitions are given below.

Table 1 - General Statistical Information contains overview information of interest in

determining the priority and urgency for further review and evaluation of individual
applications. Problem applications are those that have low architectural fit scores, low
operational performance scores, and/or high risk scores. Critical applications are
those classified as critical to statewide or departmental operations.

Table 2 - Age Statistical Information provides average age and number of applications
in various age categories. Age, by itself, is not an indicator of problems, risk, or priority;
however, older applications are more subject to problem and risk factors, such as
technical obsolescence, lack of vendor support, inability to meet changing business
requirements, etc.

Table 3 - Cost Statistical Information gives order of magnitude cost information for
operating and maintaining applications. These costs may be useful in justifying
remediation or replacement decisions that offer lower annual operating expenses and
recognizing opportunities for retiring high-cost/non-critical applications to redirect funds
for optimizing IT expenses.

Table 4 - Disaster Recovery Statistical Information offers return-to-service time

requirements for applications, and it gives the location for backup facilities (ITS or other).
Other could be at the department, outsourcer, or no backup capabilities.

Table 5 - Potential Problems Statistical Information identifies total applications with

potential problems and those by problem type.

Table 6 - Critical and Non-Critical Statistical Information gives the number of

applications by type of criticality. The column labeled Critical Applications is the sum
of the columns labeled Statewide Critical and Department Critical (the two highest
levels of criticality). This is the same number as that in the column labeled Critical
Applications in the General Statistical Information (first table above).

Table 7 Plans Statistical Information gives the number of applications with intentions
for modernization or replacement within the next three years.

Table 8 Priority Classification Statistical Information segregates applications by

relative importance to the agency (high or low critically) and severity of deficiencies/risks
(large or small problems). Greater attention for action should be given to important
(mission critical) applications with more severe technical or business problems (high
risks and severe adverse impact if risk materializes).

Total
"Problem"
Applications

Critical
Applications

Average Age of
Applications

Total FY 2010
Operations and
Maintenance
Application
Costs

Administration, Department of
Administrative Hearings, Office of
Agriculture and Consumer Services, Department of
Alcoholic Beverage Control Commission
Auditor, Office of the State
Budget and Management, Office of State
Commerce, Department of
Controller, Office of the State
Correction, Department of
Crime Control and Public Safety, Department of
Cultural Resources, Department of
Employment Security Commission
Environment and Natural Resources, Department of
Health and Human Services, Department of
Industrial Commission - Workers' Compensation
Information Technology Services, Office of
Insurance, Department of
Justice, Department of
Juvenile Justice and Delinquency Prevention, Department of
Labor, Department of
North Carolina Community Colleges
Public Instruction, Department of
Revenue, Department of
Secretary of State, Department of the
State Board of Elections
Transportation, Department of
Treasurer, Department of the State
Wildlife Resources Commission
State Totals:

Applications
with Plans in
Roadmap for
FY 2011-2014

Agency

Number of
Active
Applications

Table 1 General Statistical Information

52
3
68
5
4
9
26
13
28
79
28
18
200
227
8
27
18
78
6
7
5
106
15
1
5
62
14
5
1,117

1
3
3
3
2
0
16
3
0
0
1
0
79
35
8
6
1
46
2
1
1
10
7
0
0
21
5
0
254

17
1
31
0
0
4
3
2
0
5
3
0
29
22
5
6
7
16
2
0
0
30
1
0
0
1
3
0
188

28
2
6
3
0
1
5
12
8
45
2
9
6
47
3
12
14
53
1
7
5
24
8
1
5
26
5
5
343

9.31
7.67
10.87
9.20
5.00
14.00
5.19
13.77
6.79
16.33
11.25
15.33
8.70
12.90
10.13
5.93
6.83
11.06
5.00
7.43
13.80
8.83
9.33
10.00
5.80
9.60
8.57
3.80
10.49

$11,177,449
$2,980
$947,800
$194,320
$79,892
$883,496
$984,845
$21,447,954
$18,361,930
$7,922,359
$226,756
$5,707,768
$2,802,627
$88,616,192
$399,266
$15,758,248
$614,343
$2,734,411
$909,633
$14,951
$66,564
$23,098,594
$1,076,958
$1,377,988
$3,605,400
$43,465,993
$5,510,479
$1,197,326
$259,186,522

