Packing the portfolio: portfolio management allows IT operations to be measured from a business process-centric perspective.

Portfolio management within information technology--the systems and processes by which IT investments can be financially monitored and measured--continues to evolve. While strategic investments having a significant inpact on a company's business performance will be measured against one another using portfolio management tools and techniques, it's also important to include IT operations within that portfolio. As opposed to the traditional outsourcing-IT-operations-en-masse model, portfolio management allows IT operations to be measured from a business process-centric perspective.

As a backdrop to this concept, initial IT portfolio management applications have evolved from merely capturing and summarizing project time and expense costs to providing a more "real-time" perspective of business and technology events which could affect the IT portfolio and its associated returns on investment.

In conjunction with this IT portfolio management evolution, the role of business process outsourcing continues to gain in importance. Studies show that the worldwide BPO market is expected to grow 13% annually, from $110 billion in 2002 to $248 billion in 2005. If BPO is the first stage in the evolution to process-centric IT, as coined by IT research firm Forrester Research, it's important to understand how this can be impacted by and benefit from the use of IT portfolio management.

Much like the manner in which software was first decoupled from hardware, to allow more flexibility in its mapping to business processes, data was then decoupled from applications. This technology layer separation has continued into the separation of business rules from the data, one possible first step in the movement toward process-centric IT.

Insurers, who as an industry understand process, are proving to be early adopters of this separation effort. On the positive side, the benefits to companies include flexibility and choice. Don Ramsay, director of information architecture services at CherryRoadTechnologies, a New Jersey-based IT consulting and systems integration firm, is leading an effort to map insurers' business processes with each of their underlying technology infrastructure components. The end result will be a straight-line view of associated applications, processes and costs across the enterprise. Overall IT technology costs can be specifically associated with each business process, regardless of the type of IT infrastructure.

While conceptually the process-centric view of IT is promising, the downside is that separating the business rules from the data and applications increases complexity. The challenge then becomes one of keeping the technology and the business it supports aligned at their intersection. As businesses continually and dynamically change, the challenge becomes managing the gyration, or realigning business processes and technology solutions at this intersection.

With the potential benefit being so great, one approach insurers can use to keep technology dynamically aligned with its core mission of supporting the business is to evaluate technology implementation and management options using their IT portfolio management system. Using this model, since IT operations costs can be tied to a specific business process, IT portfolio management lends itself well to simplifying "make" or "buy" decisions for individual business processes, down to the IT infrastructure level.

Line of business, or process-centric, applications can then be more simply measured from an operations or delivery perspective--the premise of BPO. Options to application delivery, including application service providers, then become tactical implementation tools as part of an overall IT portfolio management strategy.

Looking at human capital management outsourcing, Gartner, a research and advisory firm, cited that "an HCM ASP or outsourcing solution can offer cost savings and access to specialist skills that may be difficult for midmarket enterprises to attract and retain. In addition, these solutions can enable enterprises to outsource tactical, administrative functions to allow a greater focus on strategic activities."

While this view specifically cites midmarket enterprises, BPO via an application service provider also can become an operational tool as part of a large enterprise's IT portfolio management system. Large insurers have outsourced business processes such as claims processing and call center support for years. The use of an IT portfolio management system supports the same "en masse outsourcing," while at the same time providing a more granular view of the myriad of other available options. Most importantly, this view then becomes a business process-centric perspective.

Gates Ouimette is an account executive with USi. He can be reached at [e-mail].