Chapter 7

Managing the Application Portfolio

Agenda

• Key questions on application portfolio management

• IS/IT management methods

• IS/IT environments & application portfolios

• Key issues in application portfolio

• Generic strategies

• Portfolio management principals

Key Questions on application Portfolio Management - I

• High potential– Why: not clear

– What: not certain

– How: not yet known

• Strategic– Why: do we want to do it in strategic terms?

– What: does the system need to do to gain the advantage?

– How: best to do?

Key Questions on application Portfolio Management - II

• Key operational– Why: to improve performance and avoid disadvantage

– What: how much improvement?

– How: best to do it

• Support– Why: to reduce costs by improving efficiency

– What: of existing necessary tasks

– How: best to do it?

IS/IT Management Methods - I

• Demand management– Opportunity seeking– CSFs– High potential & strategic IS

• Supply Management– Opportunity taking– Current problem solving– Key operational & support IS

IS/IT Management Methods - II

• High potential (beware)– Local– Competitive focus (proactive)– Technology driven– Federation – business led, decentralized,

entrepreneurial

IS/IT Management Methods - III

• Strategic (attack)– Corporate– Competitive/effectiveness focus– Business issue driven– Complex – Organizational planning, ideal

multiple methods based on goal seeking– Coalition

IS/IT Management Methods - IV

• Key operational (explore)– Backbone: integrated (top down) planning &

centralized control– Reactive: current & effectiveness focus– Business issues driven

IS/IT Management Methods - V

• Support (safe)– Traditional: stage of growth, isolated

applications, & decentralized control– Reactive: efficiency focus – IT issue driven

IS/IT Environments & Application Portfolios

• Traditional: support

• Backbone: key operational, support, & little strategic

• Opportunistic: High potential, support, little key operational, & little strategic

• Complex: high potential, strategic, key operational, & support

Key Issues in Application Portfolio - I

• High potential– Driving forces: new business idea or

technological opportunity– Requirements: rapid prototyping, identify

potential, & the best method

• Strategic– Driving forces: Market requirements or

competitive pressures– Requirements: rapid development

Key Issues in Application Portfolio - II

• Key operational– Driving forces: improving performance, data

integration, & avoiding disadvantages

– Requirements: data management, & cost/benefit analysis

• Support– Driving forces: legal requirements, & improving

productivity/efficiency,

– Requirements: packaged software, & cost control

Generic Strategies

• Centrally planned

• Leading edge

• Free market

• Monopoly

• Scarce recource

Centrally Planned

• Management: central• Organization: knowledgeable senior

management, & integration of IS/IT and business planning process

• IT: services matching business demands• Line management: identifying IS/IT to meet

business needs• IS: strategic

Leading Edge

• Management: technology creating business advantages

• Organization: sufficient funding, innovative IS/IT management, & strong IT

• IT: IT push• Line management: using & identifying IT

advantages• IS: high potential

Free Market

• Management: end users

• Organization: knowledgeable end users, duplication,& no budget control

• IT: competitive & profit centric

• Line management: identifying source & control IS/IT development

• IS: high potential, & support

Monopoly

• Management: corporate integration• Organization: users acceptance of

centralized policies, & good usage of resources

• IT: satisfying users needs• Line management: understanding needs and

get resources from central• IS: key operational

Scarce Resource

• Management: justifying development

• Organization: tight budgetary

• IT: making and justifying the best use of limited resource

• Line management: identifying and justifying business needs

• IS: support

Portfolio Management Principals

• High potential (wild cat - entrepreneur): process R & D, minimal integration, & cost control

• Strategic (stars – developer or empire builder): continuous innovation, vertical integration, & high value added

• Key operational (cash cows - controller): defensive innovation, effective resource utilization, high quality

• Support (dogs - caretaker): disinvest/rationalize, efficiency, & sustained quality

Points to Remember

• Key questions on application portfolio management

• IS/IT management methods

• IS/IT environments & application portfolios

• Key issues in application portfolio

• Generic strategies

• Portfolio management principals

Question

• How do you apply these application portfolio management methods or principle to an e-business?