Over 5 Years Old

Over 10 Years Old

Over 15 Years Old

Over 20 Years Old

Administration, Department of
Administrative Hearings, Office of
Agriculture and Consumer Services, Department of
Alcoholic Beverage Control Commission
Auditor, Office of the State
Budget and Management, Office of State
Commerce, Department of
Controller, Office of the State
Correction, Department of
Crime Control and Public Safety, Department of
Cultural Resources, Department of
Employment Security Commission
Environment and Natural Resources, Department of
Health and Human Services, Department of
Industrial Commission - Workers' Compensation
Information Technology Services, Office of
Insurance, Department of
Justice, Department of
Juvenile Justice and Delinquency Prevention, Department of
Labor, Department of
North Carolina Community Colleges
Public Instruction, Department of
Revenue, Department of
Secretary of State, Department of the
State Board of Elections
Transportation, Department of
Treasurer, Department of the State
Wildlife Resources Commission
State Totals:

Average Age of
Applications

Agency

Number of Active
Applications

Table 2 Age Statistical Information

52
3
68
5
4
9
26
13
28
79
28
18
200
227
8
27
18
78
6
7
5
106
15
1
5
62
14
5
1,117

9.31
7.67
10.87
9.20
5.00
14.00
5.19
13.77
6.79
16.33
11.25
15.33
8.70
12.90
10.13
5.93
6.83
11.06
5.00
7.43
13.80
8.83
9.33
10.00
5.80
9.60
8.57
3.80
10.49

44
3
49
5
2
7
10
10
22
76
23
18
164
211
6
13
12
68
3
6
5
67
13
1
3
53
11
3
908

27
1
23
1
0
4
3
8
4
47
13
16
80
144
4
7
5
42
0
0
2
45
7
1
1
41
6
0
532

7
0
17
0
0
4
1
5
0
38
6
10
21
66
1
0
0
15
0
0
2
22
3
0
0
8
1
0
227

1
0
13
0
0
4
1
3
0
37
6
5
10
43
1
0
0
10
0
0
1
11
0
0
0
3
0
0
149

10

Applications with
O&M costs over
$100,000/Year

Applications with
O&M costs over
$250,000/Year

Applications with
O&M costs over
$500,000/Year

Applications with
O&M costs over
$1,000,000/Year

Administration, Department of
Administrative Hearings, Office of
Agriculture and Consumer Services, Department of
Alcoholic Beverage Control Commission
Auditor, Office of the State
Budget and Management, Office of State
Commerce, Department of
Controller, Office of the State
Correction, Department of
Crime Control and Public Safety, Department of
Cultural Resources, Department of
Employment Security Commission
Environment and Natural Resources, Department of
Health and Human Services, Department of
Industrial Commission - Workers' Compensation
Information Technology Services, Office of
Insurance, Department of
Justice, Department of
Juvenile Justice and Delinquency Prevention, Department of
Labor, Department of
North Carolina Community Colleges
Public Instruction, Department of
Revenue, Department of
Secretary of State, Department of the
State Board of Elections
Transportation, Department of
Treasurer, Department of the State
Wildlife Resources Commission
State Totals:

Total FY 2010
Operations and
Maintenance
Application Costs

Agency

Number of Active
Applications

Table 3 Cost Statistical Information

52
3
68
5
4
9
26
13
28
79
28
18
200
227
8
27
18
78
6
7
5
106
15
1
5
62
14
5
1,117

$11,177,449
$2,980
$947,800
$194,320
$79,892
$883,496
$984,845
$21,447,954
$18,361,930
$7,922,359
$226,756
$5,707,768
$2,802,627
$88,616,192
$399,266
$15,758,248
$614,343
$2,734,411
$909,633
$14,951
$66,564
$23,098,594
$1,076,958
$1,377,988
$3,605,400
$43,465,993
$5,510,479
$1,197,326
$259,186,522

