1. Applications portfolio analysis
COM333 – IS3
Applications portfolio analysis

2. Applications portfolio analysis
Derived from
BCG (Boston Consulting Group) matrix
Product Life Cycle

3. The BCG grid is a simple matrix that can be used anywhere where it is possible to compare two measurable variables against each other
low
high

4. The product life cycle is based on the concept that the cash flow from any product (service) follows a similar pattern.
Mature
Growth
Decline
Emerging

5. Wild cat stage - Emerging
At the start of its life, the product is being designed, developed, launched and promoted;
Net cash flow is likely to be negative:
High investment,
Low rate of return.
There is no guarantee that the product will become successful
Jump in any direction.

6. Star stage - Growth
If the product is successful, its growth potential is greatest at the next stage
Net cash flow shoots up.
Still a high cash injection is needed,
Marketing of the product
Establish the product’s market share
This is the shooting star
shoots upwards.

7. Cash cow - Mature Product is established
Generates income without the need for further cash injection.
It is the company’s breadwinner, earning income and allowing investment in other areas.
Keep the cash cow for as long as possible so that it can be milked.

8. Dog Stage - Decline Declining cash flow New products from competitors
Fashion or economic trends
An injection of cash is needed to boost the declining cash flow.
Or the company will wish to divest itself of the product.

9. high
Wild cat
Star
Market growth
Dog
Cash cow
low
Market share

10. The principle can the then be applied to a mapping of the strategic importance of current IS applications versus the strategic importance of planned IS applications.

11. Importance refers to business importance
high
Turnaround
(or High potential)
Strategic
Strategic importance of
planned IS
Support
Factory
(or Key operational)
low
Strategic importance of current IS
Importance refers to business importance
not on technological complexity or newness

12. Turnaround (High potential) systems
Systems that are of low importance now, but are predicted to be critical in the future.
Strategic systems
Are those on which the organisation depends now, and will do in the future.
Factory (Key operational) systems
Are of high current value
keep the business running
Are predicted to fall in value to the business.
Support systems
Are of low importance now, and are expected to continue so.

13. Sample portfolio (Manufacturing Company)
STRATEGIC
ORDER MANAGEMENT
LINKS TO SUPPLIERS (JIT)
SALES FORECAST & MARKET ANALYSIS
PRODUCT PROFITABILITY ANALYSIS
HIGH POTENTIAL
EDI WITH WHOLESALERS
MANPOWER PLANNING
DECISION SUPPORT
DOCUMENT PROCESSING
BILL OF MATERIALS DB
INVENTORY MANAGEMENT
SHOP FLOOR CONTROL
PRODUCT COSTING
MAINTENANCE SCHEDULING
EMPLOYEE DB
CAD (PRODUCT DESIGN)
CUSTOMER DB
RECEIVABLES/PAYABLES
KEY OPERATIONAL
TIME RECORDING
BUDGETARY CONTROL
EXPENSE REPORTING
GENERAL ACCOUNTING
MAINTENANCE COSTING
CAD FOR LAYOUT DESIGN
PAYROLL
SUPPORT

14. Given that the objectives of IS applications development are to
Deliver cost-effective applications with sustainable value to the business
Provide a faster development process
Build less prescriptive and more flexible applications
Establish a style for applications development that matches the business style
Enable users to participate more and take more direct control
Support team working or dispersed work groups
Enable more customer contact
Enable more informed decision-making
Increase the value delivered by legacy applications
Maximise re-use of existing applications material
Exploit the useful potential in current technology and tools
Provide a range of information delivery methods and tools

15. High potential (turnaround) systems
Prototyping, New technology or new development tools
Evaluate technology or business idea
Independent – integration and data management are not appropriate
Rapid low cost iterative development
Business Champion
End-user development or user/IS team
New skills/skills transfer
Focussed pilots/broad potential

16. Strategic systems
Sophisticated application generators, Prototyping, Advanced database technology
Based on the corporate model
Fast and flexible development approach
Close partnership between users and IS professionals/new skills
Complex applications built up in increments, sometimes on top of Key Operational (Factory) systems
Evolving or creating a new business process
External links
Good inter-connectibility with Key Operational (Factory) systems and external data
Executive support
Limited package availability

17. Key operational (factory) systems
Systems development life cycle, Software engineering, Corporate data management, Industry-specific application packages, Application generators/CASE/IPSE, Re-engineering
Well designed
Efficient, robust, long life
Complex and integrated, based on corporate model
Strict change control procedures
IS and users’ skills and knowledge high during development, package integration and ongoing support

18. Support systems Standard packages, Disinvestment/third party support
Minimum intervention
Minimum maintenance
Skills – package selection and implementation/essential interfaces/vendor management
Compromise business needs rather than modify package
Integration not vital
Efficient/low risk

19. How to carry out applications portfolio analysis?
Begin with a grid illustrating the current portfolio, you should end up with a grid showing the desired portfolio.

20. List the current applications
Allocate the applications to the appropriate boxes using the criteria on the axes of the grid
Ask “Is the grid balanced?”
Think
There is a need to know why certain boxes may be empty or nearly empty, and why some boxes are full.
Consider what is required to balance the portfolio.
Better use or management of some IS applications
Introduction of new applications (investment).