BADM 590 May 3, 2007

Term Paper

IT Portfolio Management

Professor: Dr. Michael J. Shaw

Chung-Beom (Tony) Nam

MBA cnam3@uiuc.edu

Abstract
This paper presents the basic concepts of IT Portfolio Management (ITPM). To give a definition

of the ITPM, I identify what the ITPM is and find the components of IT portfolio and other

management tools related to the ITPM. Also, I research the IT Investment Frameworks such as

the McFarlan Strategic Grid, the Cranfield Grid, and the Ross/Beath Framework, and find how to

optimize the IT portfolio. In addition, as a case study example, I discuss how Intel have

developed a practical process around ITPM that evaluates IT initiatives based on business value,

IT efficiency, and its financial return.

Keywords: IT Portfolio Management (ITPM), IT Portfolio, Project Portfolio Management

(PPM), IT Investment, IT Return on Investment (ROI), IT Governance

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 TABLE OF CONTENT
Page

I. Introduction ----------------------------------------------------------------------------------------- 2

II. Definition of the IT Portfolio Management -------------------------------------------------- 3

1. What is the IT Portfolio Management (ITPM)? ------------------------------------------ 3

2. Four Components of IT Portfolio ------------------------------------------------------------ 3

3. Other Management Tools related to the ITPM -------------------------------------------- 4

III. IT Investment Frameworks -------------------------------------------------------------------- 7

1. The McFarlan Strategic Grid ----------------------------------------------------------------- 7

2. The Cranfield Grid ------------------------------------------------------------------------------ 9

3. The Ross/Beath Framework ------------------------------------------------------------------- 10

IV. IT Portfolio Optimization ----------------------------------------------------------------------- 12

1. IT Portfolio Management and IT Governance --------------------------------------------- 12

2. Business and IT Alignment -------------------------------------------------------------------- 13

3. Best Practices for IT Portfolio Management ----------------------------------------------- 15

V. Case Study: Intel ----------------------------------------------------------------------------------- 19

1. Balance between Strategic Objectives and Constraints --------------------------------- 19

2. Intel Case ----------------------------------------------------------------------------------------- 20

VI. Conclusion and Next Study -------------------------------------------------------------------- 22

References ---------------------------------------------------------------------------------------------- 24

I. Introduction

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A lot of organizations spend millions or billions of dollars on Information Technology (IT)

annually. There have been a number of attempts in past years to build or adapt frameworks for

the evaluation of IT projects and the construction of asset classes, much like stocks, bonds,

money market accounts, and annuities in the investment world.

Business cases for IT investments are now the norm rather than the exception. However, projects

are still considered individually as discrete investments. Likewise, there is often a segmentation

between new application spending, the realm of project portfolio management (PPM), existing

application maintenance, the realm of application portfolio management (APM), and

infrastructure investment. As of yet, few organizations are looking holistically at the entire IT

budget as a unified suite of investments. IT organizations apply many of the same tools the

financial community uses to build and manage financial portfolios to maximize benefits.

IT Portfolio Management, however, offers not only the opportunity to measure that return on

investment (ROI), but also provides the process needed to optimize the return on the portfolio.

Although the science of IT portfolio management is in its infancy, understanding the concepts

and laying the groundwork now will allow for quicker adoption later as the tools and tenets

become better defined over the coming years. The ultimate goal is delivering to the organization

predictable and higher returns at the appropriate level of risk.

Following, I lay out the basic concepts and definition of IT portfolio management, its

relationship to other management processes, the IT investment frameworks, the IT portfolio

optimization, and Intel case study.

II. Definition of the IT Portfolio Management

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 1. What is the IT Portfolio Management (ITPM)?