3
0
4
0
0
4
2
9
11
6
0
9
6
43
2
16
3
6
3
0
0
15
2
1
3
27
8
3
186

2
0
0
0
0
0
1
6
8
5
0
4
2
25
0
12
0
1
1
0
0
6
1
1
3
19
4
1
102

1
0
0
0
0
0
0
4
5
2
0
4
0
19
0
10
0
0
0
0
0
4
1
1
2
13
3
1
70

1
0
0
0
0
0
0
2
3
2
0
3
0
12
0
6
0
0
0
0
0
3
0
1
1
8
1
0
43

11

Return to Service
Requirement
Between 8 and 24
Hours

Return to Service
Requirement Over 24
Hours

Backup and Restore

at ITS

Backup and Restore

Other

Adequate Offsite
Backup and Restore
Capability

Administration, Department of
Administrative Hearings, Office of
Agriculture and Consumer Services, Department of
Alcoholic Beverage Control Commission
Auditor, Office of the State
Budget and Management, Office of State
Commerce, Department of
Controller, Office of the State
Correction, Department of
Crime Control and Public Safety, Department of
Cultural Resources, Department of
Employment Security Commission
Environment and Natural Resources, Department of
Health and Human Services, Department of
Industrial Commission - Workers' Compensation
Information Technology Services, Office of
Insurance, Department of
Justice, Department of
Juvenile Justice and Delinquency Prevention, Department of
Labor, Department of
North Carolina Community Colleges
Public Instruction, Department of
Revenue, Department of
Secretary of State, Department of the
State Board of Elections
Transportation, Department of
Treasurer, Department of the State
Wildlife Resources Commission
State Totals:

Return to Service
Requirement under 8
Hours

Agency

Number of Active
Applications

Table 4 Disaster Recovery Statistical Information

52
3
68
5
4
9
26
13
28
79
28
18
200
227
8
27
18
78
6
7
5
106
15
1
5
62
14
5
1,117

10
0
6
1
0
6
12
0
4
3
2
8
7
27
1
14
1
9
1
0
0
8
2
0
2
3
0
5
132

34
0
10
2
1
1
5
1
23
37
9
7
49
33
0
0
6
50
1
5
0
14
3
1
2
27
4
0
325

6
3
22
2
3
2
9
12
1
36
15
3
139
166
2
13
11
19
4
2
0
80
10
0
1
32
10
0
603

32
3
9
5
0
9
3
12
20
2
14
11
6
68
6
17
0
0
1
0
0
29
3
0
0
15
14
0
279

20
0
59
0
4
0
23
1
8
77
14
7
194
159
2
10
18
78
5
7
5
77
12
1
5
47
0
5
838

25
3
57
5
1
9
26
13
28
39
16
18
114
215
8
26
18
78
6
1
5
72
5
1
5
28
14
5
841

12

Applications with
Technical Issues

Applications with
Risk Issues

Applications with
Operational
Performance Issues

Administration, Department of
Administrative Hearings, Office of
Agriculture and Consumer Services, Department of
Alcoholic Beverage Control Commission
Auditor, Office of the State
Budget and Management, Office of State
Commerce, Department of
Controller, Office of the State
Correction, Department of
Crime Control and Public Safety, Department of
Cultural Resources, Department of
Employment Security Commission
Environment and Natural Resources, Department of
Health and Human Services, Department of
Industrial Commission - Workers' Compensation
Information Technology Services, Office of
Insurance, Department of
Justice, Department of
Juvenile Justice and Delinquency Prevention, Department of
Labor, Department of
North Carolina Community Colleges
Public Instruction, Department of
Revenue, Department of
Secretary of State, Department of the
State Board of Elections
Transportation, Department of
Treasurer, Department of the State
Wildlife Resources Commission
State Totals:

Total "Problem"
Applications

Agency

Number of Active
Applications

Table 5 Potential Problems Statistical Information

52
3
68
5
4
9
26
13
28
79
28
18
200
227
8
27
18
78
6
7
5
106
15
1
5
62
14
5
1,117

