IT Portfolio Management

Recently, we have just had an epiphany that capital is scarce. We have learnt the hard way that capital needs to be smartly deployed and responsibly monitored. Now, we are privy to business executives and IT guys butting heads with each other. Business accuses IT of being unjustifiably lavish while IT regards business as stingy. But they both share the same goal – maximizing value.

Given the fact that IT expenditures run into thousands with budgets spanning across multiple projects, one has to be selective and handpick the right projects for investment. IT Portfolio Management (ITPM) can be your compass here.

ITPM Demystified

Most enterprises today possess an IT architecture that almost looks like a complex web of applications that overlap each other. This complexity makes it difficult to identify the projects that maximize value.

So how do you decide where you want to deploy your investment? ITPM is your answer. ITPM is a process of analyzing an enterprise’s entourage of IT applications, making sense of them and aligning them to business objectives. The trick is to treat an IT portfolio like a financial portfolio whereby you balance risk and return of IT assets.

What And Why Of ITPM

ITPM is a crystal ball offering enterprises better insights into current ongoing IT spends and future IT investment requirements. Aptly put, it promotes strategic business decisions by gauging the future provisioning requirements of IT.

Keeping this in mind, the goals of ITPM can be summed up as follows:

  • Establish single touch-point for all IT assets and initiatives with investment possibilities.
  • Provide a 360 degree view of the IT framework and its corresponding value to the top management.
  • Identify the projects that optimize results and value.
  • Prioritize projects for IT budget spending.

With these goals close to heart, ITPM delivers the following benefits:

  • It maintains centralized information.
  • It enhances cost monitoring.
  • It helps identify redundant projects.

ITPM Maximizes IT

A recent study undertaken by the Hackett Group revealed that enterprises that better managed the applications in their IT portfolio leveraged enviable efficacy, cost savings and partnering capabilities.

But that’s the bigger picture. Closer to home, we find three main reasons that put forward a compelling case of ITPM. Firstly, a large number of applications imply a complex structure. The more the applications, the more the business ends up paying for licenses.

Secondly, too many applications delay the implementation of changes that are made to respond to business needs. This results in missed out opportunities and greater maintenance costs.

Thirdly, a large number of applications also create scaling problems for enterprises. This means your enterprise responds late, things slow down and your exposure to risk increases.

Challenges to ITPM

Although ITPM presents a formidable case, there are certain challenges that make it an unsung hero. The most common is difficulty in measuring IT benefits. IT benefits are measured in financial as well as non-financial terms. Lack of proper metrics further complicates the issue. It is also dicey to explain to the business that not all IT investment needs to show ROI.

The underlying lack of mutual respect and trust between business and IT executives, internal conflicts between different units, lack of priority to ITPM, are a few more deterrents.

Best Approach to ITPM

However, the identification of these challenges helps us develop the right approach to ITPM. The first and foremost thing to do is to bridge the gap between IT and business and make ITPM a joint responsibility. The issue of lack of metrics can be addressed by building processes and adopting capabilities in a phased manner. We also need to train people and prepare them to adopt IT as a part and parcel of business processes and develop them to form joint teams.

At the end of the day, ITPM is all about enabling the enterprise to cancel or defer projects that yield low returns and divert the investment to fruitful applications.