IT portfolio management is the application of systematic management to large classes of items

managed by enterprise IT capabilities. IT portfolio management started with a project-centric

bias, but is evolving to include steady-state portfolio entries such as application maintenance and

support, which consume the bulk of IT spending. The concept is analogous to financial portfolio

management, but there are significant differences. IT investments are not liquid like stocks and

bonds and are measured using both financial and non-financial yardsticks. So, because a purely

financial view is not sufficient, IT investment is considered discretely. Return on investment

potential may be considered for an individual investment, but the impact on the portfolio as a

whole is often ignored. Investment allocation across segments is not targeted in advance, but is

rather an outcome of project funding. Resource utilization and optimization, rather than outcome,

may drive decisions. And perhaps most importantly, all investment classes are evaluated with the

same set of criteria.

2. Four Components of IT Portfolio

The IT portfolio is the tangible manifestation of ITs plan to support the business in meeting its

strategic goals. This portfolio is composed of:

Current Investments - Existing application, programs, and processes are investments that must

be managed, optimized, retired, or enhanced as appropriate over their life cycle.

New Initiatives - These investments are added to the portfolio to add incremental value to the

organization through cost savings, productivity gains, or business advantage.

Externally Mandated Initiatives - In addition to the above, there are initiatives mandated by

regulatory, governmental, or industry rules that, although required, consume resources that

could otherwise be spent on higher-value projects or initiatives.

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 Infrastructure Investment - Underlying many of the applications is a set of shared

infrastructure assets. The degree of segregation of these assets or their linkage to associated

applications or business processes varies to a wide degree by organization. However, they are

part of the IT investment portfolio and must be evaluated and managed as such.

3. Other Management Tools related to the ITPM

3.1. Project Portfolio Management

By using techniques like categorization, financial, inventory, and risk and benefits analysis

combined with tools, companies can prioritize which projects best fit their goals. Within PPM,

common evaluation criteria allow for project arbitration and project-to-strategy alignment.

Resource management and productivity management tools ensure that approved projects are

adequately staffed with the right numbers of the right people, and project management tools

ensure that schedules are met and expected benefits delivered.

Key goals of PPM include:

Elimination of Redundancy - Collecting information about projects underway or under

consideration can identify redundant or overlapping efforts.

Better Resource Allocation - Maintaining a single repository for projects and their

requirements can let the organization better allocate and schedule resources, avoiding the need

to bring in external, and potentially more expensive, resources to deliver on committed

schedules and goals.

Common Repository for Business Value Metrics - Associated with each initiative or project will

be a set of business-oriented metrics and a business case outlining expected business value.

These goals can be reviewed by all appropriate participants in the initiative, maximizing

continued focus on value and a higher likelihood of value realization.

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The initiatives managed by the PPM organization become the engine of value growth, the way

that the organization rebalances the IT investment portfolio, and the way that the IT reacts to

changes in business focus or market dynamics.

3.2. Application Portfolio Management

Application portfolio management provides a way to create business-oriented metrics around our

existing applications by linking existing applications and components with concurrent costs to

manage and maintain current business processes, business value, and business metrics. The

repository of information created by application portfolio management tools and processes feeds

into overall IT planning so that:

Maintenance and renewal decisions are made with sound business backing. Overlaps can be

identified, systems can be consolidated, and opportunities for savings through application

sunset can be identified, freeing funds to be spent on new business enhancing applications.

Proper disaster recovery and business continuity planning can occur. Critical applications are

identified and prioritized over less critical ones. Service levels can be defined based on

business impact and business value supported. Resources are used both most efficiently and

most effectively.

Better outsourcing agreements for both sides. APM repositories, as a source of truth about

applications in use, will allow better visibility by both a potential or current outsourcing

partner and by the application-owing client. Such an inventory can be used to establish a fair

and equitable base for contract pricing, to set quality and complexity benchmarks at contract

inception that will aid year-over-year comparisons to note improvement/declines and to

answer strategic, ad hoc questions about the applications.

