Session 7: Managing The

Application Portfolio

Chapter 7
Matrix of IS/IT Planning
•
The Sullivan matrix, consider the range of
IS/IT management issues that depend on the
combination of infusion and diffusion of IS/IT
in the organization.
Infusion is ‘the degree to which IS/IT has
•

penetrated a company in terms of importance,

impact or significance, and diffusion is ‘the
degree to which IS/IT has been disseminated
or scattered throughout the company’.
Matrix of IS/IT Planning
•
Figure 7.2 suggests a number of cause-and
effect relationships, which are generally borne
out by observation in many organizations.
•
There are reasons for these cause-and-effect
 relationships, based on the way in which IS/IT
evolves in organizations and the way in which
the IS/IT strategy has to respond and become
more sophisticated and better balanced over
time.
Matrix of IS/IT Planning
•
Organizations that have a traditional, low
impact view of the role of IS/IT with highly
centralized IT decision making will tend to
have a predominance of support applications.
•
Those with devolved IT decision making will
 also produce a profusion of support systems,
solving local problems. A number of high
potential ideas will probably also be
developed, but it will be difficult to bring them
to strategic fruition because of the localized
Matrix of IS/IT Planning
•
Where the impact of IS/IT has increased,
probably due to external pressures, but IT is
kept highly centralized, both key operational
and support systems will be developed and
continually improved, but more innovative
 uses of IS/IT will not be instigated, because of
the limited knowledge in the business of what
is possible.
CLASSIFYING THE APPLICATIONS IN
THE PORTFOLIO
•
Table 7.1 suggests a set of criteria that can be
used as a basis for a strength, weaknesses,
opportunities and threats (SWOT) analysis of
the current applications, to determine the
need for action, either to improve their
contribution or enable other, related
applications to be developed or used better.
•
Although many applications are often provided
via large packages (e.g. ERP and CRM
software), the purpose of the analysis is still to
Defining Objectives of Applications
•
Figure 7.4 shows how the questions become
more complex as we move around the matrix.
For support applications, the general objective
is clear (why = efficiency) and what needs to be
improved is determined by existing tasks and
activities. The main question is how to do that
successfully, in terms of the most cost-effective
 use of IT.
•
For key operational applications, the how
question still has to be addressed, but in
Defining Objectives of Applications
•
what and how questions need to be resolved
in strategic applications, but in addition we
need to clearly understand why we wish to do it
in terms of the business strategy. Strategic
applications require creative thinking and will
cause change, probably externally as well as
internally, and the reasons for and intended
 benefits of such changes must be agreed on.
GENERIC APPLICATION MANAGEMENT
STRATEGIES
•
Given the variety of factors affecting success in
the different segments and the business
consequences of success or failure, no single
implementation approach is likely to deal
effectively with the range of issues involved.
•
Parsons described five strategies that are
prevalent as the means by which organizations
link the management of IS/IT to the corporate
or business management processes. These
 ‘linking strategies’ are ‘general frameworks
GENERIC APPLICATION MANAGEMENT
STRATEGIES
•
Centrally Planned. This generic strategy
implies that senior and executive
management need to be fully aware of the
development, due to its potential impact on
the future business strategy.
•
Leading Edge. With this strategy, the senior
management of the organization believes that,
by adopting information technology that is
‘leading edge’ in the context of its industry, it
 should be able to gain some business
GENERIC APPLICATION
MANAGEMENT STRATEGIES •
Free
Market. The philosophy behind the free market
approach is that line managers are accountable
for the performance of the business activities
within their area of responsibility. The benefits of
the free market strategy are that business
problems are resolved by IS/IT solutions close to
the problem.
•
Monopoly. Monopoly is the opposite of free
market, whereby the influence of the
 centralized IT management of supply options
GENERIC APPLICATION
MANAGEMENT STRATEGIES •

Scarce Resource .This is essentially a financial

strategy that controls the spend on IT through a
budget limitation, within which those
investments that provide the greatest return for
the spend will get priority.
•
Setting priorities on the basis of financial
‘return on investment’ criteria forces both
users and IT to find the lowest-cost solution,
based on long-term economics, and hence
 encourages the buying of packaged software
Relating Approaches to IS Strategy Formulation
and the Generic Implementation Strategies
•
Organization led planning implies cross
functional views of IS to ensure that
investments are targeted on the business
objectives and key themes implied by these
objectives. It follows that the centrally
planned strategy for implementation would
best maintain that strategic view.
•
Business led with IS investments, driven by
the plans for the particular business areas,
 should lead to uncovering high potential
Relating Approaches to IS Strategy Formulation
and the Generic Implementation Strategies
•
The administrative approach to planning implies
that the main objective is budgetary control of
IS/IT, which can result in a scarce resource
approach to implementation, whereby each
investment is asked to justify a budget
allocation via a financial case.
•
Method driven planning involves a highly
analytical and structured approach to
determining the needs and priorities for
investment, and it would seem prudent to
GENERIC APPLICATION
MANAGEMENT STRATEGIES The •

