Technology Portfolio Management (TPM) Best Practices

Overview

Technology return on investment is the most powerful financial argument for technology portfolio governance and the hardest financial metric to measure rigorously. It is the most powerful argument because demonstrating that technology investments are producing quantifiable organizational value converts technology from a cost center in organizational conversations to an investment portfolio whose management discipline directly affects business outcomes. It is the hardest to measure because the value delivered by most technologies is indirect, distributed across the applications and business capabilities the technology enables, and often contingent on factors outside the technology’s control.

Best Practice

Approach technology ROI measurement pragmatically, focusing on the value dimensions that are measurable rather than attempting a comprehensive ROI calculation that requires assumptions about the value of capabilities that cannot be directly quantified. The measurable value dimensions for technology portfolio governance include: cost avoidance, measuring the costs avoided through technology rationalization, license optimization, infrastructure right-sizing, and wasted spend elimination; security incident cost reduction, measuring the reduction in security incident costs attributable to vulnerability remediation, end-of-support technology elimination, and access control improvement; compliance cost avoidance, measuring the regulatory penalties and audit remediation costs avoided through proactive compliance governance; and operational efficiency improvement, measuring the productivity improvements attributable to technology standardization, version currency management, and technology redundancy elimination.

Benefit(s)

Technology ROI measurement, even using only the measurable value dimensions that can be quantified without heroic assumptions, consistently produces a compelling financial case for technology portfolio governance investment. The cost avoidance and wasted spend recovery alone frequently exceed the governance program cost. Adding security incident cost reduction and compliance cost avoidance produces a financial return that is difficult for even the most skeptical financial leadership to dismiss. And the ROI measurement discipline creates the organizational accountability that drives rigorous, sustained governance improvement rather than governance theater that produces reports without outcomes.