IT Success!: Towards a New Model for Information Technology

4.8. The missing component in Project Portfolio Management

There is a fundamental flaw in the concept of Project Portfolio Management (PPM) as generally put forward by some vendors and consultants from the IT industry. As we have already seen, only 20% of the average IT budget is allocated to projects (where projects refer to investments for new systems), while the remaining 80% is needed to run production applications or keep the lights on. Today's projects are tomorrow's applications, and the operating costs of these applications over their lifetime consume on average five times the original project investment – which explains the 80:20 ratio. And since it would be highly exceptional for a project to yield its target business benefits on day one, the resulting applications will require ongoing funding before they are able to yield acceptable business benefits.

In its haste to borrow a concept from the financial industry, the IT industry overlooked the applications component, thereby implying that all you had to do was to fund your projects correctly, and presumably everything else would fall into place once the resulting applications were delivered (no doubt generating all those business benefits enshrined in the business case...).

In reality of course, correctly funding projects and delivering the resulting applications (usually within the space of a year) is but the first step of a very long journey (of 5–10 years). This should require an application to be managed as an asset ...