The CIO as stockbroker

Washington State IT Portfolio Management

If you don't know what information technology portfolio management is, you're probably not alone. That's why federal leaders are poised to release guidelines on how agencies can incorporate the complicated process into their business plans.

IT portfolio management — which evolved from the principles of managing the risks and rewards of a stock portfolio — is the process of determining which investments should be started and maintained based on agencies' business requirements. It is different from investment management, which looks at the benefits and effectiveness of each investment on its own. Portfolio management builds on that, but then measures the investments against one another to get a full picture of how changes in one affect the others. This is something that agencies must do as IT programs become increasingly integrated with other agency programs in an e-government era, officials say.

"Investment management isn't easy, but portfolio management is even harder," said Marilyn Holland, chief of the program planning and management division of the Agriculture Department's chief information officer's office.

Holland is helping lead the federal CIO Council's newest partnership with the Industry Advisory Council to develop guidelines for agencies on IT portfolio management. The council's new Best Practices and Capital Planning Committee kicked off the project earlier this month. The committee's "first practices guide," scheduled for release by year's end, will be published in phases because it is important to get information on this concept to agencies as soon as possible so they can start incorporating it into their daily management, said Robert Guerra, president of Robert J. Guerra and Associates, the IAC representative on the project.

The first phase will be a pamphlet with the standard questions CIOs and other leaders should be asking to foster IT portfolio management, and the second phase will list some of the answers to those questions. By the end of the year, the team hopes to have a full working document with Web links to agencies' best practices, Guerra said.

There are already federal and state agencies working on IT portfolio management programs. The Navy CIO's office has a model that it uses as part of its IT capital planning process. Washington state also has a complete process, developed to support its policy of "portfolio-based IT management and oversight."

The private sector is also moving toward this concept, with one-third of Global 2000 companies expected to adopt a portfolio management process by 2004, according to a survey by the META Group Inc., an IT consulting firm.

What is portfolio management?

* A management tool used to ensure close alignment between an agency's business goals and its information technology expenditures.

* A communication tool to assist executives and other stakeholders in understanding the agency's IT infrastructure and supporting appropriate IT solutions to business problems.


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