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 3.3. IT Asset Management and Infrastructure Management

Much in the way that APM inventories existing applications and ties them to business processes,

IT asset management (ITAM) inventories network-attached hardware and installed licensed

software and links them to underlying contracts, depreciation schedules, and maintenance

agreements. The potential benefits of ITAM include:

License compliance - Tracking installed software (also using auto-discovery technology) and

matching it against records of licensed software. This can both mitigate the risk of unexpected

costs resulting from a compliance audit and help reduce costs by identifying unused licenses.

Better maintenance and replacement requirements - Aging hardware or software that is

approaching the end of its useful life and needs replacement can be identified.

Improved utilization - Identifying existing assets is the first step to better capacity and

utilization planning. Underused assets can be identified avoiding redundant purchases. Options

to scale or reuse assets can be exercised.

As the underlying infrastructure and the architecture behind it are part of the IT investment

portfolio, they must be managed as such. Investment decisions must be made based not solely on

cost and cost savings possibilities but also on the infrastructure as a component that can reduce

IT risk, increase business flexibility, or enable business value through better execution of new

application development and rollout.

III. IT Investment Frameworks

1. The McFarlan Strategic Grid

The first practical IT investment framework is the McFarlan Strategic Grid presented by Warren

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McFarlan in the early 1970s. The grid was designed to determine the overall positioning of the

IT organization in relation to organization goals. In this matrix, IT is positioned on two

dimensions that look at:

The strategic impact of existing systems - Systems are ranked on their relative importance to

the maintenance of the current structure, business, and processes. One way to look at this

ranking would be to examine the maximum permitted period of downtime. The higher the

ranking on strategic impact, the lower the permissible period of outage.

The strategic impact of applications under development - Systems are ranked on their ability to

act as change agents that affect the way that organizations will do business in the future. By

definition, these systems will initially have minimal operational impact, as they support only a

small portion of the organizations processes or revenue. However, they have the potential to

grow into operationally critical systems in the future. (see Figure 1)

The four quadrants are defined as:

Strategic - For these organizations, IT is essential to the execution of current operations and

strategies and new applications are essential to the maintenance of a competitive position into

the future. The planning and organizational relationship between IT and the business must be

very close in such organizations.

Turnaround - Totally uninterrupted and defect-free IT operations are not absolutely critical to

achieve operating objectives operations, but new applications are a key factor in this type of

organizations ability to meet strategic growth targets. This organization now considers its

investments in new IT systems as the engine by which it can reduce costs, improve customer

service, and develop a competitive position in the marketplace.

Factory - This type of organization is heavily dependent on totally reliable IT operations to

enable current business processes. However, IT applications that are under development,

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 though profitable and important, are not fundamental to the firms ability to compete. An

investment bank that is dependent upon trading systems but built upon relationships with

clients may fall into this category.

Support - Such an organization may use IT in the running of its business. However, the

organization would be able to survive the lack of availability of such systems for some period

of time. Likewise, when viewed realistically, new investment will make incremental

improvements in the future of these firms. The authors of this grid cite a large professional

services organization as an example of such an organization.

Figure 1. The McFarlan Strategic Grid

Source: Applegate, McFarlan, and McKenny, Corporate Information Systems Management.

2. The Cranfield Grid

John Ward and Joe Peppard of the Cranfield School of Management in the United Kingdom

produced a variation of the grid that looks at individual investments within the IT investment

portfolio (see Figure 2).2 The key difference is clearly the quadrant that is now labeled High

potential. In this matrix, the developers have added the ability to include a key class of IT

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investments those that may be lacking current benefits but that have the possibility of

producing future benefits.

Ward and Peppard moved the focus of analysis to look at the expected business contribution of

an investment. As such, they recognized the potential for movement through the matrix, from

high potential to key operational and on to support. The understanding of investment change over

time, with concurrent change in management focus, investment ownership, and portfolio

balance, is a key concept that must be internalized before an organization can embrace any

portfolio management process or tool. (see Figure 2)

Figure 2. The Cranfield Grid

Source: Ward and Peppard, Strategic Planning for Information Systems.

