Portfolio Mangement of IT

The debate over whether to run IT like a business is hot right now. Before implementing a new management structure into a department, it is important to understand that each part of a business affects the others.

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Phyllis Post, Senior Director, Global Business Planning & Management, Corporate IT, Merck & Co., suggests that IT should be managed like a portfolio. In fact, to function as well as possible, Post adds that companies need to understand that the IT department must be included in the “rhythm” of a business. Additionally, to create the best marriage of the two, the overall values of the business need to be up to date. The IT department should not be viewed as a regular maintenance or office supply expense. The department can break a company’s budget if not respected as an integral department within the company as a whole.

Good portfolio management involves checking in on a team regularly (monthly, quarterly and annually). According to Post, the three parts of portfolio management include value creation, knowing the demand and ensuring effective execution. By managing the IT department in this way, a company is able to continually measure how well the IT department is staying on strategy in relation to the rest of the company. Without a set strategy to keep the IT department in sync with a company, more money will be spent overall as the company may rush to spend on the IT department to get it back on track. However, if a strategy is set and followed and there is a budget cutback during this time, the CIO will know where to trim, instead of evenly shaving off a little money dedicated to each project.

While the IT department is routinely asked to complete small tasks to keep things updated within a company, is this system really the most beneficial? A company needs to verify that updates will be relevant long-term. While IT cannot be expected to accept change overnight, governance is an important factor when implementing the portfolio management system.

For the past two years, Merck has honed its IT department to become “process-centric”. Instead of concentrating the departmental efforts on a few projects at a time, the department instead follows the mindset and model of the rest of the company, focusing on supply and demand. The expectations are built in, creating a cause and effect structure, which strengthens the overall goal of the management style; keeping things succinct. Post points out that the IT department needs to be included in the company as an important part of the company’s planning process to work most efficiently.

Managing the IT department like a portfolio not only ensures a long-term focus on everyday activities, but on resource management as well. Any department can be viewed as a business within a business, but IT is a bit different because it is usually more internal. But hey, it’s what’s on the inside that counts the most anyway.