Evaluation of IT Portfolio Options by Linking to Business Services

  • Vijay Iyengar
  • David Flaxer
  • Anil Nigam
  • John Vergo
Part of the Lecture Notes in Computer Science book series (LNCS, volume 4055)


The management of IT portfolios in most enterprises is a complex and challenging ongoing process. IT portfolios typically contain large numbers of inter-related elements. In this paper, we present a model and a method for determining and evaluating IT portfolio options for use as a decision aid in the ongoing management of the portfolio. Business benefits of the portfolio options are articulated by linking IT portfolio elements to componentized business services. Characteristics of the IT portfolio elements are abstracted to a level of granularity suited for portfolio analysis. Our model allows various forms of uncertainty that are utilized in the evaluation. Our evaluation method determines a set of portfolio options with the associated cost/benefits tradeoffs. Business constraints and pruning methods are used to present only the relevant and available options and their tradeoffs to the IT portfolio manager.


Business Service Portfolio Management Dominance Relationship Balance Scorecard Realization Choice 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    McFarlan, F.W.: Portfolio Approach to Information Systems. Harvard Business Review 59(5), 142–150 (1981)Google Scholar
  2. 2.
    Markowitz, H.M.: Portfolio Selection. Journal of Finance 7(1), 77–91 (1952)CrossRefGoogle Scholar
  3. 3.
    Kaplan, R.S., Norton, D.P.: The balanced scorecard: translating strategy into action. Harvard Business School Press, Cambridge (1996)Google Scholar
  4. 4.
    Strassmann, P.A.: The Squandered Computer: Evaluating the Business Alignment of Information Technologies. Information Economic Press (April 1997)Google Scholar
  5. 5.
    Harvard Business Review, Collection of articles on the Business Value of IT. Harvard Business School Press (1999)Google Scholar
  6. 6.
    IT Governance Institute, Enterprise Value of IT Investments – The Val IT Framework, USA (2006),
  7. 7.
    Benko, C., McFarlan, F.W.: Connecting the Dots: Aligning Projects with Objectives in Un-predictable Times. Harvard Business School Press, Cambridge (2003)Google Scholar
  8. 8.
    Cherbakov, L., Galambos, G., Harishanker, R., Kalyana, S., Rackam, G.: Impact of Service Orientation at the Business Level. IBM System Journal 44(4), 653–668 (2005)CrossRefGoogle Scholar
  9. 9.
    Tallon, P.P., Kauffman, R.J., Lucas, H.C., Winston, A.B., Zhu, K.: Using Real Options Analysis for evaluating uncertain investments in Information Technology. Communications of the Association for Information Systems 9, 136–167 (2003)Google Scholar
  10. 10.
    Bardhan, I., Bagchi, S., Sougstad, R.: A real options approach for prioritization of a portfolio of information technology projects: A case study of a utility company. In: Proc. 37th Hawaii International Conference on System Sciences (2004)Google Scholar
  11. 11.
    Kindinger, J.P., Darby, J.L.: Risk Factor Analysis – A new Qualitative Risk Management Tool. In: Proceedings of the Project Management Institute Annual Seminars & Symposium (September 2000)Google Scholar
  12. 12.
    Vose, D.: Quantitative Risk Analysis, A guide to Monte Carlo Simulation Modeling. Wiley, Chichester (1996)Google Scholar
  13. 13.
    van Dorp, J.R., Duffey, M.R.: Statistical dependence in risk analysis for project networks using Monte Carlo methods. Int. J. Production Economics 58, 17–29 (1999)CrossRefGoogle Scholar
  14. 14.
    Tallon, P., Kraemer, K., Gurbaxani, V.: Executives Perceptions of the Business Value of Information Technology: A Process-Oriented Approach. Journal of Management Information Systems 16(4), 145–173 (2000)Google Scholar
  15. 15.
    Fawcett, T., Provost, F.: Activity Monitoring: Noticing Interesting Changes in Behavior. In: Proceedings of the Fifth ACM SIGKDD International Conference on Knowledge Discovery and Data Mining, pp. 53–62 (1999)Google Scholar
  16. 16.
    Boehm, B., Sullivan, K.: Software Economics: A Roadmap. In: The Future of Software Economics, pp. 319–343. ACM Press, New York (2000)Google Scholar
  17. 17.
    Moore, M., Kazman, R., Klein, M., Asundi, J.: Quantifying the value of architecture design decisions. In: Proceedings of the Twenty fifth International Conference on Software Engineering, pp. 557–562 (2003)Google Scholar
  18. 18.
    Aho, A.V., Hopcroft, J.E., Ullman, J.D.: Data Structures and Algorithms. Addison-Wesley, Reading (1983)zbMATHGoogle Scholar
  19. 19.
    IT Governance Institute, Enterprise Value of IT Investments – The Business Case, USA (2006),

Copyright information

© Springer-Verlag Berlin Heidelberg 2006

Authors and Affiliations

  • Vijay Iyengar
    • 1
  • David Flaxer
    • 1
  • Anil Nigam
    • 1
  • John Vergo
    • 1
  1. 1.T.J. Watson Research CenterIBM ResearchYorktown HeightsUSA

Personalised recommendations