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BADM 590 May 3, 2007Term Paper
IT Portfolio Management
Professor: Dr. Michael J. Shaw
Chung-Beom (Tony) NamMBA cnam3@uiuc.edu
AbstractThis paper presents the basic concepts of IT Portfolio Management (ITPM). To give a definition
of the ITPM, I identify what the ITPM is and find the components of IT portfolio and other
management tools related to the ITPM. Also, I research the IT Investment Frameworks such as
the McFarlan Strategic Grid, the Cranfield Grid, and the Ross/Beath Framework, and find how to
optimize the IT portfolio. In addition, as a case study example, I discuss how Intel have
developed a practical process around ITPM that evaluates IT initiatives based on business value,
IT efficiency, and its financial return.
Keywords: IT Portfolio Management (ITPM), IT Portfolio, Project Portfolio Management (PPM), IT Investment, IT Return on Investment (ROI), IT Governance
TABLE OF CONTENT Page
I. Introduction ----------------------------------------------------------------------------------------- 2
II. Definition of the IT Portfolio Management -------------------------------------------------- 3
1. What is the IT Portfolio Management (ITPM)? ------------------------------------------ 3
2. Four Components of IT Portfolio ------------------------------------------------------------ 3
3. Other Management Tools related to the ITPM -------------------------------------------- 4
III. IT Investment Frameworks -------------------------------------------------------------------- 7
1. The McFarlan Strategic Grid ----------------------------------------------------------------- 7
2. The Cranfield Grid ------------------------------------------------------------------------------ 9
3. The Ross/Beath Framework ------------------------------------------------------------------- 10
IV. IT Portfolio Optimization ----------------------------------------------------------------------- 12
1. IT Portfolio Management and IT Governance --------------------------------------------- 12
2. Business and IT Alignment -------------------------------------------------------------------- 13
3. Best Practices for IT Portfolio Management ----------------------------------------------- 15
V. Case Study: Intel ----------------------------------------------------------------------------------- 19
1. Balance between Strategic Objectives and Constraints --------------------------------- 19
2. Intel Case ----------------------------------------------------------------------------------------- 20
VI. Conclusion and Next Study -------------------------------------------------------------------- 22
References ---------------------------------------------------------------------------------------------- 24
I. Introduction
1
A lot of organizations spend millions or billions of dollars on Information Technology (IT)
annually. There have been a number of attempts in past years to build or adapt frameworks for
the evaluation of IT projects and the construction of asset classes, much like stocks, bonds,
money market accounts, and annuities in the investment world.
Business cases for IT investments are now the norm rather than the exception. However, projects
are still considered individually as discrete investments. Likewise, there is often a segmentation
between new application spending, the realm of project portfolio management (PPM), existing
application maintenance, the realm of application portfolio management (APM), and
infrastructure investment. As of yet, few organizations are looking holistically at the entire IT
budget as a unified suite of investments. IT organizations apply many of the same tools the
financial community uses to build and manage financial portfolios to maximize benefits.
IT Portfolio Management, however, offers not only the opportunity to measure that return on
investment (ROI), but also provides the process needed to optimize the return on the portfolio.
Although the science of IT portfolio management is in its infancy, understanding the concepts
and laying the groundwork now will allow for quicker adoption later as the tools and tenets
become better defined over the coming years. The ultimate goal is delivering to the organization
predictable and higher returns at the appropriate level of risk.
Following, I lay out the basic concepts and definition of IT portfolio management, its
relationship to other management processes, the IT investment frameworks, the IT portfolio
optimization, and Intel case study.
