IT Portfolio Research Articles

Information technology infrastructure, organizational process redesign, and business value: An empirical analysis

We extend current research examining synergies between information technology, process redesign, and firm performance in three ways: analyze a firm's entire IT and BPR portfolio, examine production and market value performance implications, and conduct analysis using a unique dataset of 228 firms between 1996 and 1999. We find a contingent association between IT, process redesign, and performance. The interaction of IT and BPR portfolios is positively associated with firm productivity and market value. However, we find mixed evidence of a difference in these impacts across different types of BPR. Insights for business investment in IT and process redesign are discussed.

UTILIZAÇÃO DOS BENEFÍCIOS DAS DIMENSÕES DA GPTI E OS FATORES CRÍTICOS DE SUCESSO PARA ANALISAR IMPLEMENTAÇÕES DE SISTEMAS ERP

The analysis of ERP system implementation remains both, a source of great managerial interest and academic research. However, one of the challenges of these projects is to convince people of the benefits of having a unified management system, which requires efforts from various business units. Thus, the objective of this research is to understand what the IT and business managers’ perception is about the various benefits and critical success factors that integrated systems can provide to their businesses. In order to identify the benefits, the dimensions of the IT portfolio management (ITPM) were used, likewise, to identify the critical factors, Somers and Nelson’s model was used. To achieve the objective of this study, multiple cases were carried out in three organizations: a hospital complex, a network of pharmacies and a supermarket. In all examined cases, the companies had formal processes of choice and selection of potential suppliers. Regarding to the benefits that ERP systems provide, through the dimensions of ITPM, different benefits were identified within each dimension. It was identify that organizations 2 and 3 consider ERP systems more transactional, while organization 1 considers ERP systems more informational, regardless of the other dimensions. With respect to critical factors, there was also some difference in perceptions, but also some similarities: communication and interdepartmental cooperation, the support of top management, clear objectives/ goals and the supplier support.

Evaluating Healthcare Information Technology Outside of Academia: Observations from the National Resource Center for Healthcare Information Technology at the Agency for Healthcare Research and Quality

The National Resource Center for Health Information Technology (NRC) was formed in the fall of 2004 as part of the Agency for Healthcare Research and Quality (AHRQ) health IT portfolio to support its grantees. One of the core functions of the NRC was to assist grantees in their evaluation efforts of Health IT. This manuscript highlights some common challenges experienced by health IT project teams at nonacademic institutions, including inappropriately scoped and resourced evaluation efforts, inappropriate choice of metrics, inadequate planning for data collection and analysis, and lack of consideration of qualitative methodologies. Many of these challenges can be avoided or overcome. The strategies adopted by various AHRQ grantees and the lessons learned from their projects should become part of the toolset for current and future implementers of health IT as the nation moves rapidly towards its widespread adoption.

Information Technology Portfolio Management

There is significant interest in managing IT resources as a portfolio of assets. The concept of IT portfolio management (ITPM) is relatively new, compared to portfolio management in the context of finance, new product development (NPD), and research and development (R&D). This article compares ITPM with other types of portfolio management, and develops an improved understanding of IT assets and their characteristics. It presents a process-oriented framework for identifying critical ITPM decision stages. The proposed framework can be used by managers as well as researchers.

Quantifying requirements volatility effects

In an organization operating in the bancassurance sector we identified a low-risk IT subportfolio of 84 IT projects comprising together 16,500 function points, each project varying in size and duration, for which we were able to quantify its requirements volatility. This representative portfolio stems from a much larger portfolio of IT projects. We calculated the volatility from the function point countings that were available to us. These figures were aggregated into a requirements volatility benchmark. We found that maximum requirements volatility rates depend on size and duration, which refutes currently known industrial averages. For instance, a monthly growth rate of 5% is considered a critical failure factor, but in our low-risk portfolio we found more than 21% of successful projects with a volatility larger than 5%. We proposed a mathematical model taking size and duration into account that provides a maximum healthy volatility rate that is more in line with the reality of low-risk IT portfolios. Based on the model, we proposed a tolerance factor expressing the maximal volatility tolerance for a project or portfolio. For a low-risk portfolio its empirically found tolerance is apparently acceptable, and values exceeding this tolerance are used to trigger IT decision makers. We derived two volatility ratios from this model, the π -ratio and the ρ -ratio. These ratios express how close the volatility of a project has approached the danger zone when requirements volatility reaches a critical failure rate. The volatility data of a governmental IT portfolio were juxtaposed to our bancassurance benchmark, immediately exposing a problematic project, which was corroborated by its actual failure. When function points are less common, e.g. in the embedded industry, we used daily source code size measures and illustrated how to govern the volatility of a software product line of a hardware manufacturer. With the three real-world portfolios we illustrated that our results serve the purpose of an early warning system for projects that are bound to fail due to excessive volatility. Moreover, we developed essential requirements volatility metrics that belong on an IT governance dashboard and presented such a volatility dashboard.