3. Ross and Beath Framework

Janne W. Ross of MIT and Cynthia M. Beath of the University of Texas at Austin revisited the

issue of classifying IT investments and produced a new framework that looks at the technology

scope and business objectives of the investments.3 In the framework, these two dimensions are

used to classify different investments (see Figure 3).

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The resulting quadrants differ form the previous works, in that they layer:

The key drivers for investment with each class - These drivers vary, from improving core

technology infrastructures that are incapable of supporting current activities to new

technologies and new ideas that may improve or enable future product or process

improvements.

The recommended funding approach -The authors recommend that a combination of

executive-level allocations and business cases be used, depending upon the investment classes.

The investment owner - The owner of the investment will likely vary, depending on the

investment class. Renewal investments will likely be owned by the technology department,

while process improvements will be owned by the strategic business unit or the functional

area affected.

Ross and Beath are the first to extend this thinking into IT portfolio planning. Through

interviews with different organizations, they established that different organizations in different

industries at different times have very different asset allocations

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Figure 3. The Ross/Beath Framework

Source: Ross and Beath, Beyond the Business Case: New Approaches to IT Investment.

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IV. IT Portfolio Optimization

1. IT Portfolio Management and IT Governance

ITPM is designed to provide a holistic view of the entire IT investment. As I mentioned at the

chapter I.3, Other Management Tools related to the ITPM, ITPM includes the disciplines of

project portfolio management (PPM), applications portfolio management (APM), and IT asset

management (ITAM) and is part of the overall IT governance process.

Organizations use ITPM to maximize the returns from their entire investment in IT. Through

ITPM, IT investments are constantly being monitored to enable the most effective decisions on

when to fund, hold, cancel, migrate, re-engineer, or retire projects or assets. However, it is

important to note that ITPM is not a silver bullet; it only provides tools and data for people to

make the decisions. But it is a critical part of an overall disciplined approach to IT governance

(see Figure 4).

Figure4. IT Portfolio Management As Part of IT Governance

Source: Forrester Research, Inc.

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 2. Business and IT Alignment

Once the strategic IT plan is developed and sending priorities established, potential investment

options are analyzed to ensure that they contribute to the business goals. ITPM provides an

effective process for aligning the strategic goals of the business with the appropriate IT strategy

for maximum benefit. A successful ITPM program helps:

Allocate spending by goal - Investment choices can be related to business goals. Projects that

do not support corporate goals can be evaluated for fit and goals reassessed. Should an

investment contribute to multiple goals, project costs and benefits can be allocated

proportionately .

Validate the relevancy of the strategic plan - Comparing the results of top-down planning, in

which the goals and allocations are defined by management, and bottom-up planning, in which

desired projects are proposed and submitted, can show IT and business alignment or disconnect.

The initial alignment exercise can point out discrepancies between strategic planning and tactical

suggestions.

Develop trial portfolios based on resource limitations - Every project probably can not be

funded, owing to capital, developer, resource, and business limitations. Combining different sets

of projects into trial portfolios points out the tradeoffs that need to be made.

Communicate IT plans in business terms - Before final adoption, the proposed IT investment

portfolio must be communicated to both management and relevant stakeholders in the business.

Projects that are not going to be funded or that are going to be delayed must be communicated so

the business groups can adjust expectations and goals. Agreement that the proposed suite of

investments is the best for the business must be reached before investment.

Provide increased visibility into IT spending - ITPM provides a holistic view of the entire IT

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budget and how that spending breaks down. By further categorizing portfolio elements and

linking them to the business processes they support, it becomes possible to assess the actual

alignment of IT spending with business strategy. This can lead to more strategy-focused IT

investments and improved demand management

Provide increased transparency into IT decision-making - ITPM implements a disciplined

process and methodology for decision-making, removing the veil from how projects get funded

and prioritized. Decisions are made based on well-defined criteria backed by business cases with

sound financial analysis and are linked to strategic objectives.

