5. Portfolio Management

Question 1

What are the two dimensions in the application portfolio?

Answer 1

X-axis: Importance to current business. High to the left and Low to the right.
Y-axis: Importance to future business. High at the top and low at the bottom.

Question 2

The 4 areas in the application portfolio:

Answer 2

1. Support. Low + Low.
   Not important but still valuable, like email, Word, etc. No competitive adv. because every business have it.
2. Key Operational. High + Low. Important for current but not future competitive adv. Core things like software we are dependent on, ex budgeting system.
3. Strategic. High + High. Important now and future. Smaller applications that we want to invest in, thate are critical to enable sustained future business strategy.
4. High potential. Low + High. Important for achieving future success. R&D and exploration. Don’t know if it’s gonna be important, but it MAYb be.

Question 3

Five generic IT strategies (mention them):

Answer 3

1. Centrally planned
2. Leading edge
3. Free market.
4. Monopoly
5. Scarce resources

Question 4

More about the centrally planned strategy:

• Management rationale
• Organizational requirements
• IT role
• Line managers and users role
• Who makes decisions?

Answer 4

• Management: central coordination
• Org req: knowledgeable senior mngmt. Integrated planning of IS/IT with the business planning process.
• IT role: provide services to match business demand
  Line managers/user’s role: Identify potential of IS/IT to meet business needs
• The board makes decisions.

Question 5

More about the Leading edge strategy:

• Management rationale
• Organizational requirements
• IT role
• Line managers and users role
• Who makes decisions?

Answer 5

• Management: tech can create business advantages and risks are worth taking
• Org req: commitment of funds/resources. Innovative IT management. Strong tech skills.
• IT role: push forward boundaries of tech use
  Line managers/user’s role: Use the tech and see what advantages it offers.
• Business units make decisions.

Question 6

More about the Free market strategy:

• Management rationale
• Organizational requirements
• IT role
• Line managers and users role
• Who makes decisions?

Answer 6

• Management: Market makes best decis, users responsible for business results. Integration is critical.
• Org req: Knowledgeable users. Accountability for IT at business level. Willingness to duplicate effort. Loose budget control.
• IT role: Competitive, intend to achieve return on resources
  Line managers/user’s role: Identify, source, control IT development
• CIO or senior mngmt or innovative leaders in the board makes decisions.

Question 7

More about the Monopoly strategy:

• Management rationale
• Organizational requirements
• IT role
• Line managers and users role
• Who makes decisions?

Answer 7

• Management: Info is a corporate good and an integrated resource for users to employ
• Org req: User acceptance of the philosophy. Policies to force through single sourcing. Good forecasting and resource usage.
• IT role: Satisfy user’s req.
  Line managers/user’s role: Understand needs and present them to obtain resources.
• CIO makes decisions.

Question 8

More about the Scarce resources strategy:

• Management rationale
• Organizational requirements
• IT role
• Line managers and users role
• Who makes decisions?

Answer 8

• Management: Info is limited and must be used efficiently.
• Org req: tight budget control. control of all IS/IT expenses.
• IT role: Make best use of resources. Justify all investments.
  Line managers/user’s role: identify and cost-justify projects.
• CFO makes decisions.

Question 9

Benefits of generic strategies in developing the IS/IT strategy (2 main)

Answer 9

1. Diagnostic - are our current strategies adequate? Are they coherent or contradictory?
2. Formulative - it can lead us to a path for the future, without the need if inventing the strategy from scratch. each quadrant in teh portfolio can use different strategies.

Question 10

Relationship between the application portfolio and the generic strategies:

Answer 10

• Key Operational - Monopoly. Centralisation and focus on supply.
• Support - Free market or Scarce resources. Decentralized and focus on supply.
• Strategic - Centrally planned. Centralized and focus on demand.
• High potential - Leading edge or Free market. Decentralized and focus on demand.

Question 11

Boston Matrix in relation to the application portfolio:

Answer 11

• Support: the dogs. Divest. Focus on sustained quality and efficiency.
• Key Operational: the cash cows. Defensive innovation, effective resource utilization and high quality.
• Strategic: Stars. Continuous innovation, vertical integration and high value-added integration.
• High potential: wildcats. Focus on process R&D, minimal integration and cost control.

Question 12

Risks in different fields of the application portfolio:

Answer 12

• Support: Organizational risks, due to vested interests.
• Key Operational: Organizational due to integration of processes and changing things.
• Strategic: technical, financial and organizational risks.
• High potential - again all risks. Try to minimize by limit the scale and scope.