Deciding to upgrade packaged software: a comparative case study of motives, contingencies and dependencies

Packaged software is widely adopted and has become an integral part of most organizations’ IT portfolios. Once packaged software is adopted, upgrades to subsequent versions appear to be inevitable. To date, research on packaged software has not paid attention to the upgrade decision process. To explore this area, we studied cases of upgrades to two widely used packaged software products (SAP and Windows) in a multi-billion dollar division of a Fortune 500 company. From an analysis of the cases, we induced a theoretical model explaining the influences affecting the decisions to upgrade. Our model suggests that upgrade decisions are the outcome of interaction between motivating forces that can originate from internal and external environments, and contingency forces. Business need was found to be one of the key internal requirements, along with organizational risk mitigation policies. Organizational reliance on packaged software also creates dependence on vendors that gives them influence over the organization's upgrade decision. The decision to upgrade is also contingent on the availability of internal resources. Although scarcity of internal resources can postpone an upgrade when the need to upgrade is deferrable, organizations will prioritize internal resources when the upgrade is deemed necessary.

IT Portfolio & IT Savvy (Working Title)

the (Update Circa 2003) (with Sinan Aral), Vol. III, No. 1C, March 2003. Introduces the MIT CISR framework with four asset classes and provides benchmarks for 2001 and 1993-97. Managing the Portfolio: Returns from the Different Asset Classes (with Sinan Aral), Vol. IV, No. 1A, March 2004. Provides firm performance returns for investments in each of the four asset classes. IT Savvy Pays Off (with Sinan Aral), Vol. IV, No. 3B, October 2004. Demonstrated the extra returns to the bottom line from investment in firms with high Savvy (a set of interlocking practices and competencies). IT Savvy: Achieving Industry Leading Returns from Your Portfolio (with Sinan Aral), Vol V, No. 2A, July 2005. Case studies on companies with high and low Savvy plus suggestions for maximizing the business value of investments. Managing the (Update Circa 2005): Where Did the Infrastructure Go? (with Anne Johnson), Vol V. No. 3A, December 2005. benchmarks for 2005 and 2001 - demonstrating a significant drop in infrastructure. How Savvy is Your Enterprise? Self Assessment and Benchmarking (with Sinan Aral), Vol. VI, No. 1A, March 2006. A self assessment for Savvy with benchmarks.

Effective IT governance in healthcare organisations: a tale of two organisations

Extracting value from investments in IT has been a perennial problem for healthcare organisations. IT governance provides a systematic framework to establish governing principles and decision rights over IT investments, IT architecture, IT infrastructure and applications. Set against the IT Governance Institute's five domains of IT governance, this case study provides insight into two distinctly different healthcare organisations and their incredibly similar efforts at building and sustaining effective IT governance. Both organisations have hierarchical IT governance committee structures with broad representation from across the organisation. Additionally both have chosen to implement an IT program/;portfolio management office (PMO) capability to deliberately and explicitly build IT governance supporting processes to assess strategic alignment, risk management, resource utilisation, IT portfolio performance measurement and IT value delivery. Using case study data, evidence is presented to suggest that the 5 domains of IT governance (strategic alignment, risk management, resource management, performance measurement and value delivery) are antecedents of IT governance effectiveness.

DETERMINANTS OF WEB SERVICES AND STRATEGIES DEVELOPMENT BUDGET

Web Services and Strategies (WSSs) are becoming increasingly popular and companies continue to budget and invest in such ventures. The factors that actually drive such investments, as far as we know, have not been securely established. This study revealed that socio-economic characteristics of firms, except perhaps company’s net-worth, and IT Portfolio Management (ITPM) seem to have very little influence on the amount of money expended on web applications.

Evaluating IT/IS investments: A fuzzy multi-criteria decision model approach

IT/IS represents a substantial financial investment for many organizations. Whether or not to invest in new IT/IS is, therefore, a difficult decision. Simply considering human resource cost saving criteria is not enough, especially when a corporation has had many information systems. What kind of criteria should we consider when we evaluate IT/IS? How can a new IT/IS project be evaluated in an easy, cost-effective, and collective manner? We need a tool that will help decision-makers evaluate potential new investment projects. Apart from evaluating the new project per se, its compatibility and ability to integrate with an existing IT portfolio must also be considered. Hence, we propose a new approach based on the fuzzy multi-criteria decision model (FMCDM), featuring a 2-stage evaluation process with 26 criteria for IT/IS investment. All stakeholders in a corporation can decide the relative weights they give to the criteria when they evaluate a new IT/IS project by using linguistic values. Experts can also use linguistic values to evaluate all candidates easily. Only an Excel worksheet is needed to obtain an evaluation result. It is cost-effective and efficient. We conduct a case study to show how this model can be used and discuss the results.

Quantitatives IT-Portfoliomanagement

Based on previously released research this paper focuses on the question of how IT projects should be allocated to a risk/return balanced IT portfolio. Therefore we develop an approach that exploits the structure of IS Architectures and scenarios to identify project risks as well as dependencies between projects. As a result, different clusters of efficient portfolios with distinctive risk/return-properties can be derived. The presented approach is designed to support management decisions in a pragmatic manner when selecting IT portfolios. By using real data of a major German financial services provider we exemplify the implementation and the results of the presented approach.