17
1
31
0
0
4
3
2
0
5
3
0
29
22
5
6
7
16
2
0
0
30
1
0
0
1
3
0
188

16
1
6
0
0
1
2
2
0
5
3
0
22
17
1
2
6
16
2
0
0
8
1
0
0
1
3
0
115

3
1
26
0
0
3
2
1
0
0
0
0
8
5
4
3
1
1
0
0
0
22
0
0
0
0
0
0
80

0
0
0
0
0
0
0
0
0
0
0
0
1
2
0
1
0
0
0
0
0
1
0
0
0
0
0
0
5

13

Statewide Critical
Applications

Department Critical
Applicatoins

Program Critical
Applications

Non-Critical
Applications

Administration, Department of
Administrative Hearings, Office of
Agriculture and Consumer Services, Department of
Alcoholic Beverage Control Commission
Auditor, Office of the State
Budget and Management, Office of State
Commerce, Department of
Controller, Office of the State
Correction, Department of
Crime Control and Public Safety, Department of
Cultural Resources, Department of
Employment Security Commission
Environment and Natural Resources, Department of
Health and Human Services, Department of
Industrial Commission - Workers' Compensation
Information Technology Services, Office of
Insurance, Department of
Justice, Department of
Juvenile Justice and Delinquency Prevention, Department of
Labor, Department of
North Carolina Community Colleges
Public Instruction, Department of
Revenue, Department of
Secretary of State, Department of the
State Board of Elections
Transportation, Department of
Treasurer, Department of the State
Wildlife Resources Commission
State Totals:

Critical
Applications *

Agency

Number of Active
Applications

Table 6 Critical and Non-Critical Statistical Information

52
3
68
5
4
9
26
13
28
79
28
18
200
227
8
27
18
78
6
7
5
106
15
1
5
62
14
5
1,117

28
2
6
3
0
1
5
12
8
45
2
9
6
47
3
12
14
53
1
7
5
24
8
1
5
26
5
5
343

18
1
1
0
0
0
0
10
0
14
1
6
3
13
0
8
2
12
0
0
1
12
0
0
5
17
3
0
127

10
1
5
3
0
1
5
2
8
31
1
3
3
34
3
4
12
41
1
7
4
12
8
1
0
9
2
5
216

22
1
43
2
0
7
18
1
16
23
11
0
20
156
2
6
2
7
0
0
0
7
5
0
0
30
2
0
381

2
0
12
0
4
1
3
0
4
10
15
9
174
23
0
9
2
18
5
0
0
74
2
0
0
6
7
0
380

14

Applications with
Remediation Plans
in 2011

Applications with
Remediation Plans
in 2012

Administration, Department of
Administrative Hearings, Office of
Agriculture and Consumer Services, Department of
Alcoholic Beverage Control Commission
Auditor, Office of the State
Budget and Management, Office of State
Commerce, Department of
Controller, Office of the State
Correction, Department of
Crime Control and Public Safety, Department of
Cultural Resources, Department of
Employment Security Commission
Environment and Natural Resources, Department of
Health and Human Services, Department of
Industrial Commission - Workers' Compensation
Information Technology Services, Office of
Insurance, Department of
Justice, Department of
Juvenile Justice and Delinquency Prevention, Department of
Labor, Department of
North Carolina Community Colleges
Public Instruction, Department of
Revenue, Department of
Secretary of State, Department of the
State Board of Elections
Transportation, Department of
Treasurer, Department of the State
Wildlife Resources Commission
State Totals:

Applications with
Plans in Roadmap
for FY 2011-2014

Agency

Number of Active
Applications

Table 7 Remediation Plans Statistical Information

52
3
68
5
4
9
26
13
28
79
28
18
200
227
8
27
18
78
6
7
5
106
15
1
5
62
14
5
1,117

1
3
3
3
2
0
16
3
0
0
1
0
79
35
8
6
1
46
2
1
1
10
7
0
0
21
5
0
254

0
3
1
3
2
0
7
1
0
0
1
0
51
12
0
5
1
43
1
1
1
9
7
0
0
7
4
0
160

0
0
0
0
1
0
2
1
0
0
1
0
42
8
6
3
0
11
0
0
0
5
0
0
0
8
0
0
88
15

Low Criticality
Application with
High Problems

High Criticality
Application with Low
Problems

High Criticality
Application with
High Problems
(Action Quadrant)

