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Portfolio Management

We guide our clients through the implementation and ongoing utilization of IT Portfolio Management. IT portfolio management is the application of systematic management to large classes of items managed by Enterprise IT capabilities. The opportunity that IT portfolio management represents is the quantification of previously complex IT efforts, enabling measurement and objective evaluation of investment scenarios.

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 challenge for including application maintenance and support in portfolios is that IT budgets tend not to track these efforts at a sufficient level of granularity for effective financial tracking.

The concept is similar to financial portfolio management, but there are significant differences. IT investments are not liquid and are measured using both financial and non-financial yardsticks. As a result, a purely financial view is not sufficient.

IT portfolio management is distinct from IT financial management in that it has an explicitly directive, strategic goal in determining what to continue investing in versus what to divest from.

At its most mature, IT portfolio management is accomplished through the creation of three portfolios:

• Application portfolio management focuses on comparing spending on established systems based upon their relative value to the organization. The comparison can be based upon the level of contribution in terms of IT investment’s profitability.
• Project portfolio management addresses the issues with spending on the development of innovative capabilities in terms of potential ROI and reducing investment overlaps in situations where reorganization or acquisition occurs.
• Resource portfolio management involves analyzing and forecasting the talent that companies need to execute their business strategy, proactively rather than reactively, enabling the organization to identify, develop and sustain the workforce skills it needs to successfully accomplish its strategic intent.

The agility of portfolio management is its biggest advantage over investment approaches and methods. Other benefits include central oversight of budget, risk management, strategic alignment of IT investments, and investment management in addition to standardization of investment procedure, rules and plans.

There is no single best way to implement IT portfolio management and therefore a variety of approaches can applied. Obviously the methods are not fixed and will need altering depending upon the individual circumstances of different organizations.