IT Portfolio Management

It sounds really complicated but in actuality it is really not. IT Portfolio Management is an application of systematic management to classes of items that manage organizational IT capabilities; these items are normally very large.

Some examples of IT Portfolios are things such as planned initiatives, projects, and ongoing information technology services like application support. IT Portfolio Management can be relied upon for the quantification of subsequently puzzling IT efforts; this enables measurement and objective evaluation of investment circumstances.

IT Portfolio Management History

The first proposed portfolio advance to IT assets and investments was considered to be the McFarlan. Later on Weill and Broadbent are said to have made contributions to this approach, followed by a number of other contributors such as Aitken, Kaplan, Benson, Bugnitz, and finally Walton.

Various vendors have contributions that are overtly acknowledged as IT Portfolio Management Solutions. The first attempt to standardize the IT Portfolio Management principles is believed to have been made by the ValIT framework from ISACA.

Some research even suggests that IT Portfolios statistically behave more like biological populations rather then financial portfolios.

The IT Portfolio Management idea started out with humble beginnings, it actually started with no more then a project-centric bias. Even so IT Portfolio Management like many other information technology models and structures is evolving.

IT Portfolio Management however is evolving to include steady-state portfolio entries, this can be application maintenance or even application support, both of which consume a large part of IT funds.

The challenge associated with including application maintenance and application support in these portfolios lies in the fact that IT budgets have a habit of not tracking these efforts at an adequate level of granularity for efficient financial tracking.

Efficient Financial Tracking

It is a bit simpler then one might think at first. The actual concept is one that is analogous to financial portfolio management, yet there are still significant differences. Information Technology investments are solid, unlike stocks and bonds which are considered liquid; these IT investments are measured using not only financial yard sticks but also non-financial yard sticks, like a balanced scorecard approach. Therefore a strictly financial view would be insufficient.

Typically the assets of a financial portfolio have consistent measurement information which allows for accurate and objective comparisons. This information is at the base of the “concepts” usefulness in its application to information technology.

Even so, creating such universality of measurements takes a considerable effort from the information technology industry. The management of IT Portfolios is distinct from that of IT financial managements in that it has an explicit directive, which is a strategic goal in determining what to continue investing IT funds into versus what to divest from.

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