7. Managing Applications Portfolio Key questions for management Key demand issues Key supply issues Generic management strategies Evolution of management strategies Portfolio management strategies Portfolio management principles Portfolio management styles Portfolio management over time

Key Questions for Management Strategic applications High potential applications Why do? Types of strategic advantage What to do? Business activities to create or remove How to do? Best ways to achieve goals Why do? Not clear What to do? Not certain How to do? Not yet known Key operational applications Support applications Why do? Types of process effectiveness What to do? Business activities to improve How to do? Best ways to achieve goals Why do? Types of process efficiency What to do? Business activities to automate How to do? Best ways to achieve goals

Key Demand Issues Strategic applications Market requirement or competitive pressure Business objective Obtain advantage High potential applications New business idea or technology opportunity Individual initiative Demonstrate value Key operational applications Improve activity effectiveness Integration effort Avoid disadvantage Support applications Improve activity efficiency Cost reduction Legal requirement

Key Supply Issues Strategic applications Rapid applications development Flexible applications Link to business initiative High potential applications Rapid prototype evaluation Avoid wasting resources Identify way to proceed Key operational applications Quality applications development Balance costs with benefits Evaluate options Support applications Low cost applications development Careful cost control Compromise needs

Generic Management Strategies Strategy Centrally planned Leading edge Management rationale Central coordination of all requirements will produce better decisions Technology can create business advantages and risks are worth taking Organizational requirements Knowledgeable top management Integrated IS and business planning processes Commitment of resources and funds Innovative management and strong technical skills Role of IS Provide services to match business demands Push forward boundaries of technology usage Role of managers and users Identify applications to meet business needs Use technology and identify the advantages

Generic Management Strategies Strategy Free market Monopoly Management rationale Market makes the best decisions and users are responsible for business results Information is a corporate good and an integrated resource for users to employ Organizational requirements Knowledgeable and accountable users Willingness to duplicate efforts with lose budget control Acceptance of policy on single sourcing Good forecasting of resource usage Role of IS Profit oriented to achieve a return on resources Satisfy requirements of users and non-directive in IS usage Role of managers and users Identify, source, and control applications development Understand business needs and present them to obtain resources

Generic Management Strategies Strategy Scarce resource Management rationale Information is a limited resource and its development must be clearly justified Organizational requirements Tight budget control of all IS expenses Policies to control and justify IS usage Role of IS Control costs tightly to optimize use of limited resources Role of managers and users Identify and justify applications using costs and benefits

Evolution of Management Strategies Increasing IS usage Free market Leading edge Monopoly Centrally planned Scarce resource or free market DP era MIS era SIS era Time

Portfolio Management Strategies Demand Strategic applications Centrally planned High potential applications Leading edge Free market Key operational applications Monopoly Support applications Scarce resource Free market Supply Centralized Decentralized

Portfolio Management Principles Strategic applications (stars) Continuous innovation Vertical integration High value added High potential applications (wild cats) Process development Minimal integration Cost control Key operational applications (cash cows) Defensive innovation Effective resource usage High quality Support applications (dogs) Divest or rationalize Efficient resource usage Sustained quality

Portfolio Management Styles Strategic applications (developer) Seeks organizational goals Accommodates risks High potential applications (entrepreneur) Seeks personal goals Takes risks Key operational applications (controller) Seeks lasting quality solutions Reduces risks Support applications (caretaker) Seeks immediate efficient solutions Avoids risks

Portfolio Management Over Time Strategic applications High potential applications Management ownership, IS involvement, and project management Individual ownership and freedom Fully integrated with other applications for effectiveness Re-engineer for long-term use Evaluate lower cost options to meet core needs Re-evaluate costs and benefits, and return to standards Key operational applications Support applications