IT portfolio management: A framework for making strategic it investment decisions

Abstract

IT spending has been recognised as representing a large percentage of the budget for organisations. Research has shown that significant value can be derived from IT investments if organisations actively and effectively manage their IT investments using a portfolio management approach. The goal of this paper is to contribute to the understanding of how IT portfolio management affects strategic IT investment decision making. First, an IT Portfolio Management Maturity Index is developed so that IS managers can readily assess the level of maturity of their organisation's IT portfolio management. Second, a structural model is presented to examine the influence of IT portfolio management on decision rationality and organisational political behaviour. Next, we examine how these two outcomes of IT portfolio management impact firm performance. The proposed framework can be used as a benchmark for managers to understand how to allocate IT resources most effectively. It also serves as a foundation for further research in IT portfolio Management and other IT governance mechanisms.