Enterprise information technology project portfolio selection through system dynamics simulations

Abstract

As companies are increasingly relying on information technologies (IT) to help maintain their existing and develop new competitive advantages, investing effectively in IT is becoming more and more important. One of the biggest challenges facing an enterprise IT organization is how to select a project portfolio that is best aligned with the business strategies and to deliver highest value using limited IT resources. In this research paper, I examined in detail a recently proposed IT governance framework, designed a System Dynamics model based on this framework, and developed a simulation application to investigate constructs, relationships and scenarios suggested by the framework. My research identified and examined several levers through which IT managers can achieve better alignment with business goals and more efficient use of IT resources. I examined alternative IT governance regimes (combinations of rules and policies for selecting among opportunities and retaining existing systems) in terms of their effects on efficiency, feature satisfaction, and cost of the resulting legacy asset base. By choosing the right combination of relatively straightforward selection and retention policies, IT managers can steer their legacy assets toward a desired efficiency or satisfaction goal in concert with company strategies.