II. Definition of the IT Portfolio Management
2
1. What is the IT Portfolio Management (ITPM)?
IT portfolio management is the application of systematic management to large classes of items
managed by enterprise IT capabilities. IT portfolio management started with a project-centric
bias, but is evolving to include steady-state portfolio entries such as application maintenance and
support, which consume the bulk of IT spending. The concept is analogous to financial portfolio
management, but there are significant differences. IT investments are not liquid like stocks and
bonds and are measured using both financial and non-financial yardsticks. So, because a purely
financial view is not sufficient, IT investment is considered discretely. Return on investment
potential may be considered for an individual investment, but the impact on the portfolio as a
whole is often ignored. Investment allocation across segments is not targeted in advance, but is
rather an outcome of project funding. Resource utilization and optimization, rather than outcome,
may drive decisions. And perhaps most importantly, all investment classes are evaluated with the
same set of criteria.
2. Four Components of IT Portfolio
The IT portfolio is the tangible manifestation of IT’s plan to support the business in meeting its
strategic goals. This portfolio is composed of:
● Current Investments - Existing application, programs, and processes are investments that must
be managed, optimized, retired, or enhanced as appropriate over their life cycle.
● New Initiatives - These investments are added to the portfolio to add incremental value to the
organization through cost savings, productivity gains, or business advantage.
● Externally Mandated Initiatives - In addition to the above, there are initiatives mandated by
regulatory, governmental, or industry rules that, although required, consume resources that
could otherwise be spent on higher-value projects or initiatives.
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● Infrastructure Investment - Underlying many of the applications is a set of shared
infrastructure assets. The degree of segregation of these assets or their linkage to associated
applications or business processes varies to a wide degree by organization. However, they are
part of the IT investment portfolio and must be evaluated and managed as such.
3. Other Management Tools related to the ITPM
3.1. Project Portfolio Management
By using techniques like categorization, financial, inventory, and risk and benefits analysis
combined with tools, companies can prioritize which projects best fit their goals. Within PPM,
common evaluation criteria allow for project arbitration and project-to-strategy alignment.
Resource management and productivity management tools ensure that approved projects are
adequately staffed with the right numbers of the right people, and project management tools
ensure that schedules are met and expected benefits delivered.
Key goals of PPM include:
● Elimination of Redundancy - Collecting information about projects underway or under
consideration can identify redundant or overlapping efforts.
● Better Resource Allocation - Maintaining a single repository for projects and their
requirements can let the organization better allocate and schedule resources, avoiding the need
to bring in external, and potentially more expensive, resources to deliver on committed
schedules and goals.
● Common Repository for Business Value Metrics - Associated with each initiative or project
will be a set of business-oriented metrics and a business case outlining expected business
value. These goals can be reviewed by all appropriate participants in the initiative, maximizing
continued focus on value and a higher likelihood of value realization.
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The initiatives managed by the PPM organization become the engine of value growth, the way
that the organization rebalances the IT investment portfolio, and the way that the IT reacts to
changes in business focus or market dynamics.
3.2. Application Portfolio Management
Application portfolio management provides a way to create business-oriented metrics around our
existing applications by linking existing applications and components with concurrent costs to
manage and maintain current business processes, business value, and business metrics. The
repository of information created by application portfolio management tools and processes feeds
into overall IT planning so that:
● Maintenance and renewal decisions are made with sound business backing. Overlaps can be
identified, systems can be consolidated, and opportunities for savings through application
sunset can be identified, freeing funds to be spent on new business enhancing applications.
● Proper disaster recovery and business continuity planning can occur. Critical applications are
identified and prioritized over less critical ones. Service levels can be defined based on
business impact and business value supported. Resources are used both most efficiently and
most effectively.
● Better outsourcing agreements for both sides. APM repositories, as a source of truth about
applications in use, will allow better visibility by both a potential or current outsourcing
partner and by the application-owing client. Such an inventory can be used to establish a fair
and equitable base for contract pricing, to set quality and complexity benchmarks at contract
inception that will aid year-over-year comparisons to note improvement/declines and to
answer strategic, ad hoc questions about the applications.
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3.3. IT Asset Management and Infrastructure Management
Much in the way that APM inventories existing applications and ties them to business processes,
IT asset management (ITAM) inventories network-attached hardware and installed licensed
software and links them to underlying contracts, depreciation schedules, and maintenance
agreements. The potential benefits of ITAM include:
● License compliance - Tracking installed software (also using auto-discovery technology) and
matching it against records of licensed software. This can both mitigate the risk of unexpected
costs resulting from a compliance audit and help reduce costs by identifying unused licenses.
