Objective and main results

This paper investigates how a firm’s ability to renew its portfolio of IT applications (i.e. IT application orchestration capability) impacts firm performance.

It is hypothesized that IT application orchestration capability positively influences process agility (referring to a firm’s ability to detect and respond to opportunities and threats with ease, speed, and dexterity), which again positively influences firm performance.

The study finds that:

• the effect of IT application orchestration on firm performance is mediated by process agility.  
• a firm’s strategic orientation moderates the effect of IT application orchestration on process agility. The effect is stronger for firms pursuing differentiation than for firms pursuing operational excellence.

Summary of practical implications

Executives should revisit the assumptions underpinning their IT governance structures and the arrangements in place for ensuring alignment between IT and business strategy. In multi-business firms, business units can work directly with corporate IT managers on IT investments and the development of IT applications without impinging on other business units’ ability to leverage the shared IT infrastructure. By pushing IT investment decisions down the organizational hierarchy, process agility could be increased.

Strategic considerations should become more central to decisions relating to IT applications. Firms pursuing differentiation strategies should invest in developing high levels of IT application orchestration capability to increase market responsiveness. This could be achieved by streamlining processes for identifying and resourcing IT applications that generate strategic benefits. Firms also need to develop and implement change management processes for quickly identifying and divesting IT applications that no longer generate value.