Managing the Portfolio of Business

Applications

MSSI 2022S
Structure Demand-side Supply-side

Corporate & Aligning Organizing

business IS/IT with Managing the Strategic
strategy and business the app. Managmnt
IS/IT strategy portfolio of IS/IT
implications

A strategic Business Determine

perspective innovation the IS
of IS/IT with IS/IT strategy

Establish Search for Justifying & The Strat.

IS/IT strategy competitive managing Managmnt
process opportunit. IS/IT of IT service
to shape investment &
strategy infrstructure

Establishing IS/IT Portfolio & Organizing,

strategic strategy: investment sourcing, and
management tools & management infrastructure
framework techniques management
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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

3
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

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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.
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Classifying the Application Portfolio
a)Result in a clear competitive advantage for the High Strategic Key Support
business? Potential Ope-
rational
b)Enable the achievement of specific business a) Yes (i)
objectives and/or critical success factors? b) Yes (i)
c)Overcome known business disadvantages in c) Yes
relation to competitors? d) Yes
d)Avoid foreseeable business risks becoming major e) Yes
problems in the near future? f) Yes (ii) Yes (ii)
e)Improve the productivity of the business and, g) Yes
hence, reduce long-term costs?
(i) If either applies, the supplementary question is then, ‘Is it clear
f)Enable the organization to meet statutory what the business benefits are and
requirements? how they can be obtained?’ If Yes it is Strategic, if
No it is High potential.
g)Provide benefits not yet known, but may result in (ii) To clarify which it is, the following question should be asked,
(a) or (b) above? ‘Will failure to comply lead to significant business risks (be specific
about the risk)?’ If Yes it is Key operational, if No it is Support.

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Classifying the Applications in the Portfolio:
The Starting Point

Future Current
Strategic Key Operational
• Does/will create a clear competitive advantage for the • Does/will overcome known business disadvantages in
business relation to competitors
• Enable the achievement of specific business objectives • Avoid known/foreseeable business risks becoming major
and/or critical success factors problems in the near future
• Enable the organization to comply with legal and
High Potential regulatory requirements
• The impact IT could have is as yet uncertain but could be
of a strategic nature Support
• Does/will improve the productivity of the business and,
Once the portfolio is understood & agreed, hence, reduce long-term costs or meet general statuory
decisions on how best to manage each requirements
application can be made!
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Classifying the Applications in the Portfolio:
Example [Manufacturing Company]
STRATEGIC
* Advertising & Promotion –
Campaign Management
() Sales Analysis & Forecasting
** Customer Relationship
Marketing
* Product Tracking
* Vendor Managed Inventory
() Activity-Based Costing
* Product Database/Inventory
Management
* Order Processing, Dispatch,
Invoicing, etc.
* Production Control,
Purchasing & Materials
() Customer Account
* Direct Marketing
* Warehouse & Logistics
* On-line Specification
KEY OPERATIONAL
HIGH POTENTIAL
? Virtual Reality Customer
Design & Specification
? Product Profitability
Analysis
? Analytics – Customer &
Channel Profitability
** Sustainability – Energy
Management
? ‘Innovation Factory’ for
New Development
* Payroll & Personnel Systems
* Ledgers (Receivables,
Payables)
* General Ledger & Budget
* Office Systems
() e-Procurement
* Samples Management
* Project Management Legend:
* Existing, satisfactory
() Existing, need improvement
** Planned
SUPPORT ? Potential
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 Reconciling Demand and Supply Issues in the Portfolio

Driving Forces Critical Requirements

• Market requirements, competitive pressures or other • Rapid development (even iterative) to realize benefits within
Strategic

external force the window of opportunity

• Business objectives, success factors and vision of how • Flexible system that can be adapted in the future as the
to achieve them business evolves
• Obtaining an advantage and then sustaining it • Link to an associated business initiative to sustain commitment
through a combination of technology and business
changes
High Potential

• Rapid evaluation of prototypes and avoid wasting

• New business ideas or technological opportunity effort/resources on failures
• Individual initiative—owned by a ‘product champion’ • Understand the potential benefits in relation to business
• Need to demonstrate the value or otherwise of the strategy
idea or the capabilities of the technology • Identify the best way to proceed—the next steps

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 Reconciling Demand and Supply Issues in the Portfolio
Driving Forces
Key Operational
• Improving the performance of existing core processes and
management activities
• Integration of data and systems to avoid duplication,
inconsistency, and misinformation
• Avoiding a business disadvantage or allowing a business risk
or complying with industry legislation
Support
• Improved productivity/efficiency of specific business tasks
• General legislation
• Most cost-effective use of IS/IT funds and resources available
Critical Requirements
• High-quality, long-life solutions and effective
information management
• Balancing costs with benefits and risks—identify
optimum balance of IT and business change
• Evaluation of options (including outsourcing)
available, by objective feasibility study
• Low-cost, long-term solutions—often packaged
software to satisfy most needs—compromise the
needs to the software available
• Business process outsourcing is an option
• Objective cost/benefit analysis to reduce financial
risk and then control costs carefully
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Reconciling Demand and Supply Issues in the Portfolio
[Questions to be answered before making decision on how to implement the solution]

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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
2.Leading Edge
3.Free Market
4.Monopoly
5.Scarce Resource
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Rationale and
requirements
for generic
strategies

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Generic Application Management Strategies:
Management Control

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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 …

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Portfolio Management Principles Applied to AP

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Portfolio Management Principles Applied to AP: Aligning Management
Styles

(Developer) (Entrepreneur)

(Controller) (Caretaker)

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Portfolio Management Principles Applied to AP: Aligning Management
Styles

a developer is a central planner, an entrepreneur is a free

close to the organizational goals, marketeer, who pays little
who builds resources to achieve attention to established
results procedure

a controller is a monopolist, a caretaker is a scarce

uncomfortable with anything resourcer, proving that he or
outside his or her control she can achieve as much with
less!

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 Aligning Development Approaches to the
Portfolio Segments
Application Development:
Critical Requirements Key Aspects
High Potential

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

• Rapid development (even iterative) to realize benefits • Dedicated joint IS/IT and user development teams using
Strategic

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

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 Aligning Development Approaches to the
Portfolio Segments
Critical Requirements
Key Operational
• High-quality, long-life solutions and effective
information management
• Balancing costs with benefits and risks—identify
optimum balance of IT and business change
• Evaluation of options (including outsourcing) available,
by objective feasibility study
• Low-cost, long-term solutions—often packaged software
Support
to satisfy most needs—compromise the needs to the
software available
• Business process outsourcing is an option
• Objective cost/benefit analysis to reduce financial risk
and then control costs carefully
Application Development:
Key Aspects
• SSADM and Project Management methodologies,
process redesign and apply corporate information
management standards and policies
• Use industry-specific packages with minimum
customization, but integrated with other systems
• Combine IS/IT and business team
• Design procedures to use software package efficiently;
interface not integrated; no customization
• Take advantage of the external capabilities available –
and used successfully by others
• User makes final selection of package, using package
checklist to ensure compliance with IT strategy
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End of Presentation
TUGAS: BAHAN DISKUSI MINGGU DEPAN

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Next week’s material
• …

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