Download applications portfolio analysis 1

COM333 – IS3
Applications portfolio analysis
Applications portfolio analysis
• Derived from
– BCG (Boston Consulting Group) matrix
– Product Life Cycle
• The BCG grid is a simple matrix that can
be used anywhere where it is possible to
compare two measurable variables
against each other
high
low
high
low
• The product life cycle is based on the
concept that the cash flow from any
product (service) follows a similar pattern.
Mature
Growth
Emergi
ng
Decline
• 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.
• 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.
• 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.
• 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.
high
Wild cat
Market growth
Star
Cash cow
Dog
low
Market share
low
high
• 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.
Turnaround
(or High potential)
high
Strategic importance
of
planned IS
Support
Strategic
Factory
(or Key operational)
Strategic importance of current IS
low
low
Importance refers to business importance
not on technological complexity or newness
high
• 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.
Sample portfolio
(Manufacturing Company)
STRATEGIC
HIGH POTENTIAL
1.
2.
3.
1.
2.
3.
4.
EDI WITH WHOLESALERS
MANPOWER PLANNING
DECISION SUPPORT
DOCUMENT PROCESSING
1.
2.
3.
4.
5.
6.
7.
TIME RECORDING
BUDGETARY CONTROL
EXPENSE REPORTING
GENERAL ACCOUNTING
MAINTENANCE COSTING
CAD FOR LAYOUT DESIGN
PAYROLL
4.
1.
2.
3.
4.
5.
6.
7.
8.
9.
ORDER MANAGEMENT
LINKS TO SUPPLIERS (JIT)
SALES FORECAST & MARKET
ANALYSIS
PRODUCT PROFITABILITY
ANALYSIS
BILL OF MATERIALS DB
INVENTORY MANAGEMENT
SHOP FLOOR CONTROL
PRODUCT COSTING
MAINTENANCE SCHEDULING
EMPLOYEE DB
CAD (PRODUCT DESIGN)
CUSTOMER DB
RECEIVABLES/PAYABLES
KEY OPERATIONAL
SUPPORT
• 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
• 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
• 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
• Key operational (factory) systems
– Systems development life cycle, Software
engineering, Corporate data management, Industryspecific 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
• 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
• 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.
1. List the current applications
2. Allocate the applications to the appropriate
boxes using the criteria on the axes of the grid
3. 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.
4. Consider what is required to balance the
portfolio.
•
•
Better use or management of some IS applications
Introduction of new applications (investment).