Tuesday, December 06, 2005


Thoughts on IT Porfolio Management

The measurement for return on IT investments has gone from yearly to quarterly and now sometimes even monthly. The velocity at which change occurs and the demand for innovation has caused many enterprise architects to think about IT portfolio management. Sadly, many of them are getting it wrong...

Managing information technology investments requires rational approaches to selecting, prioritizing, optimizing and aligning the IT spend to business drivers and the future direction (stated and unstated) of the particular industry vertical one plays in. Doing such not only requires achieving optimal benefit but also achieving a chaordic balance.

Better balance can be achieved by adopting service-oriented architectures, outsourcing appropriately (Nothing larger than a few projects and absolutely never more than 10% of the IT staff), data center consolidation, ubiquitous computing with nodes virtually everywhere, the adoption of open source software and agile approaches to software development.

Where most enterprises go wrong is that they attempt to get architecture teams to start thinking like project management folks and don't acknowledge that they are distinct disciplines. You can read in magazines such as CIO, that many of the IT executives that have failed didn't have enough business savvy. There is some truth to this statement, but the real problem upon further inspection actually lies elsewhere. I would challenge anyone making this statement that the real problem is the promotion up the ranks of folks with project management backgrounds which is really neither IT nor business...

Too many folks are getting it twisted so I have devised a list in prioritized order on exactly what they should be focusing in on when thinking about portfolio management. If you do them out of order, then you too will get it wrong:

NOTE: The priority of the list intentionally left elements that traditional PMI certified folk can participate on to the absolute last step. There is greater value in architecture than there is in list making.

IT portfolio management should be used as a framework (not stick) for better decision making regarding new and existing IT investments. Sadly, whenever a PMI certified type gets involved they will think of portfolio management in terms of the sinister act of time tracking (another form of list making). They will run out and purchase tools that solve this particular aspect of governance first that will lead others down the path of spending even less time delivering valuable working software for the business. They will never acknowledge that the problem is that employees are not spending time on things that are more important because they are so consumed with producing metrics. I wonder if these folk ever stop and take the time to ask are they really solving the right problem...

Enterprise Architecture and IT Porfolio Management both require a laser-like focus on the objectives of the process, avoiding getting mirred in superfluous information. Objectives should be attainable and grounded in reality. They both should synthesize potential business opportunities, assessing value, risk, costs and other parameters. Sensitivity analysis, what-if factors and scenario planning must be leveraged to manage uncertainty.

In the meantime, check out IT Governance Demystified and The difference between Application vs Project Portfolio Management...

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