Reduce costs - It is difficult to reduce costs when a company does not have a complete

understanding of where all the money is going. IT organizations implementing ITPM for the first

time are surprised to discover how much waste and redundancy exists across the enterprise. It

also allows for a rigorous and regular review process that can be used to shut down ineffective

projects, retire unused or obsolete assets, and consolidate applications, freeing up budgets to be

utilized elsewhere or returned to the business as increased margins.

Manage risks - Managing risks is a key element of ITPM. Each component in the portfolio can

be assigned a risk index based on risk assessment criteria. The sum of the individual risk indices

results in a risk beta for the entire portfolio and can then be benchmarked against an established

threshold. A beta that exceeds the threshold requires an adjustment to the portfolio, typically

removing a high-risk project. Likewise, a beta below the threshold may indicate a portfolio that

is too conservative and not likely to lead to any breakthrough innovation. Risk can never be

eliminated but it can be managed by balancing individual risks across the portfolio. ITPMs

holistic view makes this possible.

Facilitate agility - ITPM enhances an organizations agility and ability to respond quickly to

change. When fully implemented, the entire IT portfolio, including budgets, assets, and

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resources, are all contained in an integrated database, so priorities can easily be changed or new

projects can be initiated with an immediate understanding of the effect on other elements of the

portfolio. New forecasts, budgets, and resource plans can be generated and communicated to key

stakeholders quickly.

3. Best Practices for IT Portfolio Management

3.1. ITPM is not just an IT effort executive teams must drive it as well
Implementing ITPM has far-ranging effects that extend well beyond the boundaries of IT, since a

well-managed IT portfolio directly correlates with business intent for use of the firms IT dollar.

When practiced well, ITPM involves executive management, business unit management and

IT management. Without initial support from the executive team, the ITPM effort will almost

always fail. ITPM represents a significant culture change as the way of getting things done is

transformed from a culture of autonomy, political agendas, and personal clout to one of

consistently applied, objective assessments emphasizing enterprise-wide benefits over individual

business unit benefits.

3.2. Implement ITPM as part of a larger IT governance program

ITPM provides a process and tools to assist in implementing a formal IT governance program.

Since the overriding goal of IT governance is to maximize the value from IT investments, ITPM

represents a powerful mechanism for accomplishing this. However, ITPM by itself is not IT

governance, and it must be augmented with governance structures (committees, reporting

relationships) and processes (decision criteria, templates, rules of engagement) (see Figure 5).

Figure 5. IT Governance Structure And IT Portfolio Management

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Source: Forrester Research, Inc.

3.3. Assign the relationship manager to alignment tasks

One of the key goals of ITPM is to align business strategies with IT strategies to ensure that IT

investments are being made in the right places. IT account managers (or relationship managers)

are the key individuals that straddle the business and IT departments, responsible for bringing the

business strategy and requirements to IT while advising the business side on enabling

technologies.

3.4. Empower the Project Management Officer (PMO) to own the ITPM tactics

Best practices organizations are locating the responsibility for implementing, managing, and

communicating the results of ITPM within the enterprise project or program management office.

As the central repository for project management expertise and best practices, many PMOs have

been already involved in project portfolio management. Expanding their scope to include all of

IT portfolio management is only natural.

3.5. Regularly review and tune the portfolio

Organizations are getting better at providing business cases and other justifications for getting

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projects approved. However, once a project is approved, funded, and underway, it begins to take

on a life of its own. So, one of the key success factors in ITPM is a disciplined review of the

entire portfolio on a regular basis. These reviews create the opportunity to determine if projects

or initiatives are on schedule, on budget, and delivering the expected results and to ensure that

the need is still valid. It also provides an opportunity to re-balance the portfolio as a result of

change, market forces, competitive forces, new opportunities, or mergers and acquisition activity.

3.6 Use ITPM to shut down sub-optimal work

Best practice organizations use ITPM to make the tough decisions, since it forces everything out

into the open, evaluating against a set of objective criteria. This can lead to shutting down

projects that were politically motivated, to retire aging systems or applications that have little or

no value, and to consolidating other systems and applications. Often these can be unpopular

decisions because they result in a loss of autonomy for some business units.

