'IT portfolio mix all wrong'

Up to 80% of IT portfolios are out of balance and most do not recognise the relationship between assets and projects, according...

Up to 80% of IT portfolios are out of balance and most do not recognise the relationship between assets and projects, according to research by Meta Group.

The study showed that while international IT portfolio management adoption was growing fast, with 42% of the study participants applying it and 21% saying they planned to use it in the next 12 months, most had only begun to manage their IT portfolios in the past year.

"Many are prevented by a lack of understanding of the approach and methodology, and lack of data and measures," said Willie Appel, senior vice-president at Meta Group.

Other obstacles include lack of financial skills within IT, lack of perceived benefits, and lack of interest and support from finance directors and finance departments. "Do not tell the business you are doing IT portfolio management," said Appel. "Use IT portfolio management to tell the business what IT is doing." 

Appel said that firms grew into global forces with each exercise of an option portfolio. "The combination of horizontal and vertical processes within a business assessment model is a mapping of the corporation's growth strategy. IT executives need someone they can absolutely rely on, to enable speedy and effective decisions, to improve the organisation's information agility, boost its credibility, and add value to shareholders."

Appel criticised most companies for viewing their IT portfolios on a strategic versus tactical basis, rather than on relative value or risk levels, and suggested IT directors should develop a portfolio mix from a dynamic perspective rather than as an end in itself. 

According to Meta Group, the key IT portfolio allocations are value maintenance (usually 85%) to run the business, value enhancement (12%) to grow the business, and value exploration (35) to transform the business.

"CIOs should measure the organisation's ability to change this mix proactively, to continuously be in a position to contribute to business value," said Appel. "Portfolio management elevates, unifies and capitalises corporate knowledge."

Appel said the ability to categorise IT assets was essential during economic uncertainty to facilitate cost cutting and refocus spending.

"Without a portfolio categorisation and risk management process, CIOs could do business harm. Moreover, a portfolio approach provides CIOs with a methodology for articulating value and risk trade-offs, improving abilities to manage change."

Nano Mothibi writes for IDG News Service

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