High Criticality/
High Problem
Plan in Place

High Criticality/
High Problem
No Plan in Place

Administration, Department of
Administrative Hearings, Office of
Agriculture and Consumer Services, Department of
Alcoholic Beverage Control Commission
Auditor, Office of the State
Budget and Management, Office of State
Commerce, Department of
Controller, Office of the State
Correction, Department of
Crime Control and Public Safety, Department of
Cultural Resources, Department of
Employment Security Commission
Environment and Natural Resources, Department of
Health and Human Services, Department of
Industrial Commission - Workers' Compensation
Information Technology Services, Office of
Insurance, Department of
Justice, Department of
Juvenile Justice and Delinquency Prevention, Department of
Labor, Department of
North Carolina Community Colleges
Public Instruction, Department of
Revenue, Department of
Secretary of State, Department of the
State Board of Elections
Transportation, Department of
Treasurer, Department of the State
Wildlife Resources Commission
State Totals:

Low Criticality
Application with Low
Problems

Agency

Number of Active
Applications

Table 8 Priority Classification Statistical Information

52
3
68
5
4
9
26
13
28
79
28
18
200
227
8
27
18
78
6
7
5
106
15
1
5
62
14
5
1,117

16
1
32
2
4
4
18
1
20
33
23
9
166
161
1
11
4
19
3
0
0
60
7
0
0
36
7
0
638

8
0
30
0
0
4
3
0
0
1
3
0
28
19
4
4
0
6
2
0
0
22
0
0
0
0
2
0
136

19
1
5
3
0
1
5
10
8
41
2
9
5
44
2
10
7
43
1
7
5
16
7
1
5
25
4
5
291

9
1
1
0
0
0
0
2
0
4
0
0
1
3
1
2
7
10
0
0
0
8
1
0
0
1
1
0
52

2
1
0
0
0
0
0
1
0
1
0
0
0
1
1
1
0
10
0
0
0
3
1
0
0
0
1
0
23

7
0
1
0
0
0
0
1
0
3
0
0
1
2
0
1
7
0
0
0
0
5
0
0
0
1
0
0
29

16

Appendix 2
147-33.90. Analysis of State agency legacy systems.
(a) The Office of Information Technology Services shall analyze the State's legacy
information technology systems and develop a plan to ascertain the needs, costs, and time
frame required for State agencies to progress to more modern information technology
systems.
(b) In conducting the legacy system assessment phase of the analysis, the Office shall:
(1)
Examine the hierarchical structure and interrelated relationships within
and between State agency legacy systems.
(2)
Catalog and analyze the portfolio of legacy applications in use in State
agencies and consider the extent to which new applications could be
used concurrently with, or should replace, legacy systems.
(3)
Consider issues related to migration from legacy environments to
Internet-based and client/server environments, and related to the
availability of programmers and other information technology
professionals with the skills to migrate legacy applications to other
environments.
(4)
Study any other issue relative to the assessment of legacy information
technology systems in State agencies.
(c) Upon completion of the legacy system assessment phase of the analysis, the Office
shall ascertain the needs, costs, and time frame required to modernize State agency
information technology. The Office shall complete this phase of the assessment by
January 31, 2005, and shall report its findings and recommendations to the 2005 General
Assembly. The findings and recommendations shall include a cost estimate and time line
for modernization of legacy information technology systems in State agencies. The
Office shall submit an ongoing, updated report on modernization needs, costs, and time
lines to the General Assembly on the opening day of each biennial session. (2003-172, s.
1; 2004-129, s. 22.)

17

Appendix 3
Purpose and Benefits of Application Portfolio Management
The management of application assets is important because they:

Are essential to the reliable, effective, efficient, and secure business operations
of state government, the accomplishment of its primary governmental initiatives,
and the success of its governmental programs.

Represent significant capital investments and are expensive to operate, upgrade,

enhance and maintain over their useful lives. Moreover, the mission critical ones
incur extra planning efforts and associated expenses for data backup and system
recoverability to support continuity of business in the event of a catastrophic
failure.

