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• Research Overview
  • Classic Topics
    • Enterprise Architecture
    • IT Governance
    • IT Portfolio Management
    • IT Risk
• Current Projects
  • Strengthening Your Digital Business Model
  • Building Digitized Platforms Can Be Slow: What Are the Alternatives?
  • Digital Innovation: Designing
    Customer-Centric Products and Services
  • Adapting Your Business’ Genome
    to a Digital Ecosystem
  • Case Studies in Social Media Innovations
  • BYOD: Radical Changes to Managing Technology and the People and Processes Relying on It
  • Working Smarter: Seizing the Opportunities Created by Ubiquitous Data
  • Managing Your Firm’s Total Digitization:
    The Next Frontier
  • Business Complexity: Shifting IT
    from Problem to Solution
  • Managing IT Supply and Demand: How to Build a World-Class Service Organization
• Research Briefings
  • 2012 Research Briefings
  • 2011 Research Briefings
  • 2010 Research Briefings
  • 2009 Research Briefings

Introduction

Just as investors have portfolios of financial investments to address their multiple investment objectives, firms have portfolios of information technology (IT) investments. Four different management objectives guide firms’ investment in IT resulting in four different asset classes. Each of these asset classes has a different objective and a unique risk-return profile (slide: Risk-Return Profiles in the IT Portfolio). Just like any other investment portfolio, the IT portfolio must be balanced to achieve alignment with the business strategy and the desired combination of short and long term pay off. Many firms have adopted IT portfolio management to help with IT prioritization as it provides a strong business-oriented lens familiar to most executives.

MIT CISR research has found that firms invest in IT to achieve four different management objectives (slide: Management Objectives for Investing in IT):

1. Strategic (to gain competitive advantage);
2. Informational (to provide management information);
3. Transactional (to process transactions and cut costs); and
4. Infrastructural (to provide shared services and integration).

Just like any other investment portfolio, the IT portfolio must be balanced to achieve alignment with the business strategy and the desired combination of short and long term pay off. Portfolios must also be reweighed when economic conditions or strategies change. We have identified the average and top performing firms’ IT portfolios in several industries and the statistical relationships between IT investment patterns and a wide range of firm performance measures including growth, profit and asset utilization. We continue to collect new IT portfolio data yearly and refine our understanding of the impacts of each asset class on firm performance (slide: Rethinking IT as an Investment Portfolio).