● Better maintenance and replacement requirements - Aging hardware or software that is
approaching the end of its useful life and needs replacement can be identified.
● Improved utilization - Identifying existing assets is the first step to better capacity and
utilization planning. Underused assets can be identified avoiding redundant purchases. Options
to scale or reuse assets can be exercised.
As the underlying infrastructure and the architecture behind it are part of the IT investment
portfolio, they must be managed as such. Investment decisions must be made based not solely on
cost and cost savings possibilities but also on the infrastructure as a component that can reduce
IT risk, increase business flexibility, or enable business value through better execution of new
application development and rollout.
III. IT Investment Frameworks
1. The McFarlan Strategic Grid
The first practical IT investment framework is the McFarlan Strategic Grid presented by Warren
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McFarlan in the early 1970s. The grid was designed to determine the overall positioning of the
IT organization in relation to organization goals. In this matrix, IT is positioned on two
dimensions that look at:
● The strategic impact of existing systems - Systems are ranked on their relative importance to
the maintenance of the current structure, business, and processes. One way to look at this
ranking would be to examine the maximum permitted period of downtime. The higher the
ranking on strategic impact, the lower the permissible period of outage.
● The strategic impact of applications under development - Systems are ranked on their ability to
act as change agents that affect the way that organizations will do business in the future. By
definition, these systems will initially have minimal operational impact, as they support only a
small portion of the organization’s processes or revenue. However, they have the potential to
grow into operationally critical systems in the future. (see Figure 1)
The four quadrants are defined as:
● Strategic - For these organizations, IT is essential to the execution of current operations and
strategies and new applications are essential to the maintenance of a competitive position into
the future. The planning and organizational relationship between IT and the business must be
very close in such organizations.
● Turnaround - Totally uninterrupted and defect-free IT operations are not absolutely critical to
achieve operating objectives operations, but new applications are a key factor in this type of
organization’s ability to meet strategic growth targets. This organization now considers its
investments in new IT systems as the engine by which it can reduce costs, improve customer
service, and develop a competitive position in the marketplace.
● Factory - This type of organization is heavily dependent on totally reliable IT operations to
enable current business processes. However, IT applications that are under development,
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though profitable and important, are not fundamental to the firm’s ability to compete. An
investment bank that is dependent upon trading systems but built upon relationships with
clients may fall into this category.
● Support - Such an organization may use IT in the running of its business. However, the
organization would be able to survive the lack of availability of such systems for some period
of time. Likewise, when viewed realistically, new investment will make incremental
improvements in the future of these firms. The authors of this grid cite a large professional
services organization as an example of such an organization.
Figure 1. The McFarlan Strategic Grid
Source: Applegate, McFarlan, and McKenny, “Corporate Information Systems Management.”
2. The Cranfield Grid
John Ward and Joe Peppard of the Cranfield School of Management in the United Kingdom
produced a variation of the grid that looks at individual investments within the IT investment
portfolio (see Figure 2).2 The key difference is clearly the quadrant that is now labeled “High
potential.” In this matrix, the developers have added the ability to include a key class of IT
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investments — those that may be lacking current benefits but that have the possibility of
producing future benefits.
Ward and Peppard moved the focus of analysis to look at the expected business contribution of
an investment. As such, they recognized the potential for movement through the matrix, from
high potential to key operational and on to support. The understanding of investment change over
time, with concurrent change in management focus, investment ownership, and portfolio
balance, is a key concept that must be internalized before an organization can embrace any
portfolio management process or tool. (see Figure 2)
Figure 2. The Cranfield Grid
Source: Ward and Peppard, “Strategic Planning for Information Systems.”
