Application Portfolio

notes on McFarlan's app port

McFarlan’s Application Portfolio framework allows organisations to analyse their application suite and categorise them into one of four categories

1\.      High Potential – These are applications that could lead to future business success. Powerful tools such as AI for e.g.



2\.      Key operational – these are applications that are essential to business functions. Inventory control, accounts, human resources



3\.      Strategic – applications that are essential for future business strategy such as CRMs, Project Management Tools



4\.      Support – valuable and desirable applications that are available but not critical – things like multimedia packages, fancy web apps that aren’t really necessary

Why use it?

This framework is a good tool to bring about agreement on what applications are required in the suite of an organisation. Views from IT professionals, regular staff and management can often differ and it can help them reach agreement. The Boston Consulting Group Matrix is another similar matrix. It helps show what roles applications play in a business.



Many organisations have used McFarlan’s framework throughout the years, as well as Boston Consulting Group’s, largely due to its simplicity. You could critique it for being overly simple and that nowadays with the amount of applications and emerging tech it would be hard to classify everything into the grid.

What next? After applications decided?

When the applications for a portfolio have been decided, then it must be decided where the applications will be acquired, and what resources will be assigned to them. Managers must also decide what aspects of the application will be managed in-house and what will be outsourced.  

What about existing applications?

An organisation should also consider and analyse the existing applications in their org. Some might be obsolete and no longer required. You may be paying for licenses for a product that no one needs any more. Or running redundant servers. There could be data held that you no longer need or that violates GDPR laws.



It may seem too simple to interpret the relevance of your application using a simple 2 x 2 matrix. The McFarlan matrix is attractive to use because it reduces a vast number of alternative methods to a number of application options that is a proven way to achieve some high level direction.



It is vital to consider what areas of the organisation actually require change via application implementation. It is naïve to think that an organisation would overhaul an entire organisational application suite at once for every section and subsection. It is probably better to do it business unit by business unit and learn along the way.



There are some other categorisations you could look at when planning for applications.