One of the biggest challenges facing portfolio management is that it is a new field lacking maturity, with poorly defined best practices, methods and definitions, an industry specialist says.
Fulcrum Information Technologies technical director Dries van der Colff says business cases for IT investment are now the norm rather than the exception, projects are still considered individually as discrete investments.
He says there is often 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.
Few organisations, he says, consider their entire IT budgets holistically as a unified suite of investments. He adds that IT groups could apply many of the same tools the financial community uses to build and manage financial portfolios to maximise benefits, mitigate risks and better meet the needs of constituent customers.
Van der Colff says that, although the field of IT portfolio management is still new, understanding the concepts and laying the groundwork now will allow for quicker adoption later as the tools and tenets become better defined in future.
The ultimate goal is delivering predictable and higher returns at the appropriate level of risk, he states, adding that creating the right mix of investments to properly use limited resources, while providing maximum business benefit, is the ultimate challenge for IT leaders.
IT portfolio management, he says, involves balancing resources, technology, business needs and changing situations, while simultaneously maximising returns and minimising risk - the IT portfolio is the tangible manifestation of IT`s plan to support the business in meeting its strategic goals.
Van der Colff says projects under consideration or currently under way are the domain of PPM. The key goals of PPM include elimination of redundancy, better resource allocation and common repository for business value metrics.
The initiatives managed by the PPM organisation become the engine of value growth, the way that the organisation rebalances the IT investment portfolio, and the way that IT reacts to changes in business focus or market dynamics, he says.
APM provides a way to create business-oriented metrics around existing applications by linking existing applications and components with concurrent costs to manage and maintain current business processes, business value and business metrics, he adds.
The repository of information created by application portfolio management tools and processes feeds into overall IT planning, Van der Colff says.
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