IT Portfolio Management

Ed PrusieckiBADM 559 – Enterprise IT Governance

Introduction•Information technology (IT): core

competency for almost all businesses to be successful.

•Successful IT portfolios:▫Add value▫Drive growth▫Strengthen competitive advantages

History•During post WWII decades IT

management was very straightforward.

▫Equipment was expensive▫Hardware was highly customized ▫Heterogeneous nature and limited

capabilities the management of IT was relatively simple and straightforward.

History

•Main function was to conduct large amounts of calculations. ▫crunch numbers ▫process enormous amounts of data▫Ie, US census or bookkeeping for

businesses.

•Replaced the bean counters that did the number processing behind desks.

•Early IT was referred to as “data processing”.

History

•As software and hardware become more affordable:▫Business units invested in IT independently ▫It was quicker to bypass the sluggish

corporate IT process. ▫Feeding frenzy approach towards investing

in IT throughout the latter half of the 1990s.

History

•IT investments became:▫Very decentralized▫Unorganized▫Did not follow approved corporate

standards, especially in terms of interoperability.

•By the late 1990’s many companies had very heterogeneous and decentralized IT systems throughout their corporation.

•In 2000 the internet bubble popped and the economy slumped into a recession.

History

•After investigation into IT investments: ▫Many were misaligned with their strategy ▫Not integrated with other IT systems ▫Inefficiencies and waste ▫Companies placed additional pressure to

minimize waste and eradicating inefficiencies.

•Statistics: ▫between 1999-2001 firms in North America

spent more than $1 trillion on IT investments with $300 billion failing, going over budget, or finishing late.

▫Only $1 out of $14 IT money spent results in new benefits of IT growth.

IT Portfolio Management

•Composed of primarily three main areas:▫Standardized and clearly communicated

frameworks and processes. ▫Tools to analyze costs, benefits, risk, and

other data. ▫The creation of a taxonomy and governance

that provides the business with a clear picture of the policies, criteria, and guidelines for the execution and control mechanisms.

Building IT Portfolios

•Eight general stages▫Game plan▫Planning▫Creating▫Assessing▫Balancing▫Communicating▫Governance and organization▫Assessing execution

Business Example

•A new IT system did not have strong IT portfolio management▫New IT system designed to allow business

to operate without reliance on a product assembly schedule that was updated on Microsoft excel.

▫The current excel based system: Extremely time consuming Inefficient Subject to many errors and defects

Business Example

•New IT system designed and built•The IT system did not provide the same

functionality as the excel based schedule required.

•Excel file remained as the tool for updating the schedule

•Using the eight stages of building IT portfolios would have greatly assisted in ensuring this project was successful.