Matakuliah
Tahun
: A0784 - Strategi Investasi IT
: 2009
Investment Portfolio Methodologies
Pertemuan 23-24
Introduction
•Companies have portfolios of technology
•Examine set of methodologies that related to the
idea of establishing a collection or portfolio
investment
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Portfolio management
• Involves collecting all IT investments in one place and
controlling them as single set of interrelated activities
• Monitor and manage all IT investments of organization,
so that benefits, costs, and risks of individual
investments can be determined whether or not they are
making a significant contribution
• Overall view of IT investments to evaluate if individual
investments correspond with organizational strategy
• Continuous process that views IT investments as assets
as opposed to costs
• Has been applied to IT investment evaluation and
management
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Investment Portfolio Methodologies
• Defined as IT investment evaluation techniques based
on portfolio management
• May be applied in situations where number of individual
IT investment is large and when aligning IT investment
with organizational strategy is important
• Two specific methodologies :
– Ward’s portfolio approach
– Peter’s investment mapping methodology
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Ward’s Portfolio Approach
• Views organization’s IT investments as belonging to
different categories in a portfolio of IT investments
• Provides consistent set of rules and procedures to
evaluate individual IT investments and provides
information necessary for setting priorities for set of IT
investment
• Involves segmenting organization’s IT investments into 4
categories, identifying possible IT investment in each
category and making best investment decisions
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Categories of IT investments
• Strategic ; essential or critical in achieving business
objectives and executing strategies
• High potential ; investments that may or may not be
important to business success
• Factory ; those that organization currently depends on to
improve the effectiveness and efficiency of business
process and activities
• Support ; IT investments that valuable but not critical to
improve the efficiency of support activities throughout
organization
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Feasibility Study
Involves analyzing whether or not an investment is feasible
given organizational resources and constraints
• Technical feasibility : do hardware, software, and
technical resources exist to implement IT?
• Economic feasibility : do benefits of IT outweigh its
costs?
• Operational feasibility : does proposed IT fit into the
existing managerial and organizational context?
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Steps to evaluate individual IT investments
1. Construct a portfolio of current IT investments
2. Determine the degree to which each IT investment
assists in meeting the objectives
3. Evaluate IT investment
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Setting Priorities
Considering :
• IT benefits
• IT costs
• IT risk
 See Table 1-4
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Peter’s Investment Mapping Methodology
• Consists of prescriptions for creating investment portfolio
map, evaluating overall IT strategy, identifying &
evaluating individual investments, and managing
benefits after implementation
• Overall IT management tool for assessing and
monitoring every aspect of IT investment
• Consists 3 stages :
– Mapping investment portfolio
– Evaluation of alternative investments and performance
measurement
– Management of benefits after implementation
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Mapping investment portfolio
3 types of benefits :  See Figure 1
• Enhance productivity
• Minimize risk
• Expand the business
3 types of investment orientation :  See Figure 2
• Support technical infrastructure
• Perform routine business operations
• Influence the market
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Cost-benefit hierarchy
• Used to value the benefits if IT investment
• Assist decision-makers in selecting measurable metrics
• Steps :
1. Identify key measurable variables that reflect the impact
of expected benefits of organizational performance
2. Identify the expected changes in key variables and their
impact on profitability
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