MANAGING THE PORTFOLIO

OF BUSINESS APPLICATIONS
PSSI 2017FA/B
 12/12/2023 2

Structure
Corporate Aligning Organizing
& business IS/IT with Managing the
strategy business the app. strategic
and IS/IT strategy portfolio managmnt
implications of IS/IT

Key ideas
A strategic Business Determine & the future
perspective innovation the IS of IS/IT
of IS/IT with IS/IT strategy strategy

Establish Search for Justifying & The strat.

IS/IT competitive managing Managmnt
strategy opportunit. IS/IT of IT
process to shape investment service &
strategy s infrstructur
e
strategic management IS/IT strategy IS/IT strategy execution
concept & IS/IT implications formulation & planning
12/12/2023 3

Session Objectives

• Understand how to classify the applications in the

portfolio
• Understand the various strategies in managing the
applications
• Understand how to align application development
approach to its portfolio segment
12/12/2023 4

Agenda
• Conclusions from Various Portfolio Models
• Classifying the Applications in the Portfolio
• Reconciling Demand and Supply Issues in the Portfolio
• Generic Application Management Strategies
• Portfolio Management Principles Applied to the Application Portfolio
• Aligning Development Approaches to the Portfolio Segments
• The ‘Special Case’ of Enterprise Systems
• Managing Application Portfolios in Multi-unit Organizations
12/12/2023 5

The Application Portfolio

• AP is a means of bringing together
existing, planned, and potential
investments in IS and then managing
them according to their business
contribution.
• The main purpose is to ensure that
they are managed successfully and
that the expected contribution is
delivered.
• Based on the issues relevant to each
segment of the portfolio, appropriate
implementation strategies can be
adopted.
• AP’s simplification of a more complex
situation has its limitation  precision
should not be expected; merely
relevant guidance to inform and
support management decision making.
 12/12/2023 6

Conclusions from Various Portfolio

Models

Uncertainty,
due to external
forces of future
IS/IT impact

Ability of a firm to
control its destiny
12/12/2023 7

The Various Portfolio Models

• The Sullivan: • Ives & Learmonth and Galliers:
• Demand-driven and • A vision of what is possible plus
decentralized planning strength of resources are essential
approaches for the management if IS/IT is to be used as strategic
of the strategic and high potential weapon
• ‘Eclectic’ planning method to deal
with the strategic developments • E-business:
when IS/IT is considered in • Business criticality © & practice
establishing the business
innovation (I)
objectives
• ci: new fundamentals ~ support
• Ci: operational excellence ~ key
• Galliers:
operational
• Strategy- vs. issue-driven • cI: rational experimental ~ high
• Business- vs. technology-driven potential
• CI: breakthrough strategies ~
strategic
12/12/2023 8

Classifying the Applications in the Portfolio:

SWOT Analysis
EXPLOIT STRENGTHS
• high future potential, currently underexploited;
• can be extended, enhanced to be of more value;
• could be more valuable if integrated more effectively or used more
extensively;
• critical to the business, but data quality is poor;
• needs to be developed to meet current and future business needs;
• must be enhanced to meet changed business requirements for future;
• system required, but needs to be reimplemented to absorb less
resources or overcome technology obsolescence;
• system will be less important in future—needs to be simplified/reduced to
real needs;
• system is no longer of value—should be discontinued.

OVERCOME WEAKNESSES
 12/12/2023 9

Classifying the Applications in the Portfolio:

The Starting Point
Future Current

Strategic Key Operational

• Does/will create a clear competitive • Does/will overcome known business
advantage for the business disadvantages in relation to
• Enable the achievement of specific competitors
business objectives and/or critical • Avoid known/foreseeable business
success factors risks becoming major problems in the
near future
High Potential • Enable the organization to comply with
• The impact it could have is as yet legal and regulatory requirements
uncertain but could be of a strategic
nature Support
• Does/will improve the productivity of

Once the portfolio is understood & the business and, hence, reduce long-
agreed, decisions on how best to term costs or meet general statuory
manage each application can be made! requirements
12/12/2023 10

Classifying the Applications in the Portfolio:

Example
STRATEGIC HIGH POTENTIAL
* Advertising & Promotion – ? Virtual Reality Customer
Campaign Management Design & Specification
() Sales Analysis & ? Product Profitability
Forecasting Analysis
** Customer Relationship ? Analytics – Customer &
Marketing Channel Profitability
* Product Tracking ** Sustainability – Energy
* Vendor Managed Inventory Management
() Activity-Based Costing ? ‘Innovation Factory’ for
New Development
* Product * Payroll & Personnel
Database/Inventory Systems
Management * Ledgers (Receivables,
* Order Processing, Payables)
Dispatch, Invoicing, etc. * General Ledger & Budget
* Production Control, * Office Systems
Purchasing & Materials () e-Procurement
() Customer Account * Samples Management
* Direct Marketing * Project Management
* Warehouse & Logistics
* On-line Specification
KEY OPERATIONAL SUPPORT
 12/12/2023 11

Reconciling Demand and Supply Issues in the

Portfolio
Driving Forces Critical Requirements
High Potential

• New business ideas or technological • Rapid evaluation of prototypes and

opportunity avoid wasting effort/resources on
• Individual initiative—owned by a
failures
‘product champion’
• Need to demonstrate the value or • Understand the potential benefits in
otherwise of the idea or the relation to business strategy
capabilities of the technology • Identify the best way to proceed—the
next steps
• Market requirements, competitive
pressures or other external force
Strategic

