It's time to upgrade portfolios

We are in a unique period in the history of enterprise computing. The extra-organizational elements of the technology supply side -- venture capitalists, vendors, subscription research firms and systems integrators -- have been struck mute by the perfect-storm convergence of an economic downturn, the utter lack of killer apps in the pipeline and a bordering-on-revenge-seeking buyer dissatisfaction with prior-period technology purchases.

Pity the poor vendor. But things are no better inside IT organizations.

This year's IT budget cycle was also unique because of the current unprecedented conditions. While every company's budget meeting was different in details, a general consensus emerged from these sessions that IT departments must migrate from being functional fetishers (constantly demanding new stuff) to being value addicts (delivering business benefits with what they already have).

Additionally, leading IT operations in end-user companies such as Toyota Motor Corp. and Kraft Foods Inc., as well as high-tech vendors like Cisco Systems Inc. and Hewlett-Packard Co., are having to move away from managing disparate pieces of functionally applied technology to managing enterprise IT portfolios. They're being forced to think more deeply about how and why they're spending money on IT.

One of the implications of this "back to basics" mind-set was the resurrection of the long-forgotten skill set of IT portfolio management.

At a recent program called "Managing the Information Resource" held on the UCLA campus, IT leaders from 32 companies in 12 vertical markets were asked to describe how their organizations manage their IT portfolios, paying specific attention to two things:

- What tools/processes for portfolio management were being used?

- What lessons were being learned/relearned?

The results were somewhat disturbing. IT portfolio management skills and tools have atrophied in most organizations. Furthermore, a very broad spectrum of portfolio management behaviors and tool sets exists in global corporations today. As such, IT portfolio management means different things to different companies. A common definition is lacking.

IT managers at the UCLA conference said they generally believe that until 2005, more value will be created by making technologies disappear (by methods such as rationalizing platforms and turning off low-value systems and devices) than in making new technologies appear. The best way to make these difficult "What do we turn off?" decisions is, in my view, effective IT portfolio management.

Surprisingly, many IT leaders leave the choice of portfolio management tools to relatively low-level project managers. But project management is not portfolio management. The portfolio management tool creates the environment in which important decisions will be made.

Steve Finnerty, CIO at Kraft, said at the recent annual conference of the Society for Information Management, "Most of the low-hanging fruit in the functional orchard has already been harvested. The big opportunities are at the enterprise and extra-enterprise level." The only way to get to a point where enterprise decisions can be made is with IT portfolio management being driven at the highest levels of IT.

Whether you are seeking to become proficient in forecasting or simply trying to determine which legacy systems should get the ax, a critical next step for IT leaders is to get your portfolio management houses in order.

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