Among IT buzzwords, portfolio management is used so commonly that it hardly needs definition. This magazine has been writing about it since 1998. Analysts preach that managing technology investments as one would a financial portfolio is the surest way to maximize value, ensure alignment with the business and minimize risk. Consequently, software vendors are forever pushing products that promise holistic, color-coded views of the IT portfolio that they say will enable CIOs to prioritize projects; simplify and automate the processes for project approval, planning, resource allocation and project tracking; and standardize metrics for measuring ROI.

Some may even make breakfast for you.

But despite all those promises, many CIOs say their portfolio management efforts are still works in progress. CIO Executive Council members share that sentiment, noting that portfolio management is hardly a been-there-done-that subject. Here they share lessons they’ve learned along the way.

1] Create a PM-friendly environment. Portfolio management is, at its simplest, a method of prioritizing IT projects. But successful prioritization requires both ongoing adjustments based on shifting business demands as well as a way to evaluate whether projects have delivered the anticipated ROI. "The portfolio management process will not work unless you’ve a strong support system established around it," says Jerry Hale, VP and CIO at Eastman Chemical.

For Hale, that meant setting up an IT program office responsible for financial and project management, the portfolio management process, and a team of relationship managers dedicated to helping business units make the most out of IT’s capabilities. Hale also set up a governance council, made up of representatives from all functions and business units. Each council member heads up an oversight team that prioritizes

IT projects within its respective business unit or function.

This infrastructure has made Eastman Chemical’s portfolio management efforts successful. There’s been an increased commitment to and ownership of projects from the business side, which has helped IT focus more on high-value projects. As a result, Eastman Chemical has been able to shift some IT staff away from application development.

2] First progress, then perfection. What should you do if you don’t have these portfolio management-enabling IT governance elements in place? "Create a wireframe of what IT governance should be," says Lars Rabbe, CIO of Yahoo. "Identify the most critical functions and start implementing lightweight processes for those functions."

For Rabbe, the most important thing was establishing an office with staff dedicated to managing the IT portfolio (project prioritization and resource allocation) and the IT production environment (schedules and budgets).