by Chris Potts

Using Portfolio Management to Meet Company Goals

Mar 25, 2010
IT Leadership

If you're doing a good job at portfolio management, you'll choose IT investments that help achieve corporate goals, even if they don't have the largest ROI.

The fundamental principle of portfolio management is that you first choose the goals for your portfolio and then select the investments that will achieve them. For investments in change, these goals are expressed as the results you want to accomplish (with corresponding measures and milestones) and the shape of the enterprise that the investments must deliver.

You can use these signs to assess whether your enterprise manages its investments in change as a portfolio:

  • As your goals change—for example, from efficiency to growth—so does your portfolio.
  • You select projects based on their contributions to the portfolio, rather than their standalone merits. This means turning down proposals that have positive ROI individually but don’t fit the goals of the portfolio.
  • You explore what each proposal would mean for the shape of the enterprise, considering factors other than cost. This can mean investing in projects—such as redesigning a pivotal process—that have a low or negative return but are key to the enterprise’s future. It can also mean rejecting projects that would undermine the organization’s direction.

Better Investment Decisions

It’s common for enterprises to treat the cost of a portfolio as the primary constraint when making decisions. But this approach can conceal other, possibly more significant, factors that drive the portfolio’s success. These include the overall value that the portfolio is expected to deliver and the enterprise’s capacity to make and exploit the changes that the portfolio represents. Exploring other prioritization criteria can result in a more productive and efficient portfolio and a higher project success rate.

Chris Potts is corporate IT strategist and CIO futurist with Dominic Barrow.