A portfolio approach to evaluating information systems investments and setting priorities

Abstract

The types of benefits which a business can obtain from investments in Information Systems (IS) have developed and become more varied over time. During that same period many organizations have become dependent on their Information Systems in terms of how they do business and some have used IS to gain competitive or strategic advantages. This article explores the nature of the benefits that can accrue in relation to the business objectives of IS investments. A portfolio model is discussed which helps management evaluate the relative importance of such investments to the business and hence to define how each investment can be appraised and managed. In order to maintain a coherent strategy for managing IS investments, not only must they all be evaluated on a consistent basis, but priorities amongst the applications must be established on the same set of criteria. Again the portfolio approach enables management to address this issue in a rational way, based on business needs and imperatives.