Formalizing Portfolio Management

Iowa’s mission to implement a formal approach to portfolio management has eliminated redundancies, justified projects without strong political constituencies, and provided active project and budget oversight. Contrary to some stereotypes, the private sector can learn a lot from state governments. Iowa deserves the National Association of State Chief Information Officers’ accolades.

However, I am skeptical that the scoring system is helping Iowa choose the best projects. Research over the years has shown that subjective scoring methods are not as effective as other valuation methods. The Enterprise Quality Assurance Office should consider methods that can assign dollar values to the criteria it uses to measure a project’s worthiness. While it does calculate financial impacts for such things as transaction savings, it could represent any other value this way as well. I routinely quantify the value of intangibles in IT organizations, including those in government agencies.

I don’t believe that scoring is an effective method for quantifying risk or the value of customer service. If the Quality Assurance Office officials were to replace the language of scores with the language of actuaries, CFOs and economists, I believe they would see yet another significant improvement in IT decision making.