A Framework for Extending Potency and Reducing Competitive Risk in the IT Strategic Systems Portfolio

Abstract

This research proposes that, in addition to balancing risk in the total IT project portfolio as McFarlan suggested in 1981, organizations should also balance risk in their strategic IT portfolios. A framework is distilled from the literature that will both minimize the total risk of an organization’s strategic project portfolio, and identify opportunities to extend the strategic life of its information systems. The framework’s validity is assessed by using four classic cases in the strategic use of technology. Results indicate that overall strategic IT risk may be reduced by evaluating an organization’s strategic IT portfolio against the five dimensions of the framework, and then seeking strategic IT projects and opportunities that would bring greater balance to the organization’s efforts. In addition, by moving across boundaries in each of the five dimensions, strategic systems can adapt to competitive marketplace or technology changes, and thus maintain their strategic potency over extended time periods.