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Application portfolio analysis

Analysis of the current portfolio of business applications within a business is used to assess 

current information systems capability and also to inform future strategies. A widely applied 

framework within information systems study is that of McFarlan and McKenney (1993) with 

the modifications of Ward and Griffiths (1996). Figure 5.7 illustrates the results of a portfo-

lio analysis for a B2B company applied within a digital business context. It can be seen that 

current applications such as human resources, financial management and  production-  line 

management systems will continue to support the operations of the business and will not be a 

priority for future investment. In contrast, to achieve competitive advantage, applications for 

maintaining a dynamic customer catalogue online, online sales and collecting marketing intel-

ligence about customer buying behaviour will become more important. Applications such as 

procurement and logistics will continue to be of importance in a digital business context.

Portfolio analysis is also often used to select the most appropriate future Internet projects. 

A weakness of the portfolio analysis approach is that today applications are delivered by a 

single digital business software or enterprise resource planning application. Given this, it is 

perhaps more appropriate to define the services that will be delivered to external and internal 

customers through deploying information systems.

In E-consultancy (2008a) I defined a form of portfolio analysis as the basis for bench-

marking current e-commerce capabilities and identifying strategic priorities. The six areas 

for benchmarking are: