Business executives love to hate information technology, yet IT expenditures continue to increase. In 2002, $780 billion was spent on IT in the United States alone, with IT budgets of individual companies, such as Citigroup Inc., reportedly as high as $4 billion. At the same time, accounts of wasted investments make headlines, providing fuel for IT skeptics: An estimated 68% of corporate IT projects are neither on time nor on budget, and they don’t deliver the originally stated business goals. Some even claim that during the last two years, $100 billion to $150 billion of U.S. IT projects have failed altogether.1
Considering that IT budgets comprise hundreds or even thousands of projects running simultaneously across functions, business units and geographies, it’s a challenge to select projects for investment that are synchronized with corporate strategy. Charged with managing such projects effectively, executives are asking, “How do we maximize the business value from IT investments?”2
The answer may be IT portfolio management (ITPM) —that is, managing IT as a portfolio of assets similar to a financial portfolio and striving to improve the performance of the portfolio by balancing risk and return.
Analogies that build on financial-portfolio theory or on concepts about product and research-and-development pipeline portfolios (which are more akin to IT portfolio management than to financial portfolios) are not new.To read the complete article, login or sign-up using the form below.
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