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CIOs at financial services firms constantly are looking for ways to run their IT departments more efficiently. And, despite often elusive results, firms continue to devote dizzying amounts of money to IT. In fact, "The U.S. spends $800 billion a year on IT," according to Charles Betz, enterprise architect at Wells Fargo. "And it is still the most mismanaged part of the business," he adds. "It's the barefoot shoemaker's child."

But more and more CIOs are finding that by implementing IT portfolio management in much the same way that a fund manager oversees a firm's investment funds, they are better able to manage their staffs, run and monitor applications, and deal with the needs of their business partners. And running IT as a portfolio is something with which most business managers can identify, which may help bridge the gap between IT and the business. For this reason, and others, portfolio management likely is here to stay.

In general, portfolio management includes such things as setting goals and objectives, incorporating strategies and products, and ultimately making sure that business services are being delivered. But there also is the continued need to oversee the operation and maintenance of IT projects throughout their life cycles. "IT portfolio management needs to be defined holistically - it's not just about project management anymore," Betz says. Once an IT project is completed, the IT department must continue to be diligent and responsible in monitoring how well the project is running and whether or not it is returning value, he continues.

As such, many vendors and consultants have jumped on the IT portfolio management bandwagon. "We believe there is an ecosystem around IT portfolio management," says Greg Gilmore, COO at Planview, an IT business solutions firm. At its core, portfolio management is about using discipline to make good decisions, even if that means having to sacrifice some initiatives in favor of others. In fact, a huge part of making good IT portfolio decisions is being able to prioritize and decide which projects should go forward, and which ones are going south and need to be terminated.

One firm that continues to take IT portfolio management seriously is Bear Stearns. "I have always run the IT department as a business," says Peter Cherasia, the firm's CIO. According to Cherasia, at the beginning of each year, the IT department at Bear Stearns works with each of the bank's business units to identify and map out initiatives within each of those units. It then uses a simple set of criteria to set its goals. "We don't work on anything that doesn't either generate revenue, cut costs or meet a defined need, such as regulatory, compliance or client retention," he says.

Adding Value

After assessing the cost and risk of each project in the IT portfolio and working with the business units to prioritize them, the IT department at Bear Stearns begins working on issues such as sequencing, balancing the risk of the portfolio and assessing the department's ability to deliver. "Once the IT department understands the business' priorities and desire to increase or decrease tech initiatives, then we go ahead and construct the IT portfolio, taking into account investment in areas such as IT training, skills development, tools acquisition and maintenance reduction," Cherasia explains. IT also assigns metrics to all projects and tracks them using a business case review approach as they go through a software development life cycle (SDLC). This kind of oversight gives the IT department at Bear Stearns the ability to be agile and increase investments in projects that may be under performing or kill projects for which the strategic importance may have changed during the year, Cherasia notes. "It's a seven-stage process that is toll-gated at every point and allows us to manage the projects throughout their life cycles," he says.

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