Portfolio management, a method of aligning IT with business goals by prioritizing IT projects as you would a financial portfolio, can provide answers to that question. However, like most ideas in IT, portfolio management sounds great in concept but is tough in execution. "Portfolio management is like Olympic mud wrestling," says Dave Clarke, VP of enterprise technology services at the American Red Cross, who has 10 years’ experience managing portfolios at W.L. Gore & Associates and General Motors. "It’s nasty, difficult and high-spirited even in the nicest of organizations. But it’s well worth it in the end, for the discipline and clarity it can produce."

Going on the theory that it is better to learn from someone else’s mistakes than to make your own, we asked CIO Best Practice Exchange members to share lessons learned from the front lines of portfolio management.

1 Start simple. The more features the better, right? Not necessarily, says Jeff Chasney, executive VP and CIO of CKE Restaurants. "Don’t look for a fancy portfolio management system with lots of bells and whistles. Spreadsheets work great."

2 Be willing to cancel projects. "Constantly review the merit and utility of your projects based on current information," says Chasney. "Just because a project is placed on a docket doesn’t mean that its efficacy remains constant across time."

3 Make sure your portfolio indicates which investments did not make the cut. "The chief value of a portfolio is that it represents critical decisions about investments," says American Red Cross’s Clarke. "The portfolio should clearly show what is currently approved for spending and what is not, but might be at a later date."

4 Have a rational and transparent prioritization scheme. At GM, Clarke used one that looked something like this:

A. Mandatory or legal
B. Fix major operational risk areas
C. Major strategic projects (note that this is third on the list!)
D. Projects with significant business returns
E. Nice to have

5 Set a corporate strategy—and incentivize others to stay the course. Dade Behring, a medical device company, focuses on "just a handful of initiatives," says CIO David Edelstein. "The company’s IT governance council succeeds," he says, because "each member of the executive leadership team works hard to ensure our respective organizations are supporting these initiatives. Everyone’s individual performance objectives, from the CEO to the guy on the shop floor, are explicitly linked to one or more of the company initiatives. It becomes relatively easy to link IT investments to the company initiatives because everyone is moving in the same direction."