Ten Principles to Optimize the Business Value of IT

Aug. 7, 2008
Adopting a portfolio management strategy can help your company better align its IT goals.

So your latest IT project was delivered late, or it failed for no discernible reason. Or it could be that the project was derailed due to constantly changing business priorities. The challenge for many, if not all, organizations is to optimize their investments in IT. One way is to focus on portfolio management, a strategy that aims to establish a more mature relationship between business and IT, one focused on innovation rather than transaction.

"Failure to deliver the required portfolio management transformation often results in dissatisfaction with the IT operation," says Tim Newman, who leads the investment portfolio management business for consulting firm Accenture. "Where effective processes are lacking, there is usually little discipline in decision making and priority setting. Under these circumstances, it is common for projects to continue and remain funded when the original reasons for investing in them no longer appear valid, for substantial IT budget to be spent on 'must do' projects without clear value, and for there to be uncontrolled increases in systems and business complexity."

As a result, Newman believes companies need to manage and apply IT resources in a way that clearly delivers the greatest business value from technology. These resources include highly skilled people, business applications, infrastructure and IT-enabled services.

"It's not a question of necessarily spending more on IT, but rather one of spending differently," he explains. "High-performing companies use investment portfolio management to confirm that every dollar spent contributes to the achievement of their strategic business goals. IT investment portfolio management alone will not guarantee high-performance IT. Yet with the right business-aligned decisions and right governance in place, it's much more likely to occur."

Accenture has developed a diagnostic model to help senior executives align IT investments with their business needs and improve the management of their IT resources. This model was designed to help organizations clarify the accountabilities for key elements of the governance framework and operating model needed to fulfill them. To apply this framework and guide the transformation, Newman recommends the following 10 principles:

  1. Investment portfoliomanagement is an enterprise issue, not just an IT issue.
  2. Planning is not a one-time event.
  3. Incentives must align with business strategy and value.
  4. The categories of change must be defined.
  5. The CIO must make the right commitments to the business.
  6. Focus attention on the big things first.
  7. People drive success.
  8. Good management information will lead to better decisions.
  9. Define the transfomational journey.
  10. Don't buy a tool to fix the problem.

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