Service Portfolio Measurment (SPM): Assessing Financial Performance of Service-Oriented Information Systems

Abstract

This chapter addresses service-oriented information systems from a management perspective. It is evident that running a service-oriented enterprise brings up new challenges for management. Given the technological opportunities, the challenge lies essentially in choosing the right mix of services on the basis of an appropriate architecture. For this purpose, strategic considerations regarding, for example, the company’s flexibility have to be justified by financial performance measures. This is particularly evident as long-term economic consequences result from decisions on the service portfolio. Thus, evidence is required about the fact that these decisions are in alignment with the company’s financial situation. The total costs of ownership (TCO) caused by a particular service-oriented information system, as well as the return on investment (ROI) gained by it, give examples for appropriate financial performance measures. In this chapter, a measurement system is presented that facilitates the assessment of the various financial consequences within a comprehensive framework. The system is grounded in decision theory and capital budgeting, and it is illustrated by its application within practical examples.