3.7. Communicate regularly

Implementing ITPM requires a cultural change in an organization. It typically results in

significant changes in the way that IT decisions are made which can appear threatening to

some. Communicating regularly the reasons for implementing ITPM (maximizing the value of

IT to the business) and then the results (the actual benefits derived) can go a long way in

diffusing some of the organizational angst that accompanies any cultural change. Best practices

organizations developed a mix of dashboards and reports to provide business unit and executive

management status of the portfolio on a monthly basis.

3.8. Acknowledge the cultural issue

Despite sophisticated software solutions, ITPM and portfolio optimization adoption is hindered

by the requirement for a major cultural shift in the way that IT is acquired and managed, the

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biggest of which is the focus on optimizing the portfolio for the benefit of the entire enterprise as

opposed to individual business units. This loss of autonomy is typically the most difficult to

overcome.

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V. Case Study: Intel

1. Balance between Strategic Objectives and Constraints

Ultimately, portfolio optimization is about balance. On one side are the strategic objectives of the

business and on the other are the constraints, including IT resources like the IT budget, people,

skills, and existing technology assets, as well as risk. IT Portfolio optimization involves making

the tradeoffs based on these constraints.

ITPM balances keeping the lights on with new initiatives. Every new IT initiative will eventually

become part of the keep-the-lights-on budget the following year through depreciation,

maintenance, and other related expenses. The keeping-the-lights-on portion of the budget is often

as much as 70% or more of the total IT budget, and without careful management, it will

eventually consume all of the IT budget. Companies are aggressively using ITPM to reduce the

size of the keep-the-lights-on budget through retirement of non-performing or obsolete systems

and assets, consolidation of servers, elimination of redundant systems, and reduced software

licensing costs through improved license management. Their overall goal is to shift the budget

ratio to 1:1 from the typical 3:1 today, making more money available to drive strategic

initiatives.

ITPM finds the balance between business value, IT efficiency, and financial return. Maximizing

business value is the primary driver behind ITPM, but business value must be balanced against

other criteria, such as IT efficiency and the ROI. Business value and financial return are not the

same. For example, a company may decide to invest heavily in an enterprise-wide CRM system

to improve customer satisfaction (a business value improvement), but ROI may be difficult to

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measure. A business unit may want to implement a new inventory management system that will

produce a significant ROI. However, it may need to run on a nonstandard platform (IT

efficiency) that will require IT to add resources and skills to support.

2. Intel Case

Intel has developed a very practical process around ITPM that evaluates IT initiatives based on

business value, IT efficiency, and its financial return. For each IT initiative, Intel calculates three

values: a business value index (BVI), an IT efficiency index (ITE), and the ROI.

The business value index (BVI) measures business value. Each proposed IT initiative is assessed

against a list of business value criteria relevant to that investment. Each criterion is assigned a

weight, based on the importance of that particular criterion and dependent on business strategy

and conditions. The BVI is the sum of the assessed weighted criteria.

The IT efficiency index (ITE) measures compliance with architecture. One of the key methods

for reducing the cost of IT is to develop an enterprise architecture and technology standards. This

leads to simplification, which reduces operating expenses and scale, which leads to improved

vendor pricing. IT initiatives that comply with the existing architecture and standards are almost

always less costly than those that require nonstandard hardware/software. IT efficiency is a

measure of how well proposed initiatives comply with the existing architecture and standards.

Return on investment measures financial implications. The third component uses standard

financial analysis tools including NPV, IRR, and payback to assess the financial implications of

an IT investment.

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All IT initiatives are then plotted on a bubble chart with the BVI on the Y-axis, the ITE on the X-

axis, and the size of the bubble representing the financial return (see Figure 6).

Figure 6. Intel IT Initiative ROI Analysis

Source: Forrester Research, Inc.