technology led approach implies an

incremental adoption of technology as it is
available and proven, to enable technology
efficiency to substitute for people’s
inefficiency (i.e. automation through
technology). Leading edge implies using a
relatively new, possibly unproven, technology
to discover whether it has strategic benefit to
the business.
 Planning and Implementation Strategies

Stage 1—no coherent strategy—a mix of free

•

market, monopoly and scarce resource— which

is likely given the ‘bottom-up’ process, and the
only planning is of technology supply.
•
Stage 2—a monopolistic strategy tends to
prevail, linked to the need for structure and
integration related to the method driven
planning used to avoid systems
ineffectiveness.
Planning and Implementation Strategies
•
Stage 3—a combination of monopoly and
scarce resourcing is common to provide the
necessary controls of implementation
processes and costs in line with the emphasis
on the budget (administrative led).
Planning and Implementation Strategies

•
Stage 4—users pursuing localized opportunities
opens up free market activities in addition—
which should be based on business led
 planning, in terms of local functional priorities.
Alternatively, emerging new technologies
provide the opportunity to innovate in creating
new business processes or radically change
existing ways of working. Linking the technology
to a genuine business need is the first step in
determining the benefits of adopting the
Application Portfolio Matrix
•
Figure 7.7 superimposes the product and
applications portfolio matrices. Maximizing
the long-term contribution of products
 depends on successful management in the
relevant quadrant and successful transition
management across quadrants, as determined
by prevailing market forces.
Application Portfolio Matrix
•
High Potential (Wildcats). IS/IT high potential
applications resemble wildcat products due to
the degree of uncertainty of success—the
amount of risk they involve. Many will fail.
Identifying and then transforming the
successes into the next phase of the life cycle
 is the objective.
•
Strategic (Stars). A star product or strategic
application is one that the company is
dependent upon for future success in a
Application Portfolio Matrix
•
Key Operational (Cash Cows). As with its cash
cows, an organization expects its key
operational systems to make a significant and
lasting contribution to the business.
•
Support (Dogs). Support systems, like dog
 products, are not critical to an organization’s
future, unless they waste valuable resources
or the marketplace changes unexpectedly.
Application Management Styles
•
High potential applications require a similar
style to wildcat products, namely
entrepreneurial, to champion the application
through phases of doubt or decide to stop if
the potential is not realizable. ‘Entrepreneurs’
are highly motivated, expecting personal
recognition of their success.
•
Strategic systems require more nurturing, to
gain organizational acceptance through
demonstrated contribution to future
strategy.
Application Management Styles
•
Key operational systems require a different
style of management entirely: that of a
‘controller’ who is risk-averse, wanting
everything to be done correctly and failure
never to occur. The controller approach is
essentially inflexible and resistant to change,
 since change causes confusion and error.
•
Support applications are ideally best managed
by ‘caretakers’, who get their satisfaction from
achieving ‘the impossible, with no resources,
management styles reflects the
generic strategies
•
an entrepreneur is a free marketer, who pays
little attention to established procedure;
•
a developer is a central planner, close to the
organizational goals, who builds resources to
achieve results;
•
a controller is a monopolist, uncomfortable
with anything outside his or her control;
•
a caretaker is a scarce resourcer, proving that
he or she can achieve as much with less!
MANAGING APPLICATION PORTFOLIOS
IN MULTI-UNIT ORGANIZATIONS
•
Transferring the knowledge gained from
one organization to another may accelerate
the development of strategic applications.
In Figure 7.10, the term constrain in the
•

support segment implies corporate scarce

 resourcing for applications that are not
unique in any of the units.
•
Monopolistic control is suggested for key
operational applications to reduce
unnecessary diversit over time to enable
both reduction in
MANAGING APPLICATION
PORTFOLIOS IN MULTI-UNIT
ORGANIZATIONS Capitalizing on
•

strategic application success requires some

(business) central planning across the units to
determine whether and how the same
benefits can accrue across the organization.
•
The communication facilitation is probably best
established at the corporate IT centre, via a
‘bulletin board’ or similar knowledge-sharing
mechanism.
END OF SESSION