Kundra’s “Projects as Stocks” Approach Highlights the Ultimate Role of the CIO

US Federal CIO Vivek Kundra treats projects as investments, like stocks.  This model provides leadership towards the ultimate destiny of the CIO role – as portfolio investor in business change – provided that everyone bears four things in mind.

Kundra, as D.C.’s CTO, has emphasized what he calls a stock-market approach to IT project management (see “Meet the Nation’s First CIO”, CIO.com, March 6^th 2009). Projects are subject to ongoing, robust investment management:  those that will still deliver their expected value are nurtured, while those that won’t are cancelled and the investment moved elsewhere.

As CIOs hone their skills in investment portfolio management, and make them the core focus of the role, four things are especially worth bearing in mind:

• The “projects are like stocks” approach is at its most effective when applied to all investments in change, not just those involving IT.

  Ultimately, there is no reason why projects involving IT should be approached differently, as investments, from those that don’t. However, focusing just on projects involving IT can be a wise transitional step where CIOs are still perceived to be primarily ‘IT leaders’.

• Projects are indeed investments, not implementations. A successful project is one that either achieves its minimum required value or has Stop Loss applied as soon as it becomes clear that it won’t. Successful implementation of change does not, in itself, equal a successful project.

• Success at treating projects like stocks requires robust business competencies in investment portfolio management.

  Many CIOs have been developing these competencies within the IT department, but often only for the IT elements of total project investment, and not as one of the IT organisation’s core competencies (which are perceived to be in IT services management, and project delivery – potentially meaning a fundamental conflict of interests with investment management). If so, it’s time to upgrade the investment portfolio competencies, appoint dedicated Investment Managers and move them away from IT delivery.

• Measures designed for choosing, targeting and measuring stock market investments are not best suited for investing in business change.

  In particular, using a single measure of ‘return’, such as Net Present Value, conceals the diversity of reasons that organisations invest in change, and therefore the true value of investment projects. Instead, use a portfolio of different value types to maximise the overall productivity and efficiency of investments in change, while mitigating the risk of having insufficient diversity in the portfolio. Net Present Value (for example) should only be used to decide between investment options on the rare occasions when everything else is equal.

A CIO whose primary purpose is maximising the value, and efficiency, of the portfolio of business change projects involving IT (as opposed to managing the design and efficient delivery of IT) represents the third and penultimate generation of the role.  The final, fourth generation of the CIO role means removing the qualifier “involving IT”, when the time is right to do so.