At any given time most Fortune 500 companies have dozens of information technology (IT) projects occurring simultaneously. In fact Fortune 50 and large government organizations may have hundreds of IT initiatives taking place in a single calendar year. On average, companies spend approximately 5.5% of their total revenues on IT related activities. For a billion dollar company this amounts to $55 million per year. Unfortunately the majority of these companies do a very poor job of managing their IT assets.
Over the years I have had the opportunity to perform over a dozen data warehousing assessments. During these assessments I always ask the client how much do they spend on data warehousing. The majority of companies cannot give a relatively good estimate on what they actually spend. In order to manage these costly IT initiatives it is critical to measure each one of them. However, it is impossible to measure them when most companies do not understand them (see the Figure 1). Enter IT Portfolio Management.
IT Portfolio Management
IT portfolio management is the term that describes the formal process for managing IT projects, software, hardware, middleware, internal staffing and external consulting. Like every newer discipline, many companies that have started their IT portfolio management efforts have not done so correctly. I would like to list out some of the keys to building successful IT portfolio management applications.
First, IT portfolio management must be integrated into a corporation's meta data repository application. The information that portfolio management targets is meta data (both business and technical) and, as such, needs to be stored in the repository. The repository will allow the corporation to aggregate the portfolio information into an executive view. Also it can publish the information to a website so that front-line IT staff can see the status of other projects. This will greatly aid their project timelines and planning. Also, this IT portfolio information should be directly linked to the more granular business and technical meta data to allow developers to understand what IT projects are underway, what technology these projects are implementing and what data sources they are accessing. In my experience, almost every large company has a great deal of duplicate IT effort occurring. This happens because the information (IT portfolio related meta data) is not accessible. At EWS we have a couple of large clients whose only goal is to remove these tremendous redundancies, which translates into tremendous initial and ongoing IT costs.
Second, a good portfolio management system has a business and a technical component. In most cases the business component is more complicated than the technical. For example, project managers will need to communicate their projects funding, status, technology, etc. to a group responsible for the portfolio management application. The meta data in the portfolio application is only as good as the information that these managers provide. It is critical to integrate the IT portfolio application into the company's IT spending procurement procedures.
Third, these efforts require the support of executive management. Executive management involvement is imperative in breaking down the barriers and the "ivory towers" that exist in all of our companies. Do not underestimate the obstacle that these political challenges present.
Fourth, IT portfolio management efforts will take time to fully implement; however, it is important to do so in an iterative fashion. It is best to target specific areas of need within a corporation (staffing, system redundancy, technology redundancy, etc.) and look to provide value in the first 6 - 9 months of a project.
Every day companies are asking their IT departments to do more with less. We can no longer afford the extreme application, data, process, and technology redundancies that exist in all of our companies.
About the Author
If you have any comments or observations, you can contact David Marco by e-mail at DMarco@EWSolutions.com. Mr. Marco is an internationally recognized expert in the fields of data warehousing and business intelligence, and is an authority on meta data. Mr. Marco is the author of several books including the widely acclaimed book "Building and Managing the Meta Data Repository: A Full Life-Cycle Guide" (Wiley, 2000) and editor of Real-World Decision Support, a free electronic newsletter http://www.ewsolutions.com/newsletter.asp. Mr. Marco is an adjunct teacher at the University of Chicago and Penn State University, and is the founder and President of Enterprise Warehousing Solutions, Inc. (EWS), a Chicago-headquartered strategic partner and systems integrator dedicated to providing companies and large government agencies with best-in-class business intelligence solutions using data warehousing and meta data repository technologies. You can get more information by visiting www.EWSolutions.com.
Marco, D., "IT Portfolio Management", DSSResources.COM, 04/25/2003.
David Marco provided permission to archive this article and feature it at DSSResources.COM on Monday, January 13, 2003. This article was posted at DSSResources.COM on April 25, 2003.