Bank Applies Portfolio Techniques To IT

Banks looking for ways to cut costs and eliminate waste in IT spending are advised to start taking a portfolio management approach.

By simply undertaking an inventory analysis of their technology inventory, including applications and projects, firms can reduce IT spending by 10 to 40 percent, according to Meta Group. For a firm with a $100 million annual IT budget, that's a minimum of $825,000 per month.

Revenues for enterprise portfolio analysis (EPA) tools, from vendors such as ProSight, Business Engine Software, UMT and ITCentrix, were $85 million last year and are projected by Meta Group to hit $540 million by 2005.

The enterprise portfolio analysis market focuses on enabling refined decision making, or the ability to identify the right things to do, according to a Meta Group research report.

"The goal of enterprise portfolio analysis tools is to determine the optimal mix of investments, activities, initiatives, and programs needed to achieve a desired output or outcome," wrote Doug Lynn, author of the report. "Tools in this market enable users to compare and contrast scenarios and relevant views of projects, enabling organizations to determine what should be done and by whom." The output of the analysis, wrote Lynn, is typically passed to project and asset portfolio management tools that ensure all related projects, programs, asset enhancements/changes, etc. are consistently and predictably performed based on predefined constraints.

Enterprises use portfolio analysis tools to communicate the value of their decisions, to make decisions based on the risk, reward, and timing tradeoffs of various investment choices, and to fully run, grow, and transform their business, according to Lynn.

ProSight, Portland, Ore., is regarded as one of the leading contenders in this "young and functionally immature market," according to Lynn.

ProSight helps firms manage technology resources by aggregating and interfacing data, and providing a centralized source of information about projects across an enterprise. It's IT governance software, Portfolios, allows IT executives and line managers to quickly access information about their technology portfolio in order to better manage resources.

Firms use ProSight's browser-based technology to create forms for inputting information about their technology and projects. A scorecard provides a snapshot of how technology assets are performing, while a dashboard provides charts of performance. A workbook allows users to record and manage information and a to-do module allows tasks to be assigned to personnel. The system also produces an investor map, a graphical representation of potential investments that firms can undertake to improve operations.

TD Bank Financial is using Portfolios for "prioritizing and selecting projects," said Bruce Harrison, vice president of the project management office at Toronto-based TD Bank. "It's the typical stuff that ProSight does."

When the bank went shopping for an EPA system,it was led to ProSight. "Everybody was pointing at ProSight as the ideal portfolio management tool," said Harrison.

The bank plans to go live with the system in June, in time for its 2004 planning process, said Harrison, noting that "we'll be walking before we run." While the ProSight system will be focused initially on the bank's enterprise technology solutions, he said, it could later be introduced to other divisions in the bank.