COM333 – IKBS3

Managing Portfolio

Key questions on the application portfolio

STRATEGIC

Why – do we want to do it in strategic terms?

What – does the system need to gain the advantage?

How – best to do it?

HIGH POTENTIAL

Why – not clear

And/or

What – not certain

And/or

How – not yet known

Why – to improve the performance and avoid disadvantage

What – actually has to improve and how much

How – best to do it?

KEY OPERATIONAL

Why – to reduce costs by improving efficiency

What – of existing necessary tasks

How – best to do it?

SUPPORT

Understanding the management implications of these questions offers guidance on how best to manage each application through its life cycle

• No single implementation approach is likely to deal effectively with the range of issues involved

• Adopting unique approach to each development?– Chaos

• Limited set, which meets the majority of requirements and which is well understood throughout the organisation

• Generic strategies– General frame works which guide the opportunities for

IT which are identified, the IT resources which are developed, the rate at which the new technologies are adopted, the level on impact for IT within the firm etc

– Ways of succeeding in the management of IS/IT in the long term, provided the appropriate strategy or mix of strategies is adopted in a given set of circumstances

• Central tendencies which firms use to guide IT within the business

• Centrally Planned– Most appropriate for strategic systems

• Top management involvement– Fully aware– Necessary resources are applied

– Strategic systems span over different functional area• Task force approach is needed

– Led by senior manager– Full time dedicated team

» Key personnel from each functional area» Good IT skills» Often difficult to implement

– This strategy addresses the needs of strategic applications– Could be used for

• short sharp evaluation of high potential systems • key operation systems when business faces serious short term

disadvantage

• Leading Edge– Organisation believes in adopting leading edge

technology for business advantage– Senior management

• Endorse the principle• Fund some experimentation to evaluate the technology

– IT specialist• Identify the technology• Evaluate in conjunction with business objective

– Suitable for High Potential system• Untried technology – risky

– Once evaluated it may have strategic potential and become a strategic application

• Free Market– Free market and Monopoly approaches are complementary – In Free Market Approach the line managers are

• Accountable for performance • Make beneficial decision about IS and IT• Could obtain their IT solutions from wherever they think best

– Profit centred approach– Problems are resolved by IS/IT solutions close to the problem

• Strong motivation to make the system work• Best fit solutions – need, cost and time

– The danger is that it may lead to fragmentation, that is, incompatible hardware and software systems across the organisation

– Suitable for• Support systems• High potential evaluation – driven by business idea

• Monopoly– Monopoly approach line managers decide what is needed

subject to senior management agreement • Central co-ordination and control• Standardisation of solution• Integration of data and systems• Cost control

– Well directed business priorities– Competent users specify their needs achieve high quality,

integrated easy maintainable system delivered in an over all cost effective way

• Key for developing Key Operational systems– Satisfies the controlled development of low risk key

operational system to avoid system failure– Adopting to support systems may be costly– Each functional manager will not achieve the most cost effective

timely satisfaction of his or her needs• Cause resentment• IT monopoly goes beyond its brief setting priorities for what is done

rather than optimising how best to achieve• Senior management must set priorities satisfying line managers

• Scarce Resource– Financial strategy– Controls the spend on IT through budget limitations– The solution chosen will always be the one that is most cost-

effective.– Promote local specific solutions that meets the needs – Most appropriate for support systems – May produce effective key operational systems in the short term

but very expensive long term integration– Does not support any innovative or speculative use of IT

• Not suitable high potential system– There is a demand for quantified financial benefits

• Not suitable for strategic systems– More cost effective to modify business practice to use available

software than develop a new software to satisfy non-critical tasks

Sample portfolio(Manufacturing Company)

STRATEGIC

Centrally Planned

HIGH POTENTIAL

Leading Edge

Free Market

Monopoly

KEY OPERATIONAL

Free Market

Scarce Resources

SUPPORT

centralised decentralised

Demand

Supply

• Strategies in total addresses the balance of demand and supply issues and offer a mix of centralisation and de-centralisation needed– Central planning is a demand management strategy– Monopoly is a supply management strategy– Free market and leading edge are demand management

approaches

• Examining the main reasons behind the different application types and resulting issues helps to demonstrate why certain strategies are more appropriate

• In each case strategies can co-relate closely with strategic issues and attributes