Designing an Agile Software Portfolio Architecture: The Impact of Coupling on Performance

The modern industrial corporation encompasses a myriad of different software applications, each of which must work in concert to deliver functionality to end-users. However, the increasingly complex and dynamic nature of competition in today’s product-markets dictates that this software portfolio be continually evolved and adapted, in order to meet new business challenges. This ability – to rapidly update, improve, remove, replace, and reimagine the software applications that underpin a firm’s competitive position – is at the heart of what has been called IT agility. Unfortunately, little work has examined the antecedents of IT agility, with respect to the choices a firm makes when designing its “Software Portfolio Architecture.”
We address this gap in the literature by exploring the relationship between software portfolio architecture and IT agility at the level of the individual applications in the architecture. In particular, we draw from modular systems theory to develop and test a series of hypotheses about how different types of coupling impact three specific dimensions of agility: the ability to update, remove and replace software applications in the firm’s portfolio. We test our hypotheses with data from a financial services firm, encompassing over 1,000 software applications and 3,000 dependencies between them. We capture data at two points in time, allowing us to identify changes in the software portfolio, and hence to develop robust measures of IT agility.