Maximising business value through enhanced IT performance
Yeo Kim Meng
12/09/2007

For most IT executives, the annual dance of creating next year’s IT investment plans has become increasingly complex. The plan must be sound enough to communicate how IT will help the business meet its goals, while remaining agile enough to adjust to an ever-changing competitive landscape. IT executives need to produce an agile IT plan that balances investments and responds to rapidly changing requirements.

As IT investments today typically represent more than 50 per cent of capital expenditures, IT executives are under considerable scrutiny from executive boards to provide greater visibility of the IT portfolio. IT organisations also need to work within constraints such as the limited availability of financial, infrastructure and human resources to support the entire IT portfolio, while consistently delivering increased business value.

Need for portfolio and investment planning
In order to respond to the many challenges facing IT during investment decision-making, IT organisations must be able to determine the criteria used to prioritise investments based on stated business objectives. Further, they must prioritise while leveraging a consistent and repeatable process that enables transparency after decisions have been made. To achieve these goals, IT executives must operate with strong governance (accountability with clear specification of who contributes to and/or make decisions) and collaborate with key stakeholders to engage them in the prioritisation and planning processes.

One such way would be to adopt a disciplined approach of IT portfolio and investment planning. This helps to provide specific, repeatable processes that can keep the planning focused and on target. Effective and successful portfolio planning also enables IT organisations to determine whether a proposed investment is in alignment with corporate priorities and business goals.

Benefits of IT portfolio and investment planning
So what are some of the benefits that proper IT portfolio and investment planning can bring to businesses?

Improved decision making
A portfolio and investment planning discipline improves IT decision making. By collaborating on criteria that categorise and prioritise each investment, the decision making process will become more focused and IT committees will be able to make better decisions for the business as a whole. In time, this increased visibility adds to the business’ accountability and IT’s credibility as a valued and equal partner in vital business decisions, and improves communications between the IT department and business decision makers.

Reduced risks
Portfolio and investment planning also ensures that the inherent risks in proposed investments are considered in the process. By understanding and documenting the levels of risk involved with each investment (such as technical risk, level of resource experience, project size and the level of risk an IT organisation can accept), evaluating risk factors in proposed portfolios becomes much easier.

Increased return on investment
Organisations that collaborate – using joint, interactive processes between business and the IT organisation for portfolio planning – are more likely to ensure that their money is spent wisely, with a greater ROI. By accurately assessing which investments will “do the most good”, IT organisations can determine exactly how much time and money should be spent on a particular initiative, and create balance between resources that will be used.

Optimised workload
By effectively prioritising new investments, IT organisations can address and reduce constraints on IT resources. The result is obviously better resource utilisation, but there are other benefits, too. Employees are no longer pulled in several directions; their work can be focused on those initiatives that make the best sense to the business, and help keep employees satisfied and engaged.

Portfolio and investment planning, when done with consistent processes and criteria, provides better communication, management and alignment of IT investments within the business. Further, it provides greater visibility into the IT portfolio to help prioritise, optimise and monitor its technologies and performance. Using a portfolio and investment planning discipline enables IT organisations to improve their ability to identify and eliminate risky and redundant investments, thereby reducing costs and optimising the allocation of resources. Portfolio planning can also have an impact on IT by increasing credibility and customer satisfaction.

With increasing executive scrutiny, IT executives have to provide greater visibility into the IT portfolio. As such, the effectiveness of how IT executives are handling these challenges will mean either greater credibility with their business counterparts, or less – and less credibility is simply not an option.

- Yeo Kim Meng is Sales Director, Compuware, Asia Pacific.

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