Portfolio Management Of It Assets

Yesterday's sequential planning approach, which provided the IS function with sufficiently long lead times to meet business objectives, no longer exists in today's rapidly changing business world. Although business change drives the integration of process and technology, ineffective communications are causing the gap between business strategy and IS delivery to continue to widen. As IT becomes a major engine of change, it redefines what is strategically possible and gets further embedded into every business process, including electronic commerce, computer-integrated manufacturing, investment program trading, and supply chain optimization. The future of IT therefore requires a holistic understanding of business strategy and processes.

In stark contrast, many decisions regarding legacy systems are episodic, tentative, and trapped in a pattern of inertial spending. To address these tendencies, IS managers should evaluate legacy systems in much the same way as sales territories, personnel, or the corporate image are evaluated. Looking at IT assets as business resources provides IS managers with two main evaluation criteria:

1. How effectively does a given system or suite of applications support business objectives?

2. How efficiently does the system perform its support tasks?

This orientation highlights a pair of key points. First, both business and technical perspectives are necessary to assess a portfolio. Business objectives are derived from evolving business processes and evolving strategy, and this can be a difficult process. IT assets are mapped against these objectives and evaluated using a comprehensive set of metrics. Second, the portfolio must be examined in meaningful pieces. Individual elements of the portfolio fit together like puzzle pieces to support a critical business area or process. Even though individual elements may appear to be valuable, the overall business results may be considerably weaker because of critical shortcomings in the way the various parts fit together.

The results of this assessment are then mapped within a grid called the 4R portfolio assessment matrix (Exhibit 2).

Exhibit 2. Portfolio Assessment Matrix

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