IT Black Hole or IT Investment Portfolio

Technology programs can be managed in two ways –

1. Active asset management, or
2. A black hole where IT projects are lost and forgotten.

 

Active Asset Management

Ideally, an organization should manage its IT program like a financial investment portfolio.

Each system or project is an individual investment and, collectively, they are a portfolio. Projects are funded, methodically managed and are expected to yield a return. Just like in a financial portfolio, each IT project would need to fit within the company’s objectives, the potential return would be balanced and any risk is assessed.

“If we take an investment perspective, we take an active role in managing to the outcome we desire,” says Paul Theisen, principal and founder of TAG CXO.

To successfully manage an IT program as an investment portfolio, companies need impartial oversight, good project management following strict methodology and the capability to finish strong or exit early.

This perspective is in contrast to an IT black hole.

IT Black Hole

An IT black hole is a department that implements projects at random and in an uncoordinated fashion, they aren’t managed and often are lost to the abyss. The only metrics projects are measured by is whether they are on time and on budget.

Company leaders often don’t know what’s going on in their IT department, they don’t know which systems and projects are successfully being adopted and which are falling flat.

These types of black hole departments view IT as an expense, not a revenue generator.

 

Change your perspective around your IT program to an investment mentality.

A successful IT program will bring a higher return than what is spent on it. If your company’s hurdle rate is 10 percent, your IT program needs to demonstrate a better than 10 percent return on that IT investment.

“The cost to implement a project is the down payment on owning it,” Theisen says.

All IT spending leads to consequences and to a material outcome, good or bad.

To ensure a good outcome, an IT program managed like an investment portfolio will have an active, participatory project manager. Rigorous project management controls and structured and disciplined processes should be put in place.

This project manager should be part of your team.

TAG CXO’s practice directors of project management services, have decades of experience in project management and process improvement. For more information, reach our Team here.

Another important principle in this portfolio management approach is to measure the organization’s efficiencies and find areas where improvements can be made. Efficiencies such as reducing headcount, eliminating redundancies and improving process flow are essential to a portfolio management model.

As the project moves along, some portions may prove to be poor performers. As with any investment, take those losses and apply those assets elsewhere.

Know how to finish strong or exit early, Theisen says.