• Business objectives, success factors • Rapid development (even iterative) to

and vision of how to achieve them realize benefits within the window of
• Obtaining an advantage and then opportunity
sustaining it through a combination • Flexible system that can be adapted in
of technology and business changes the future as the business evolves
• Link to an associated business
initiative to sustain commitment
 12/12/2023 12

Reconciling Demand and Supply Issues in the

Portfolio
Driving Forces Critical Requirements
Key Operational

• Improving the performance of existing • High-quality, long-life solutions and

core processes and management effective information management
• Balancing costs with benefits and
activities
risks—identify optimum balance of IT
• Integration of data and systems to and business change
avoid duplication, inconsistency, and • Evaluation of options (including
misinformation outsourcing) available, by objective
• Avoiding a business disadvantage or feasibility study
allowing a business risk or complying
with industry legislation • Low-cost, long-term solutions—often
packaged software to satisfy most
needs—compromise the needs to
• Improved productivity/efficiency of the software available
Support

specific business tasks • Business process outsourcing is an

• General legislation option
• Objective cost/benefit analysis to
• Most cost-effective use of IS/IT funds
reduce financial risk and then control
and resources available costs carefully
12/12/2023 13

Reconciling Demand and Supply Issues in the Portfolio

12/12/2023 14

Generic Application Management Strategies

• 3 Key Parties:
1. Executive management
2. Line management: functional/process managers & systems’ users
3. IS/IT specialists: internal (centrally/in business areas) or external
• Strategies:
1. Centrally Planned: most appropriate for strategic systems
2. Leading Edge: most appropriate for high potential systems
3. Free Market: most appropriate for support & high potential
systems
4. Monopoly: most appropriate for key operational systems
5. Scarce Resource: most appropriate for support systems
12/12/2023 15

Rationale and requirements for generic

strategies (source: after Parsons)
12/12/2023 16

Generic Application Management

Strategies: Management Control

(Interactive Control
+ Belief System) (Belief System +
Boundary Control)

(Diagnostic Control) (Boundary Control)

12/12/2023 18

Generic Application Management Strategies: Relating

to Approaches to IS Strategy Formulation
12/12/2023 19

Portfolio Management Principles Applied to AP

• First, both applications and products have life cycles, and move
around the matrix over time.
• … It is important in both cases to avoid high potential or wildcat
investments from drifting straight down into the support or dog quadrant …
• Second, both applications and products require investment funding.
• … Lack of reinvestment will in all cases cause the value of previous
investments to depreciate, steadily but surely, over time …
• Third, both applications and products need to be managed and have
resources allocated …
• … Balancing the available resources and expertise to match the evolving
portfolio needs is essential to sustain success …
12/12/2023 20

Portfolio Management Principles Applied to AP

12/12/2023 21

Portfolio Management Principles Applied to AP:

Aligning Management Styles
12/12/2023 22

Portfolio Management Principles Applied to AP:

Aligning Management Styles

(Developer) (Entrepreneur)

(Controller) (Caretaker)
 12/12/2023 24

Aligning Development Approaches to the Portfolio

Segments
Application Development:
Critical Requirements
Key Aspects
High Potential

• Rapid evaluation of prototypes and • Prototypes and pilots to test

avoid wasting effort/resources on performance, scalability and user
failures acceptance
• Understand the potential benefits in • Evaluate potential benefits and how to
relation to business strategy achieve them through low cost,
• Identify the best way to proceed—the iterative developments
next steps • Acquire new skills/transfer knowledge
from outside expertise

• Rapid development (even iterative) to • Dedicated joint IS/IT and user

Strategic

realize benefits within the window of development teams using Agile

opportunity methods to share knowledge and
• Flexible system that can be adapted in create new business processes
the future as the business evolves • RAD and GUI tools to produce and test
• Link to an associated business initiative pilots for functionality and performance
to sustain commitment • Executive sponsorship and senior
management leadership in the team
 12/12/2023 25

Aligning Development Approaches to the Portfolio

Segments
Application Development:
Critical Requirements
Key Aspects
Key Operational

• High-quality, long-life solutions and • SSADM and Project Management

effective information management methodologies, process redesign and
• Balancing costs with benefits and risks apply corporate information
—identify optimum balance of IT and management standards and policies
business change • Use industry-specific packages with
• Evaluation of options (including minimum customization, but integrated
outsourcing) available, by objective with other systems
feasibility study • Combine IS/IT and business team

• Low-cost, long-term solutions—often • Design procedures to use software

packaged software to satisfy most package efficiently; interface not
needs—compromise the needs to the integrated; no customization
software available • Take advantage of the external
Support

• Business process outsourcing is an capabilities available – and used

option successfully by others
• Objective cost/benefit analysis to • User makes final selection of package,
reduce financial risk and then control using package checklist to ensure
costs carefully compliance with IT strategy
12/12/2023 26

The ‘Special Case’ of Enterprise Systems

• ES: ERP, CRM, SCM, …
• ES affect a large number of business processes & functions,
standardizing & integrating information, processes, and activities.
• ES do not normally fit into any one of the portofolio segments,
given the activities covered and the range of potential benefits
available.
• Issues accelerating ES adoption:
• Replacement of non-integrated legacy systems
• Legislation/regulation compliance
• The need to expand the business by rapid replication of existing business
models
• Differ from traditional IS development, ES are more complex,
cross-functional in scope, involving range of different
stakeholders, dealing with significant business & organization
changes in order to accommodate the ‘ES’ business models
12/12/2023 27

The ‘Special Case’ of Enterprise Systems:

2-Stage Implementation Model
 12/12/2023 28

Managing APs
in Multi-unit
Organizations
End of Presentation