In the last few postings we have touched on the evolution of IT / IS systems. We grouped them into the Data Processing (DP) era, the Management Information System (MIS) era, and the Strategic Information System (SIS) era.

Please do not conclude that I am suggesting that the success or maturity of an Organization’s IT / IS capability is to be measured by the “era” which it can be identified with. Neither does it depend on how heavily its IT / IS leans towards SIS (the most modern of the three eras). So then, how would we go about determining the level of IT / IS implementation in an organization or industry?

F.W. McFarlan (“Information technology changes the way you compete”, Harvard Business Review, May-June 1984) provided what is widely recognised as the most helpful application classification scheme.

The information systems applications portfolio

The information systems applications portfolio

McFarlan’s scheme classifies information systems based on the contribution they make to business success. It takes the form of a matrix.
Ward and Peppard (2003) contains the following brief description of the portfolio:

  • Strategic applications are critical to future business success. They create or support change in how the organization conducts its business, with the aim of providing competitive advantage. Note that whether the technology used is ‘leading edge’ does not indicate that the application is strategic – assessment must be based on business contribution.
  • Key operational applications sustain the existing business operations, helping to avoid any disadvantage. It can be argued that, in many industries, substantial numbers of applications have become so pervasive that they have become ‘mandatory’ for survival in the industry.
  • Support applications improve business efficiency and management effectiveness but, in themselves, do not sustain the business or provide any competitive advantage.
  • High potential innovative applications may create opportunities to gain a future advantage, but are as yet unproven.

Refer also to Edwards et al (1995).

Try this on your own business…

Step one: Make a list of all the applications which your business uses. For applications which can be customized for various purposes (Eg. Excel, AutoCAD) list each customization as a separate application.

Step two: Now consider each application on your list, and, which of the four quadrants describes that application according to its current and future contribution to business success.