IT Investment Portfolio

Management
 IT Investment Portfolio
Management

 How do you manage the money your

organization spends in IT? Do you treat all
IT investments in a similar way?
 Every year some organizations spend millions of euro
in IT systems and are likely to spend several multiple
of this on legacy investments, many of which but not
all they continue to rely on to run their business.
 A lot of organizations don't have any mechanisms to
help them understand and manage existing and
planned IT investments.
 This is where taking a portfolio approach can
help.
 IT portfolio management
 IT portfolio management is about
managing their evaluation, selection,
monitoring, and ongoing adjustment of IT
investments to achieve defined business
results while meeting clear risk/reward
requirements by taking a portfolio
perspective.
 We are looking to evolve beyond making
selections in isolation to optimize the
portfolio for the overall enterprise.
 To move beyond looking only at the
financial aspects of value to taking a
holistic perspective of value.
 To move from avoiding risk to managing risk in
order to increase value.
 By taking a portfolio perspective we're seeking to
evolve from treating investment selection as a one-
time event to continually reviewing an adjusting
the portfolio in response to changing conditions.
 IT investments need to be planned and managed
according to their current and future contribution
to the business.
 Not all of your IT investments are the same; for example,
some may provide a source of competitive differentiation
others are core to running the business or may help a meeting
regulatory requirement.
 We suggest the classification of all existing planned and
potential IT investments into four categories based on an
assessment of the current and future business importance of
these investments.
 With this model an investment can be
defined as strategic, key operational,
support or high potential depending on its
contribution or expected contribution to
business success.

The Portfolio Model

 Strategic investments
 Strategic investments are critical to future
business success.
 They create or support change in how the
organization conducts its business with the
aim of providing competitive advantage.
 Key operational investments
 Key operational investments sustain existing business
operations helping to avoid any disadvantage.
 The organization currently depends on these
investments for success. It can be argued that in
many industries substantial numbers of IT
applications, for example, electronic point-of-sale,
internet channel and ERP have become so pervasive
that they have become mandatory for survival in the
industry.
 Support investments
 Support investments are those which
improve business efficiency and
management effectiveness but in
themselves do not sustain the business or
provide any competitive advantage.
 High potential investments
 High potential investments are those
which may create opportunities to gain a
future advantage but are as yet on
problem. This is your R&D investment
where you seek out innovative
opportunities to use IT.
 The strategic and high potential
investments are about gaining advantage.
 key operational and support investments
are about avoiding disadvantage.
 The driving forces for Portfolio
Model
 The driving forces for each quadrant are
different.
 In the strategic quadrant it is about
perceived market requirements,
competitive pressures and ultimately
achieve business change.
 For key operational investments, it is
about improving performance of existing
activities. You are often looking for
integration and rationalization to speed up
business processes and to meet specific
industry legislation.
 For support investments, it is about cost
reduction and efficiency improvement to
automation or to meet the requirements
of general legislation.
 High potential investments are driven by
innovative business ideas and new
technology.
The driving forces for Portfolio Model