Title: Application Portfolio Management
1Application Portfolio Management
- An organisation will tend to develop a range of
IS/IT applications over time - data processing systems
- clerical support systems
- customer service applications
- just-in-time systems
- strategic information systems
- This is rather like a product portfolio
- each has its place purpose
- each will have current future value
2Application Portfolio Management
- Application portfolio management is about
- improving the contribution of existing systems
- allocating organisational resources more
effectively - ensuring that the best approach is adopted for
new applications - enables managers (IS/IT and otherwise) to make
more informed consistent judgements about IS/IT
resources
3Characteristics of IS/IT applications
- Any IS/IT application in the portfolio may
- have high future potential that is currently
under exploited - have potential to be developed to give more value
to the organisation - have more value if integrated with other
applications - be critical but suffer from poor quality
- need to be altered to suit changes in the
organisation - need transfering to newer technology
- have no current or future value at all
4The Strategic Grid - an APM Tool
- The Strategic Grid measures the organisations
- level of dependence on IT systems
- high essential to organisations survival
- low may improve operations, but not essential
- strategic impact on business
- high a critical success factor, mission
critical - low useful, but low business potential
5Strategic Grid Quadrants
- Strategic
- company depends on IT system now in future
- Turnaround
- not critical at the moment, may be in future,
could be made so. May become less critical - Factory
- core systems, critical but are unlikely to
affect organisations position or create new
opportunities - Support
- useful but not critical
6The Strategic Grid
High
factory
strategic
Dependency
support
turnaround
Low
Impact
High
Low
7Using Application Portfolio Management
- Application Portfolio Management helps
- see the balance of IS/IT investment in terms of
organisational resources funds - see where IS/IT management effort is being
deployed where it is planned - APM is needed because
- most organisations want to focus effort money
on strategic factory applications - but
- they often waste effort money on generic
applications in the support quadrant - and
- dont invest sufficient effort or money in
(future) turnaround applications
8Identifying Strategic Applications of IT
- Six useful questions (after Michael Porter)
- can IT create sustain barriers to entry to
industry or market segment? - can we create switching costs for our strategic
target? - can IT change the basis of competition?
- can IT change competition from cost leadership to
differentiation or focus? - can IT lock-in suppliers or customers?
- can IT be used as a product or service?
9Interpreting the Strategic Grid
- To help managers develop a greater awareness
of the strategic role of IT in their
organisations FW McFarlan - As a tool for managing the IS/IT applications
portfolio Ward et al - 1980s emphasis on factory support
- 1990s emphasis on strategic
- 2000s solving the turnaround problem
- There will always be a role for factory support
- applications and they should be valued
10Using the Strategic Grid
- The process of using the grid is important...
- creates agreement between stakeholders
- focuses management action
- tool of communication
- The grid may be used for
- systems development/improvement
- IT investment
- opportunity spotting
- IT requires management action to be effective
11Identifying Opportunities to Use IT Strategically
- competitive advantage
- see work of Porter, Wiseman, McFarlan etc.
- strategic collaboration
- business alliances based on shared technology
- diversification
- new products/services, new uses for existing P/Ss
- marketing focus
- target intelligence communication
- management improvement
- new methods, organisational forms, processes
12Characteristics of turnaround applications
- Driving force Requirements
- New opportunity Evaluation, selection
- for organisation rejection of ideas
- Individual initiative Managers
appreciate potential of idea(s) - Obtaining full value Policy on how to
- for IS/IT investment proceed
13Characteristics of support applications
- Driving force Requirements
- Improved productivity Packaged software,
- operational efficiency user compromises
- Legal requirements Evolve to latest versions
of packages - Cost effective use of Use of cost/benefit
- IS/IT funds resources risk analysis
14Characteristics of factory applications
- Driving force Requirements
- Improve performance Effective information
- of existing activities management, stable
- long-term systems
- Integrate systems Business process
- Streamline processes re-engineering (BPR)
- Avoid duplication Cost benefit analysis
- wastage Value chain analysis
15Characteristics of strategic applications
- Driving force Requirements
- Opportunities Rapid IS applications
- Environmental pressure development
- Organisational vision, Flexible IT platforms,
- objectives, CSFs IS applications
- Spreading benefits Organisational networks
16Management action to balance portfolio
- buy cheaper off-the-shelf packages to service
support applications - point out importance of factory applications -
prevent legacy systems - develop champions for turnaround applications
- ensure management budgetary support for
strategic applications - Understanding the forces that drive systems
is the key to managing them