IT Portfolio Management

Especially in Service industries, Information Technology (IT) enables new business strategies and allows firms to realize strategic competitive advantages. But in recent years, IT also causes increasing investment costs involved with high risks. Based on this development, an economic and legal necessity for aligning business and IT and thus for an evaluation of IT investments by their contribution to a firm's business value can be argued (IT Governance). But today, only a few firms are capable to measure risk and return of their IT investments and IT portfolios adequately.

IT Portfolio Management describes an approach for a holistic consideration of a firm's IT landscape with the focus on the process of IT investment decision making. Essential aspects are the valuation, prioritization and selection of IT investments and their allocation to an IT Portfolio. But risk and return of IT investments are not exogenous given factors. So risk and return can be influenced for example by site decisions of software development projects (Sourcing Flexibility). Moreover, different implementation strategies of IT projects may influence the value contribution of an IT project ‑ e.g. a required functionality can be implemented by several IT-Services or only one single application system (IT-Service Flexibility). Furthermore, among consecutive IT-investments may exist intertemporal interdependencies, which can also influence risk and return of the considered IT projects (Temporal Flexibility).




Objective of this research focus is the development of decision models to evaluate IT investments within an IT Portfolio considering the different flexibility dimensions.