David Gritz answers: How can your organization maximize its IT investment with a framework? How does your organization rank in its IT portfolio management maturity?

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COMPUTER AID, INC.
IT Best Practices
Best Practices in IT Portfolio Management
David Gritz

2. Best Practices in IT Portfolio Management
Leading Questions
How can your organization maximize its IT investment with a framework?
How does your organization rank in its IT portfolio management maturity?
Key Concepts
Most organizations struggle to show business gains from investments in information technology. The IT
portfolio management (ITPM) maturity model seeks to address the challenges of delivering tangible benefits
from IT projects. This model has four stages: Ad hoc, defined, managed, and synchronized. Ad hoc
companies make investments that are uncoordinated, chaotic, and misaligned. Defined companies have
defined key components of their portfolios and coarsely estimated the cost and benefits of each element.
Managed companies have standardized process that enables objective project selection with a link to
business strategy. Financial metrics are established and calculated for major projects. Synchronized
companies match their IT investment with strategy. They are able to assess risk and reward, balance
portfolios, and eliminated underperforming projects.
Facts and Figures
- $780 billion was spent on IT in the US in 2002
- 68% of IT projects were not on-time or on-budget
- There is a statistical link between synchronized ITPM and return-on-asset performance
- $150 billion of IT projects failed between 2002 and 2004
- 17% of companies run in the most mature stage of ITPM
Visual Concepts
Maturity Stage
Factor Defined Managed Synchronized
Advanced valuation x x x
Feedback mechanism x x x
Benefits measurement x x x
Active portfolio management x x
Strategic alignment x
Financial metrics x x
Demand management x x
Centralization x
Standardization x x

3. Best Practices in IT Portfolio Management
About the Author
David Gritz is a research specialist in the Allentown, PA office of Computer Aid. You may contact him at
david_gritz@compaid.
Resource Authors
Mark Jeffery is assistant professor of technology at the Kellogg School of Management’s Center for
Research in Technology and Innovation at Northwestern University
Marcus Schaper is a principal with DiamondCluster International Inc. in Chicago.
Full Article
Published by MIT Sloan Management Review (Apr 2004)
Download at http://tinyurl.com/3eg3acl
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