Those projects in the upper right quadrant represent the best mix of projects based on the

available budget. However, this process enables management to make appropriate tradeoffs. For

example, an infrastructure upgrade might have little immediate business value, but it could have

a huge effect on IT efficiency and a very favorable financial return. Management might choose to

fund this initiative rather than one that provides a high level of business value but has a very low

ROI or IT efficiency.

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VI. Conclusion and Next Study

Each organization has different needs, goals, and requirements from its IT organization. As a

result, portfolios will differ by a company. The lack of tools that point to the optimal spending

mix should not prevent an organization from considering its IT spending holistically. Building

the IT portfolio has enormous benefit for any organization, and optimizing the portfolio creates

even more value. To do, the organization should:

Develop and communicate a plan and build consensus - ITPM is part of an overall IT
governance program and reaches across the entire enterprise. Plan to implement in stages
tackling the low-hanging fruit first and then build upon incremental wins.
Increase the depth of communications between IT and management Seeing the portfolio

displayed visually, rather than as a list of budget items, helps move the discussion up a level.

Provide the checks and balances on spending - Spending gaps or over-weighted situations can

be identified. Is the organization under-investing in future growth? Is the organization over-

investing in low-value support applications?

Dont underestimate the cultural change required - While governance processes underpin

ITPM and software tools can help automate many of the processes, ITPM is ultimately about

changing the way an organization makes IT investment decisions, which makes it an

enterprise-wide change management effort. This implies a change in culture, which remains

the single largest barrier to implementing a successful ITPM effort. Make sure that executive

management is on board and takes an active role.

Once the concepts of IT portfolio management are embraced, the process of evaluating and

communicating the components and goals of the portfolio can be layered in. Future studies will

cover such topics as:

Visualizing the IT portfolio classifying and categorizing IT investments IT investments,

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 just like financial investments, can be classified in multiple ways. A framework for evaluating

potential investments can ensure the proper balance of investments.

Metrics and measurements for the IT portfolio - Few organizations measure and report the

results of their investments and fewer still consider these results as components of the

portfolio. Developing the proper metrics and measurement processes to ensure that the initial

motivation for the investment carries through implementing and optimizing the results is

critical to move from project-based to portfolio-based thinking.

Risk and return and their relationship to the IT portfolio - A well-defined portfolio of

investments can produce the greatest return at the lowest risk. Some of the techniques of

modern portfolio theory can be applied to the development of an IT portfolio to optimize

investment choices.

The role of architecture in maintaining the IT portfolio - IT architecture is about creating

standards and components to minimize costs, increase business benefits, maximize flexibility,

and reduce risk. Within the architecture function, creating and managing the architectural

elements is a portfolio to them. Applying many of the same portfolio management concepts to

IT architecture can change this function from one of standards police.

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 REFERENCES

Bryan Maizlish and Robert Handler, IT portfolio Management: Unlocking the Business Value

of Technology, April 8, 2005, New Jersey, Wiley & Sons, Inc.

Chip Gliedman, Defining IT Portfolio Management, Sep.29, 2004, Forrester Research, Inc.

Chip Gliedman, The Basis for IT Portfolio Thinking, Dec.21, 2004, Forrester Research, Inc.

Chip Gliedman, The Forrester Portfolio Management Matrix, Dec.22, 2004, Forrester

Research, Inc.

Chip Gliedman, Trends 2005: IT Portfolio Management, Nov.5, 2004, Forrester Research, Inc.

Jeanne W. Ross and Cynthia M. Beath, Beyond the Business Case: New Approaches to IT

Investment, Winter 2002, MIT Sloan Management Review

Craig Symons, Optimizing the IT Portfolio for Maximum Business Value, Sep.30, 2005,

Forrester Research, Inc.

Craig Symons, Five Best Practices for Portfolio Management, Sep.25, 2006, Forrester

Research, Inc.

IT Governance Institute, Governance of IT Investment The Val IT Framework, 2006

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Amsterdam, Department of Mathematics and Computer Science, Netherlands

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