Managing the Applications

Portfolio
Strategic Information Systems
Series
By A P Shemi
 Objectives
 To bring to understanding what the applications
portfolio is and its purpose
 To bring business management understanding and
agreement on the contribution expected from
current and future systems as a cornerstone of
strategy
 To explain application portfolio using McFarlan’s
Impact grid.

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 Applications Portfolio
 Is a means of bringing together existing, planned and
potential IS and assessing their business contribution.
 The cornerstone of any strategy is:-
– to gain business management understanding and agreement on
the contribution expected from the variety of current and future
systems -
 The applications portfolio uses McFarlan’s Strategic
Impact grid.
– The assumption is that management must be willing and able to
categorize systems in this way.
– Application: Do you think local business managers are aware of
this grid?
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A Composite matrix-(Ward, Figure 7.1
 The various models have been combined to
produce one matrix to help management decision
making with respect to IS/IT planning, utilization
and resourcing (see lecture notes)

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 Purpose of classifying applications
 To ensure that the applications are managed
successfully and that the expected contribution is
delivered.
 Based on the issues relevant to each segment,
appropriate implementation strategies can be
adopted
 The applications portfolio will evolve over time and
how the effects of that evolution can be managed
successfully will be considered.
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SMIS - Developing the IS Strategy
Managing the Applications Portfolio

Strategic High potential

How
Factory Support

Data
What
Organisation Application

Technical

Lecture theme:
Application portfolio management strategies vary by nature of system

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McFarlan’s Impact Grid
 Recalling….
 The original McFarlan’s Strategic Grid was
devised as a way of plotting the overall expected
contribution of IS/IT to business success
 This is of limited value since every enterprise is
likely to have some strategic, some key
operational, some support and some high
potential(turnaround) applications.
 Further, over time the contents of segments will
change and for any organization, the contents of
the segments of the portfolio will be influenced by
a variety of internal and external factors.
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Management Strategies
Vary by Nature of System
Strategic High potential
Service oriented Innovative
Costs important but Give it a try
secondary to delivery Be prepared to cut

High quality Get the job done

Reliable Reliable
Disciplined operation Minimise cost
Tightly managed

Factory Support

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Classifying the applications in the
Portfolio
 Once the portfolio is understood and agreed, decisions on how best to
manage each application,both existing and future, can be made, along
with overall decisions on the use of resources across the portfolio and
the selection of the most effective sources of supply- aspects should
be managed in-house and which can and should be outsourced

 While agreeing the contribution and, hence, portfolio positioning of

future investments is important, so is understanding the role of and
value to the organization of the existing application set

 Some applications may be obsolete and no longer required, others

may need significant investment to avoid future business problems,
some may be under-exploited and others may be consuming undue
amounts of resource in relation to their business value. 9
A Composite matrix-(Ward, Figure 7.1
 The various models and matrices we have covered so far
can be combined as follows:
Generic IS Management Strategies

 Necessary evil
 Scarce resource
 Free market
 Monopoly
 Centrally planned
 Leading edge
IS Application Portfolio Management
Evolutionary Stages
Centralise Decentralise

Strategic High potential

ORGANISATIONAL BUSINESS LED
Demand
management Central planning Free market
(Leading edge) or Leading edge

ADMIN LED ?
Monopoly &
Scarce resource
TECHNOLOGY LED
Supply METHOD LED
Scarce resource
management Monopoly
(Free market)

Factory Support
Developed from Ward Figs., 7.5 & 7.10

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IS Application Portfolio Management
Evolutionary Stages
Strategic High potential
(Stars) (Wild Cats)
Continuous innovation Process R&D
Vertical integration Minimal integration
High value added Cost control
Defensive innovation
Effective resource Disinvest / rationalise
utilisation Efficiency
High quality Sustained quality
Factory Support
(Cash Cows) (Dogs)

Developed from Ward Fig., 7.7

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IS Application Portfolio Management
- Requires that management styles vary

Strategic High potential

Developer Entrepreneur
- Organisation goal seeker Personal achiever
- Risk accommodating Risk taking
- ‘Central planner’ ‘Free marketeer’

Controller Caretaker
- Long term / quality Immediate / efficient
solutions solutions
- Risk reducing Risk avoiding
- ‘Monopolist’ ‘Scarce resourcer’

Factory Support
Developed from Ward Fig., 7.8

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IS Application Portfolio Management
- Benefits from Co-operative Approaches
Strategic Business Unit . . .
Strategic Business Unit 2
Strategic Business Unit 1

Strategic High potential

Evaluate how advantages Share ideas and the results
gained in one business can of evaluated prototype
be achieved in a different applications and
market / product environment technologies

Share experience in Achieve economies by

applications and technology sharing non-critical systems
management of business and using a generalised
critical operational systems systems service resource

Factory Support
Developed from Ward (1990) Fig., 8.10

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Towards Management Perspectives On
Key Architectures
Strategic High potential
Technical
Data
Applications
Organisation

Factory Support
Developed from Ward Fig., 7.12
Critical Issues in Managing the
Portfolio
Business risk Financial risk
Future
risk
High
risk Strategic High potential Very high
risk

Integration of application Identifying the best way of

with particular/unique obtaining the business
business needs to achieve benefits of applications
maximum advantage

Integration of related Obtaining, organising and

applications and information using information in the
resources to satisfy all most efficient way
business needs in most
effective way

Existing Known Low

risk risk Factory Support risk

Developed from Ward Fig., 7.11

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The End…

Questions?
Discussion!