Present risks in the areas of security, confidentiality of records, privacy of

individuals, and integrity of technical operations and business processes
resulting in possible unfavorable public repercussions and significant financial
repercussions in the event of breach or failure.

Provide opportunities for delivering innovative, responsive, and quality services

to constituents; achieve efficiencies of operations and improve the productivity
and effectiveness of employees, and enhance the outcomes and results of
governmental programs.
However, they must be implemented properly,
operated proficiently, maintained effectively, and upgraded or enhanced
periodically to provide maximum value.

What is Application Portfolio Management (APM)?

Application assets are managed through the discipline of application portfolio
management (APM). In summary, APM is about how agencies measure and respond to
the business value, cost, operational and technical performance, and risk of their
application portfolios.
APM employs a combination of business/IT governance
processes, portfolio management concepts, and best practices and techniques for asset
life cycle management. The goals are to obtain optimal performance and value from
applications over their life spans while minimizing costs and risks and to consolidate,
eliminate, or retire them when they are no longer business-acceptable, cost-justified, or
risk-tolerable.
In practice, many business shortcomings, technical problems, and operational risks
associated with aging applications can be attributed to outdated technologies; therefore,
agency business, application, and infrastructure architectures are key considerations for
the management of applications. Accordingly, the road map for individual or groups of
related applications is often called the applications modernization plan because it shows
the paths and timeframes (what to do and when to do it) for removing technically
obsolete applications from the portfolio or renovating them to employ more modern

18

designs and newer technologies and run on more cost-effective and better-performing
platforms.

Benefits of APM
The benefits of APM can be summarized in four areas highlighted below:

Reduce costs The identification of overlapping capabilities and unused

functions of applications to offer opportunities for retirements without
replacement, consolidation of like applications, or multiple retirements from a
common initiative (such as ERP replacing several legacy applications). The
removal of redundant, elimination of low-value/high-cost, and technical
renovation of high-maintenance applications free up funds for possible use on
new investments and innovative projects offering greater benefits.

Identify and reduce risks A list of areas creating potentially unacceptable

risks includes regulatory compliance (unable to meet), disaster
recovery/business continuity (unable to perform), security vulnerabilities, vendor
viability for support or warranty coverage, product viability for technical
components, loss of staff with technical or business knowledge, privacy
(compromise of sensitive citizen data), information (unable to follow data
retention/deletion policies), and business failure (unable to support changing
business requirements).

Prioritize capital investments An understanding of the state of the application

portfolio from value, cost, and risk perspectives and its supporting IT
infrastructure provides important information for the IT investment review,
selection, and funding process.

Provide business value The development of application modernization plans

assists in the alignment of IT initiatives with business strategies and enables the
reengineering of business processes that improve efficiencies and effectiveness
of governmental services and programs. The objective is to transform the
applications portfolio to a position that is more business-responsive, costoptimized, financially-affordable, technically-suitable, and risk-acceptable.

Primary goals of the states application portfolio management effort include:

Maintain an accurate, up-to-date inventory.

Evaluate their present status:

o Costs to operate and maintain.
o Ability to support current and future agency business processes and the
operations of governmental programs.
o Fit with the states technical architecture and each agencys business and
applications architectures.
o Risk of technical and/or business failure due to lack of staff or vendor
support, technical obsolescence, defunct technical component, security

19

vulnerabilities, outdated design, dependencies on other applications with

problems, use of outmoded or non-supported technical infrastructure, etc.

Determine the priority and urgency for action:

o Importance to the business processes of the agency or the results of
program operations (mission critical or less essential to the achievement
of agency goals and mandates or success of key business strategies and
initiatives).
o Severity of business issues or technical problems risks and severity of
any adverse impacts.

Decide the best approaches and timeframes for managing them for at least the
five-year near-term, including continue to maintain, enhance or modernize,
consolidate or eliminate, or retire/replace. Longer term plans also may be
created based on the positions of applications in their life cycles.

Develop a comprehensive modernization plan/roadmap and a technical

applications strategy for the agencys applications portfolio and prepare
associated funding requests.

20