IT Savvy Pays Off: How Top Performers Match IT Portfolios and Organizational Practices

Information technology is major investment for most enterprises and constitutes a portfolio of investments. Just like any other investment portfolio, the IT portfolio must be balanced to achieve alignment with business strategy and the desired combination of short and long term pay off. This portfolio balancing is the role of senior management and should be integrated into firms' IT governance processes. Top financial performers have matched particular organizational practices and competencies with IT portfolio allocations to achieve specific business goals. In short, they have more IT savvy and it pays off.

Exploring e‐education applications: a framework for analysis

As a result of the convergence of computing and communications in the information age, there have been repeated calls for institutions of higher education to embark on needed changes. Some believe that higher education must transform itself, or make radical shifts, to operate effectively in this era. Much has been learned from the business and government sectors about the power of information technology to improve organizational efficiency and effectiveness, and to enable radical transformation. This study looks at approaches that have been used to classify e‐commerce and e‐government IT applications and explores their relevance to higher education. The study develops an e‐education framework that analyzes applications in higher education in terms of their application category and phase. By developing a framework for analysis based upon lessons learned in e‐commerce and e‐government, the study can provide another way of viewing an institution’s IT portfolio and for mapping future application possibilities.

IT sourcing reflections

For more than a decade, the authors have studied the best, worst, and emerging information technology sourcing practices in 543 large and small organizations world-wide. From an initial focus on cost reduction in the early 1990s, the authors found that customers now expect many business advantages from IT outsourcing, including better service, infusion of new technology, transformation of fixed IT budgets to variable IT budgets, improved business processes, and even increased revenues. In short, customers expect IT outsourcing to transform IT functions into lean, dynamic groups that respond quickly to business needs and opportunities. But how do customers actually achieve such business advantage? Customers must become adept at managing four continual processes to successfully exploit IT outsourcing: Assess the in-house IT portfolio to determine which activities are best outsourced Evaluate market options for the best sourcing models and best suppliers to achieve customer objectives, ranging from simple ASP provision to the creation of customer-supplier joint ventures Craft contracts to align customer and supplier expectations and incentives; and Continually manage supplier relationships.

Do you know what's in your project portfolio?

Cathleen Benko and Warren McFarlan, authors of "Connecting the Dots: Aligning Projects with Objectives in Unpredictable Times" discuss the dangers of ignoring your IT portfolio.

Quantitative IT portfolio management

We present a quantitative approach for IT portfolio management. This is an approach that CMM level 1 organizations can use to obtain a corporate wide impression of the state of their total IT portfolio, how IT costs spent today project into the budgets of tomorrow, how to assess important risks residing in an IT portfolio, and to explore what-if scenarios for future IT investments. Our quantitative approach enables assessments of proposals from business units, risk calculations, cost comparisons, estimations of TCO of entire IT portfolios, and more. Our approach has been applied to several organizations with annual multibillion dollar IT budgets each, and has been instrumental for executives in coming to grips with the largest production factor in their organizations: information technology.

Lessons in global information technology sourcing

Successful information technology sourcing decisions require customers to identify their IT needs, know the sourcing market, and develop significant contract-crafting and relationship management skills. The author gives twelve customer lessons considered to be most important for managing four processes: evaluating market options; assessing the IT portfolio; crafting deals; and managing relationships. Three lessons are given for suppliers.

New Developments in Practice IV: Managing the Technology Portfolio

Due to the unrelenting pace of technological change, the task of managing an organization’s IT portfolio can be formidable. Failure to accomplish this task effectively can expose an organization to technology failure and/or financial risk. This paper, based on discussions with a focus group of senior IT managers from a number of leading-edge organizations, outlines the challenges of managing the IT portfolio and presents recommended, “tried-and-true” strategies to tackle the problem.

The Implications of Information Technology Infrastructure for Business Process Redesign

Business process redesign (BPR) is a pervasive but challenging tool for transforming organizations. Information technology plays an important role by either enabling or constraining successful BPR. This paper explores the links between firm-wide IT infrastructure and business process change. IT infrastructure is the base foundation of the IT portfolio, which is shared throughout the firm in the form of reliable services, and is usually coordinated by the IS group. IT infrastructure capability includes both the technical and managerial expertise required to provide reliable physical services and extensive electronic connectivity within and outside the firm.Exploratory case analysis of four firms (two in retail and two in petroleum) was used to understand the ways IT infrastructure contributes to success in implementing BPR. The finding was that all firms needed a basic level of IT infrastructure capability to implement BPR. The firms that had developed a higher level of IT infrastructure capabilities, before or concurrent with undertaking business process redesign, were able to implement extensive changes to their business processes over relatively short time frames. The higher level of infrastructure capability was provided in the form of (1) a set of infrastructure services that spanned organizational boundaries such as those between functions, business units, or firms, and (2) the ability of the infrastructure to reach particular constituencies inside and outside the firm to transfer information and process complex transactions.The more extensive business process changes were more innovative and radical, crossing business and functional unit boundaries, and resulted in more significant business impact. The practical implication of the study is that before embarking on any form of BPR, managers should complete a business audit of their IT infrastructure capabilities, as these capabilities have an important impact on the speed and nature of business process change.