IT Portfolio Management Step-by-Step: Unlocking the Business Value of Technology

2.8. PORTFOLIO METRICS

It is ironic that a discipline like IT, evolving out of mathematics, is so resistant to metrics. Business cases are often based on intuition. Metrics evade. Devoid of quantitative measures to demonstrate the value of portfolio management, however, value gained is left to the perception of key stakeholders. Thus, it is critical to plant the seed that measurable value will be derived from incorporating the discipline of IT portfolio management into the fabric of IT and the company. As with all new initiatives, there is a time lapse between inception and value delivery. Depending on the scope and subportfolio(s) selected, this value delivery time lapse can vary. For example, if IT portfolio management is applied during the funding cycle to eliminate superfluous requests from being funded, each instance of a nonapproved project could conceivably be attributed to IT portfolio management and counted as part of the return on investment. However, failure to consider metrics before embarking on IT portfolio management will lead to a reverse engineering exercise to demonstrate value after IT portfolio management has been performed. This is often fruitless.

There are two fundamental types of metrics that must be considered before commencing with IT portfolio management: value delivery and process improvement. Value delivery consists of cost reduction, increase in revenue, increase in productivity, reduction of cycle time, and reduction in downside risk. Process improvement ...