3. Ross and Beath Framework
Janne W. Ross of MIT and Cynthia M. Beath of the University of Texas at Austin revisited the
issue of classifying IT investments and produced a new framework that looks at the technology
scope and business objectives of the investments.3 In the framework, these two dimensions are
used to classify different investments (see Figure 3).
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The resulting quadrants differ form the previous works, in that they layer:
● The key drivers for investment with each class - These drivers vary, from improving core
technology infrastructures that are incapable of supporting current activities to new
technologies and new ideas that may improve or enable future product or process
improvements.
● The recommended funding approach -The authors recommend that a combination of
executive-level allocations and business cases be used, depending upon the investment classes.
● The investment owner - The owner of the investment will likely vary, depending on the
investment class. Renewal investments will likely be owned by the technology department,
while process improvements will be owned by the strategic business unit or the functional
area affected.
Ross and Beath are the first to extend this thinking into IT portfolio planning. Through
interviews with different organizations, they established that different organizations in different
industries at different times have very different asset allocations
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Figure 3. The Ross/Beath Framework
Source: Ross and Beath, “Beyond the Business Case: New Approaches to IT Investment.”
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IV. IT Portfolio Optimization
1. IT Portfolio Management and IT Governance
ITPM is designed to provide a holistic view of the entire IT investment. As I mentioned at the
chapter I.3, Other Management Tools related to the ITPM, ITPM includes the disciplines of
project portfolio management (PPM), applications portfolio management (APM), and IT asset
management (ITAM) and is part of the overall IT governance process.
Organizations use ITPM to maximize the returns from their entire investment in IT. Through
ITPM, IT investments are constantly being monitored to enable the most effective decisions on
when to fund, hold, cancel, migrate, re-engineer, or retire projects or assets. However, it is
important to note that ITPM is not a silver bullet; it only provides tools and data for people to
make the decisions. But it is a critical part of an overall disciplined approach to IT governance
(see Figure 4).
Figure4. IT Portfolio Management As Part of IT Governance
Source: Forrester Research, Inc.
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2. Business and IT Alignment
Once the strategic IT plan is developed and sending priorities established, potential investment
options are analyzed to ensure that they contribute to the business goals. ITPM provides an
effective process for aligning the strategic goals of the business with the appropriate IT strategy
for maximum benefit. A successful ITPM program helps:
● Allocate spending by goal - Investment choices can be related to business goals. Projects that
do not support corporate goals can be evaluated for fit and goals reassessed. Should an
investment contribute to multiple goals, project costs and benefits can be allocated
proportionately .
● Validate the relevancy of the strategic plan - Comparing the results of top-down planning, in
which the goals and allocations are defined by management, and bottom-up planning, in which
desired projects are proposed and submitted, can show IT and business alignment or disconnect.
The initial alignment exercise can point out discrepancies between strategic planning and tactical
suggestions.
● Develop trial portfolios based on resource limitations - Every project probably can not be
funded, owing to capital, developer, resource, and business limitations. Combining different sets
of projects into trial portfolios points out the tradeoffs that need to be made.
● Communicate IT plans in business terms - Before final adoption, the proposed IT investment
portfolio must be communicated to both management and relevant stakeholders in the business.
Projects that are not going to be funded or that are going to be delayed must be communicated so
the business groups can adjust expectations and goals. Agreement that the proposed suite of
investments is the best for the business must be reached before investment.
● Provide increased visibility into IT spending - ITPM provides a holistic view of the entire IT
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budget and how that spending breaks down. By further categorizing portfolio elements and
linking them to the business processes they support, it becomes possible to assess the actual
alignment of IT spending with business strategy. This can lead to more strategy-focused IT
investments and improved demand management
● Provide increased transparency into IT decision-making - ITPM implements a disciplined
process and methodology for decision-making, removing the veil from how projects get funded
and prioritized. Decisions are made based on well-defined criteria backed by business cases with
sound financial analysis and are linked to strategic objectives.
