Operational structure matters
While it's true that any large and complex organization is almost certain to benefit from application portfolio management, the precise way in which the organization can reap benefits will vary according to the challenges that the organization faces and the goals that it has. An important factor in identifying which areas can benefit most from application portfolio management is the operating model of the organization – how is it structured? How do the different business units interact? In this short article, the last of four, I'm going to examine how application portfolio management can benefit an organization with a Replication model as defined by Ross, Weill and Robertson in their seminal publication “Enterprise Architecture as Strategy”.
An organization with a Replication model is one where the different business units have completely separate customer bases but perform the same tasks, delivering the same goods and services to these separated customer bases. A common example is retail chains such as a supermarket or retail food outlets such as MacDonald's – in both cases the individual stores and the regional divisions perform the same function, but with relatively little overlap between their customer bases.
As the name implies, the Replication model implies replicated processes implemented in a set of different markets. To quote Ross, Weill and Robertson, “In a Replication operating model, companies leverage standardized IT-enabled business processes to grow into new markets and increase products and services.”
So in a Replication model organization, the application portfolio enables the creation of a standardized platform – but in this case the idea of a standardized platform has meaning at two levels.
First of all, there may be operations that can be implemented centrally, which will be shared between the different business units – implementing a shared services model. Such operations naturally lend themselves to consolidation of supporting applications. However, this will often only apply to the back-end support functions such as purchasing, information technology, human resources, and so on.
The more distinctive standardized platform that an application portfolio can enable, and which is particularly useful to an organization with a Replication model, is a platform for standardized Replication. That is to say, a standard operating platform that can be implemented multiple times in multiple business units. An example would be that the regional distribution hubs for say, McDonalds, can operate a standardized set of processes supported by standard systems.
So in an organization with a Replication operating model, the application portfolio can provide the basis for identifying and distinguishing between the two areas of possible streamlining of the applications that the organization uses. First of all, the portfolio will enable rationalizing the applications that support shared, centralized operations. But at the same time, it will also support defining the replicated platform that will exist for each business unit.
An organization with a Replication operating model offers clear opportunities for an application portfolio to form the basis for rationalization. However, in contrast to a Unification model organization,
rationalization will fall into two categories – rationalizing the centralized, shared platform, and rationalizing the replicated platform.