Measuring Application Portfolio Health: KPIs and Metrics That Matter

Define and track the right metrics to measure your application portfolio's health. From cost efficiency to user satisfaction, learn what to measure and why.

Why Measure Portfolio Health?

The Dashboard Gap

Most SMEs track individual application costs or uptime but lack a holistic view of portfolio health. Without comprehensive metrics, you're making portfolio decisions with incomplete information—like driving with only a speedometer and no fuel gauge.

What Comprehensive Metrics Enable:

Data-driven investment decisions
Early warning of emerging issues
Justification for portfolio changes
Progress tracking on optimisation initiatives
Benchmarking against industry standards
Executive communication and reporting

Financial Metrics

Total Portfolio Cost

What: The all-in annual cost of maintaining your entire application portfolio. Formula: Sum of all licensing + infrastructure + support + integration + training costs. Target: Should decrease 5-10% annually through optimisation. Review Frequency: Monthly

Cost per Application

What: Average annual cost for each application in the portfolio. Formula: Total Portfolio Cost ÷ Number of Active Applications. Why It Matters: Highlights the overhead of maintaining a large portfolio. Review Frequency: Quarterly

Cost per User per Application

What: The fully loaded cost of each application for each active user. Formula: Application TCO ÷ Number of Active Users. Why It Matters: Identifies applications that are expensive relative to their user base. Review Frequency: Quarterly

License Utilisation Rate

What: Percentage of purchased licenses actively being used. Formula: (Active Users ÷ Licensed Users) × 100. Target: Above 85%. Below 70% indicates significant waste. Review Frequency: Monthly

Software Spend as Percentage of Revenue

What: How much of your revenue goes to application costs. Formula: (Total Portfolio Cost ÷ Annual Revenue) × 100. Industry Benchmark: 3-6% for most SMEs. Review Frequency: Quarterly

Operational Metrics

Application Count by Category

What: Number of applications serving each business function. Why It Matters: Multiple applications per category indicates redundancy. Target: Ideally 1-2 applications per category. Review Frequency: Quarterly

Portfolio Age Distribution

What: The percentage of applications in each age bracket. Categories:

Modern (0-3 years): Target 40-50%
Mature (3-7 years): Acceptable 30-40%
Legacy (7+ years): Target below 20% Review Frequency: Quarterly

Integration Health Score

What: The percentage of integrations operating without errors. Formula: (Successful Integration Runs ÷ Total Integration Runs) × 100. Target: Above 99%. Review Frequency: Weekly

Application Availability

What: Uptime percentage for each critical application. Formula: (Total Hours - Downtime Hours) ÷ Total Hours × 100. Target: 99.5% or higher for business-critical applications. Review Frequency: Monthly

Support Ticket Volume by Application

What: Number of IT support tickets generated per application per month. Why It Matters: High ticket volumes indicate usability or reliability issues. Target: Decreasing trend quarter over quarter. Review Frequency: Monthly

Strategic Metrics

Business Value Score

What: Weighted composite score of an application's business value. Components: Strategic alignment + user satisfaction + process criticality + revenue impact. Scale: 1-5, with 5 being highest value. Review Frequency: Quarterly

Technical Health Score

What: Weighted composite score of an application's technical fitness. Components: Architecture quality + security posture + performance + integration capability + vendor viability. Scale: 1-5, with 5 being healthiest. Review Frequency: Quarterly

TIME Distribution

What: Percentage of applications in each TIME category. Healthy Distribution:

Invest: 20-30%
Tolerate: 30-40%
Migrate: 15-25%
Eliminate: 5-15% Review Frequency: Quarterly

Innovation Ratio

What: Percentage of IT budget spent on new capabilities vs. maintaining existing ones. Formula: (Investment in new/strategic applications ÷ Total IT budget) × 100. Target: At least 30% on innovation (run/grow/transform split). Review Frequency: Annually

User Experience Metrics

User Satisfaction Score (Per Application)

What: Average satisfaction rating from application users. Collection Method: Quarterly pulse survey (1-5 scale). Target: 4.0 or above for strategic applications.

Adoption Rate

What: Percentage of intended users actively using the application. Formula: (Active Users ÷ Target Users) × 100. Target: Above 80% for mandated applications.

Productivity Impact

What: Estimated time saved or lost due to application quality. Collection Method: User survey combining time spent on workarounds, manual processes, and waiting for application responses. Target: Positive net productivity impact.

Building Your Metrics Dashboard

Essential Dashboard Elements

Portfolio cost trend (12-month rolling)
License utilisation heatmap
TIME classification pie chart
Top 10 applications by cost
Bottom 10 applications by satisfaction
Application count trend
Integration health status
Recent changes and actions

Reporting Cadence

| Report | Audience | Frequency | |--------|----------|-----------| | Operational Dashboard | IT Team | Weekly | | Portfolio Health Summary | IT Leadership | Monthly | | Cost and Value Report | CFO/Finance | Quarterly | | Strategic Portfolio Review | Executive Team | Annually |

Tools for Metrics Collection

Spreadsheets: Google Sheets or Excel for initial tracking
BI Dashboards: Power BI, Looker Studio, or Metabase
SaaS Management Platforms: Zylo, Productiv, or Torii
Custom Dashboards: Built on your existing data infrastructure

Getting Started

[ ] Define which metrics are most important for your organisation
[ ] Identify data sources for each metric
[ ] Set baseline measurements for your current state
[ ] Define targets and improvement goals
[ ] Create a simple dashboard (even a spreadsheet)
[ ] Schedule regular review meetings
[ ] Refine metrics based on decision-making needs

You can't improve what you don't measure. Start with a handful of critical metrics, ensure accurate data collection, and build your measurement practice over time. The goal isn't to track everything—it's to track the right things that drive better portfolio decisions.