● Reduce costs - It is difficult to reduce costs when a company does not have a complete
understanding of where all the money is going. IT organizations implementing ITPM for the first
time are surprised to discover how much waste and redundancy exists across the enterprise. It
also allows for a rigorous and regular review process that can be used to shut down ineffective
projects, retire unused or obsolete assets, and consolidate applications, freeing up budgets to be
utilized elsewhere or returned to the business as increased margins.
● Manage risks - Managing risks is a key element of ITPM. Each component in the portfolio can
be assigned a risk index based on risk assessment criteria. The sum of the individual risk indices
results in a risk beta for the entire portfolio and can then be benchmarked against an established
threshold. A beta that exceeds the threshold requires an adjustment to the portfolio, typically
removing a high-risk project. Likewise, a beta below the threshold may indicate a portfolio that
is too conservative and not likely to lead to any breakthrough innovation. Risk can never be
eliminated but it can be managed by balancing individual risks across the portfolio. ITPM’s
holistic view makes this possible.
● Facilitate agility - ITPM enhances an organization’s agility and ability to respond quickly to
change. When fully implemented, the entire IT portfolio, including budgets, assets, and
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resources, are all contained in an integrated database, so priorities can easily be changed or new
projects can be initiated with an immediate understanding of the effect on other elements of the
portfolio. New forecasts, budgets, and resource plans can be generated and communicated to key
stakeholders quickly.
3. Best Practices for IT Portfolio Management
3.1. ITPM is not just an IT effort – executive teams must drive it as wellImplementing ITPM has far-ranging effects that extend well beyond the boundaries of IT, since a
well-managed IT portfolio directly correlates with business intent for use of the firm’s IT dollar.
When practiced well, ITPM involves executive management, business unit management — and
IT management. Without initial support from the executive team, the ITPM effort will almost
always fail. ITPM represents a significant culture change as the way of getting things done is
transformed from a culture of autonomy, political agendas, and personal clout to one of
consistently applied, objective assessments emphasizing enterprise-wide benefits over individual
business unit benefits.
3.2. Implement ITPM as part of a larger IT governance program
ITPM provides a process and tools to assist in implementing a formal IT governance program.
Since the overriding goal of IT governance is to maximize the value from IT investments, ITPM
represents a powerful mechanism for accomplishing this. However, ITPM by itself is not IT
governance, and it must be augmented with governance structures (committees, reporting
relationships) and processes (decision criteria, templates, rules of engagement) (see Figure 5).
Figure 5. IT Governance Structure And IT Portfolio Management
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Source: Forrester Research, Inc.
3.3. Assign the relationship manager to alignment tasks
One of the key goals of ITPM is to align business strategies with IT strategies to ensure that IT
investments are being made in the right places. IT account managers (or relationship managers)
are the key individuals that straddle the business and IT departments, responsible for bringing the
business strategy and requirements to IT while advising the business side on enabling
technologies.
3.4. Empower the Project Management Officer (PMO) to own the ITPM tactics
Best practices organizations are locating the responsibility for implementing, managing, and
communicating the results of ITPM within the enterprise project or program management office.
As the central repository for project management expertise and best practices, many PMOs have
been already involved in project portfolio management. Expanding their scope to include all of
IT portfolio management is only natural.
3.5. Regularly review and tune the portfolio
Organizations are getting better at providing business cases and other justifications for getting
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projects approved. However, once a project is approved, funded, and underway, it begins to take
on a life of its own. So, one of the key success factors in ITPM is a disciplined review of the
entire portfolio on a regular basis. These reviews create the opportunity to determine if projects
or initiatives are on schedule, on budget, and delivering the expected results and to ensure that
the need is still valid. It also provides an opportunity to re-balance the portfolio as a result of
change, market forces, competitive forces, new opportunities, or mergers and acquisition activity.
3.6 Use ITPM to shut down sub-optimal work
Best practice organizations use ITPM to make the tough decisions, since it forces everything out
into the open, evaluating against a set of objective criteria. This can lead to shutting down
projects that were politically motivated, to retire aging systems or applications that have little or
no value, and to consolidating other systems and applications. Often these can be unpopular
decisions because they result in a loss of autonomy for some business units.
