Enterprise Software Portfolio Management: An IT Decision-Making Framework

As enterprises continue searching for ways to strengthen the linkage between business models and IT, the enterprise software portfolio offers a crystallization of business processes whose cost-effort metrics, such as Function Point (FP) counting method, have been well defined over the past 25 years of custom software development history. A medium-sized manufacturing company has a portfolio averaging 200,000 FP’s of program pieces or 8000 Man-Months of program code accumulation, whereas desktop spreadsheet programs have around 50FP’s. How to reengineer a given deployed program portfolio to meet the requirements of new business processes, acquire new ones, and prioritize investments to generate the greatest return over time, are all topics that need to be addressed by taking recent technology infusions (such as packaged software and Free/Open Source Software) into consideration. Trade-offs between development and subsequent maintenance cost (Total Cost of Ownership), and implementation speed offers management significant decision freedom as well as challenges. Thus, the aim of this research is to analyze portfolio management from a decision maker’s point of view by surveying the following key characteristics of enterprise software: i) Total Cost of Ownership, ii) Implementation Speed, and iii) some irregularities in portfolio components pertaining to Japanese enterprises. Based on these characteristics, a decision framework for enterprise software portfolio management will be introduced.