At any given time, most Fortune 500 companies have dozens of information technology (IT) projects occurring simultaneously. In fact, Fortune 50 and large government organizations may have hundreds of IT initiatives taking place in a single calendar year. On average, companies spend approximately 5.5 percent of their total revenues on IT-related activities. For a billion-dollar company, this amounts to $55 million per year. Unfortunately, the majority of these companies do a very poor job of managing their IT assets.

Over the years, I have had the opportunity to perform more than a dozen data warehousing assessments. During these assessments, I always ask the client how much they spend on data warehousing. The majority of companies cannot give a relatively good estimate of their actual spending. In order to manage these costly IT initiatives, it is critical to measure each one of them. However, it is impossible to measure them when most companies do not understand them (see Figure 1). Enter IT portfolio management.

Figure 1: Managing the IT Budget

IT Portfolio Management

IT portfolio management is the term that describes the formal process for managing IT projects, software, hardware, middleware, internal staffing and external consulting. Like every newer discipline, many companies that have started their IT portfolio management efforts have not done so correctly. I would like to list some of the keys to building successful IT portfolio management applications.

  1. IT portfolio management must be integrated into a corporation's meta data repository application. The information that portfolio management targets is meta data (both business and technical) and, as such, needs to be stored in the repository. The repository will allow the corporation to aggregate the portfolio information into an executive view. It can also publish the information to a Web site to enable front-line IT staff to see the status of other projects. This will greatly aid their project time lines and planning. Also, this IT portfolio information should be directly linked to the more granular business and technical meta data to allow developers to understand what IT projects are underway, what technologies these projects are implementing and what data sources they are accessing. In my experience, almost every large company has a great deal of duplicate IT effort because the information (IT portfolio-related meta data) is not accessible. At EWS, we have a few large clients whose only goal is to remove these tremendous redundancies, which translate into tremendous initial and ongoing IT costs.
  2. A good portfolio management system has both a business and a technical component. In most cases, the business component is more complicated than the technical. For example, project managers will need to communicate their project funding, status, technology, etc., to a group responsible for the portfolio management application. The meta data in the portfolio application is only as good as the information that these managers provide. It is critical to integrate the IT portfolio application into a company's IT spending procurement procedures.
  3. These efforts require the support of executive management. Executive management involvement is imperative in breaking down the barriers and the ivory towers that exist in most companies. Do not underestimate the obstacle that these political challenges present.
  4. IT portfolio management efforts will take time to fully implement; however, it is important to do so in an iterative fashion. It is best to target specific areas of need within a corporation (staffing, system redundancy, technology redundancy, etc.) and to provide value in the first six to nine months of a project.

Every day, companies are asking their IT departments to do more with less. We can no longer afford the extreme application, data, process and technology redundancies that exist in all of our companies.

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