3.7. Communicate regularly
Implementing ITPM requires a cultural change in an organization. It typically results in
significant changes in the way that IT decisions are made — which can appear threatening to
some. Communicating regularly the reasons for implementing ITPM (maximizing the value of
IT to the business) and then the results (the actual benefits derived) can go a long way in
diffusing some of the organizational angst that accompanies any cultural change. Best practices
organizations developed a mix of dashboards and reports to provide business unit and executive
management status of the portfolio on a monthly basis.
3.8. Acknowledge the cultural issue
Despite sophisticated software solutions, ITPM and portfolio optimization adoption is hindered
by the requirement for a major cultural shift in the way that IT is acquired and managed, the
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biggest of which is the focus on optimizing the portfolio for the benefit of the entire enterprise as
opposed to individual business units. This loss of autonomy is typically the most difficult to
overcome.
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V. Case Study: Intel
1. Balance between Strategic Objectives and Constraints
Ultimately, portfolio optimization is about balance. On one side are the strategic objectives of the
business and on the other are the constraints, including IT resources like the IT budget, people,
skills, and existing technology assets, as well as risk. IT Portfolio optimization involves making
the tradeoffs based on these constraints.
ITPM balances keeping the lights on with new initiatives. Every new IT initiative will eventually
become part of the keep-the-lights-on budget the following year through depreciation,
maintenance, and other related expenses. The keeping-the-lights-on portion of the budget is often
as much as 70% or more of the total IT budget, and without careful management, it will
eventually consume all of the IT budget. Companies are aggressively using ITPM to reduce the
size of the keep-the-lights-on budget through retirement of non-performing or obsolete systems
and assets, consolidation of servers, elimination of redundant systems, and reduced software
licensing costs through improved license management. Their overall goal is to shift the budget
ratio to 1:1 from the typical 3:1 today, making more money available to drive strategic
initiatives.
ITPM finds the balance between business value, IT efficiency, and financial return. Maximizing
business value is the primary driver behind ITPM, but business value must be balanced against
other criteria, such as IT efficiency and the ROI. Business value and financial return are not the
same. For example, a company may decide to invest heavily in an enterprise-wide CRM system
to improve customer satisfaction (a business value improvement), but ROI may be difficult to
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measure. A business unit may want to implement a new inventory management system that will
produce a significant ROI. However, it may need to run on a nonstandard platform (IT
efficiency) that will require IT to add resources and skills to support.
2. Intel Case
Intel has developed a very practical process around ITPM that evaluates IT initiatives based on
business value, IT efficiency, and its financial return. For each IT initiative, Intel calculates three
values: a business value index (BVI), an IT efficiency index (ITE), and the ROI.
The business value index (BVI) measures business value. Each proposed IT initiative is assessed
against a list of business value criteria relevant to that investment. Each criterion is assigned a
weight, based on the importance of that particular criterion and dependent on business strategy
and conditions. The BVI is the sum of the assessed weighted criteria.
The IT efficiency index (ITE) measures compliance with architecture. One of the key methods
for reducing the cost of IT is to develop an enterprise architecture and technology standards. This
leads to simplification, which reduces operating expenses and scale, which leads to improved
vendor pricing. IT initiatives that comply with the existing architecture and standards are almost
always less costly than those that require nonstandard hardware/software. IT efficiency is a
measure of how well proposed initiatives comply with the existing architecture and standards.
Return on investment measures financial implications. The third component uses standard
financial analysis tools including NPV, IRR, and payback to assess the financial implications of
an IT investment.
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All IT initiatives are then plotted on a bubble chart with the BVI on the Y-axis, the ITE on the X-
axis, and the size of the bubble representing the financial return (see Figure 6).
Figure 6. Intel IT Initiative ROI Analysis
Source: Forrester Research, Inc.
