A recent study conducted by Meta Group Inc., to measure international IT Portfolio Management (IT PfM) trends, has revealed that IT PfM adoption is growing fast, with 42 percent of the study participants indicating that they apply it, and 21 percent saying they plan to use it in the next 12 months.

Most, however, according to the report, indicated that they only began to practice IT PfM in the past year. "Many are prevented by a lack of understanding of the approach and methodology, and lack of data and measures," says Willie Appel, senior vice-president for Meta Group"s international executive services, who recently presented his findings at a forum held by Microsoft Corp. in Bryanston.

Based on the findings, Appel argues that firms grow to become global forces with each exercise of an option portfolio. "The combination of horizontal and vertical processes within a business assessment model is a mapping of the corporation"s growth strategy," he says.

"IT executives need someone upon whom they can absolutely rely, to enable speedy and effective decisions, to improve the organization"s information agility, boost its credibility, and add value to shareholders," he says.

He notes that most companies still, incorrectly, view their portfolios on a strategic versus tactical basis, rather than based on relative value or risk levels. He says CIOs should develop a portfolio mix which should not be approached as an end, but rather from a dynamic perspective.

The key IT portfolio allocations, Appel says, are: value maintenance (usually 85 percent), to run the business; value enhancement (usually 12 percent), to grow the business; and value exploration (about 3 percent), to transform the business. "CIOs should measure the organization"s ability to change this mix proactively, to continuously be in a position to contribute to business value," explains Appel.

"PM elevates, unifies and capitalizes corporate knowledge," he says, arguing that the ability to categorize IT assets is essential during economic uncertainty, in order to appropriate cost cutting and refocus spending.

"Lacking a portfolio categorization and risk management process, CIOs could do business harm. Moreover, a portfolio approach provides CIOs with a methodology for articulating value and risk trade-offs, improving abilities to manage change," he says.

According to Meta Group, IT PfM can be complemented with asset management, project management, lifecycle management, sourcing management, strategic planning, information analysis and real options analysis. "Best practices must, however, be fitted to match the organizational culture," says Appel.

He says that, contrary to the popular belief that IT PfM is a "silver bullet", up to 80 percent of portfolios are out of balance, and most do not recognize the relationship between assets and projects.

Other obstacles to PM adoption include lack of financial skills within IT, lack of perceived benefits, and lack of interest and support from CFOs and finance departments.

He concluded by saying: "Do not tell the business you are doing IT PfM, use IT PfM to tell the business what IT is doing."