While the discipline of application portfolio management can bring benefits to almost any large organization, the precise areas where it can bring the most benefits is going to vary from organization to organization. One of the key factors that decides which areas these are, is the operating model that the organization follows, as determined by the nature of the role that the organization performs. In this article, the first of four, I'm going to examine how application portfolio management can bring benefits to an organization with a Coordination operating model, as defined in the pioneering work by Ross, Weill and Robertson in their book “Enterprise Architecture as Strategy”.
Ross, Weill and Robertson define a Coordination model organization as one where different business units serve the same customers but perform completely different functions. One example might be a financial services company that provides mortgages, pensions and stock investment plans, potentially all to the same person. Another example would be a local authority, where the same person might interact with the authority regarding taxes, schools, planning permission and business assistance.
So what implications does the coordination operating model have for the application portfolio efforts of the organization concerned? Ross, Weill and Robertson summarize the situation by saying: “In a Coordination operating model, a company leverages a strong IT infrastructure to share data across unique businesses”.
There are two key points to consider in that statement – unique businesses and shared data. The point regarding unique businesses is that different business units have different needs regarding the processes that they execute in order to support the services that they deliver. This means that consolidating applications between business units will be a challenging proposition at best. First of all, there may be little overlap between the operations performed by the applications used by different units. Second, the applications may need to execute these functions in different ways – especially when there are regulatory considerations involved, as the different units will likely fall under the purview of different regulations or even different regulators. But even in the increasingly rare case where regulation plays no part, the different needs of business units that operate in different ways can make consolidation infeasible.
The second key point is that there is still a need to share data between these unique businesses. In turn, this means that while the different business units may need to end up keeping their different applications, they will need to co-operate in the sharing of data. In other words, the application portfolio management effort should focus on the data integration capabilities of each application – the portfolio needs to consider the application programming interface and the data sharing capabilities of the key applications used by each business unit as part of their effort.
The Coordination operating model could be described as “common data, independent applications”. So while there may be opportunities in some cases to consolidate applications, and there may be some value in standardization, the main focus for an application portfolio effort should be to enable the exchange of data between the applications that it manages.