Those projects in the upper right quadrant represent the best mix of projects based on the
available budget. However, this process enables management to make appropriate tradeoffs. For
example, an infrastructure upgrade might have little immediate business value, but it could have
a huge effect on IT efficiency and a very favorable financial return. Management might choose to
fund this initiative rather than one that provides a high level of business value but has a very low
ROI or IT efficiency.
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VI. Conclusion and Next Study
Each organization has different needs, goals, and requirements from its IT organization. As a
result, portfolios will differ by a company. The lack of tools that point to the optimal spending
mix should not prevent an organization from considering its IT spending holistically. Building
the IT portfolio has enormous benefit for any organization, and optimizing the portfolio creates
even more value. To do, the organization should:
● Develop and communicate a plan and build consensus - ITPM is part of an overall IT governance program and reaches across the entire enterprise. Plan to implement in stages tackling the low-hanging fruit first and then build upon incremental “wins.”
● Increase the depth of communications between IT and management – Seeing the portfolio
displayed visually, rather than as a list of budget items, helps move the discussion up a level.
● Provide the checks and balances on spending - Spending gaps or over-weighted situations can
be identified. Is the organization under-investing in future growth? Is the organization over-
investing in low-value support applications?
● Don’t underestimate the cultural change required - While governance processes underpin
ITPM and software tools can help automate many of the processes, ITPM is ultimately about
changing the way an organization makes IT investment decisions, which makes it an
enterprise-wide change management effort. This implies a change in culture, which remains
the single largest barrier to implementing a successful ITPM effort. Make sure that executive
management is on board and takes an active role.
Once the concepts of IT portfolio management are embraced, the process of evaluating and
communicating the components and goals of the portfolio can be layered in. Future studies will
cover such topics as:
● Visualizing the IT portfolio — classifying and categorizing IT investments – IT investments,
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just like financial investments, can be classified in multiple ways. A framework for evaluating
potential investments can ensure the proper balance of investments.
● Metrics and measurements for the IT portfolio - Few organizations measure and report the
results of their investments and fewer still consider these results as components of the
portfolio. Developing the proper metrics and measurement processes to ensure that the initial
motivation for the investment carries through implementing and optimizing the results is
critical to move from project-based to portfolio-based thinking.
● Risk and return and their relationship to the IT portfolio - A well-defined portfolio of
investments can produce the greatest return at the lowest risk. Some of the techniques of
modern portfolio theory can be applied to the development of an IT portfolio to optimize
investment choices.
● The role of architecture in maintaining the IT portfolio - IT architecture is about creating
standards and components to minimize costs, increase business benefits, maximize flexibility,
and reduce risk. Within the architecture function, creating and managing the architectural
elements is a portfolio to them. Applying many of the same portfolio management concepts to
IT architecture can change this function from one of “standards police.”
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REFERENCES
● Bryan Maizlish and Robert Handler, IT portfolio Management: Unlocking the Business Value
of Technology, April 8, 2005, New Jersey, Wiley & Sons, Inc.
● Chip Gliedman, Defining IT Portfolio Management, Sep.29, 2004, Forrester Research, Inc.
● Chip Gliedman, The Basis for IT Portfolio Thinking, Dec.21, 2004, Forrester Research, Inc.
● Chip Gliedman, The Forrester Portfolio Management Matrix, Dec.22, 2004, Forrester
Research, Inc.
● Chip Gliedman, Trends 2005: IT Portfolio Management, Nov.5, 2004, Forrester Research, Inc.
● Jeanne W. Ross and Cynthia M. Beath, Beyond the Business Case: New Approaches to IT
Investment, Winter 2002, MIT Sloan Management Review
● Craig Symons, Optimizing the IT Portfolio for Maximum Business Value, Sep.30, 2005,
Forrester Research, Inc.
● Craig Symons, Five Best Practices for Portfolio Management, Sep.25, 2006, Forrester
Research, Inc.
● IT Governance Institute, Governance of IT Investment – The Val IT Framework, 2006
● C. Verhoef, Quantitative IT portfolio management, Jul.15, 2002, Free University of
Amsterdam, Department of Mathematics and Computer Science, Netherlands
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