Agencies get bullish on portfolio management

You arrive at your desk in the morning, fire up your PC and open your IT investment portfolio. You check over your agency's IT assets and make sure you've got the right mix to maximize your return on investment.

OK, so portfolio management in government isn't entirely like managing a stock or real-estate portfolio.

But the idea is much the same. You monitor, shuffle and trade IT assets to maximize mission goals and effectiveness instead of dividends and profits.

'Conceptually, financial investment management is a good analogy because people can relate to it,' said Marilyn Holland, chief of the program, planning and management division in the Agriculture Department's CIO office. 'The way we monitor financial portfolios is different than the way we would manage IT portfolios ... but philosophically it gets people thinking about IT portfolio management. It does bring a picture to people's minds.'

The federal requirement to manage IT assets as an investment derives fundamentally from the Clinger-Cohen Act of 1996, though the law doesn't expressly mandate portfolio management.

The Office of Management and Budget's revised Circular A-130, published three years ago, requires agencies to maintain a portfolio of major information systems as part of the capital-planning process.

Increasingly important

But the term portfolio management is a recent addition to government vernacular.

It isn't just the latest in-vogue term among Washington's chattering classes. It's growing in importance as part of managers' IT capital planning process across all levels of government.

'I do think it's coming to the forefront,' said Holland, who helped research and write a CIO Council guide to practices and lessons learned in portfolio management, published last year. 'It is becoming a larger element. You can have a lot of high-performing investments but that doesn't mean they're the right ones or they're the right mix.'

Efficient management of IT assets is especially critical right now when money is tight and budget deficits are soaring.

Portfolio management is 'a matter of effectively allocating strained resources to achieve greater returns,' said Lester Diamond, the General Accounting Office's assistant director for IT management.

A small but rapidly growing body of government literature also is testimony to the rise of portfolio management.

GAO, for example, will provide a more precise definition of portfolio management later this year when it releases a new version of its IT investment management framework, widely used as a model for formulating a portfolio management program.

Most federal agencies are just taking the initial steps to build portfolio management programs. They're coming up with an assortment of approaches.

At the Treasury Department's Mint, for instance, programmers wrote a dashboard application that will consolidate and automate the agency's management of business cases.

Other Treasury agencies are piloting the Mint's software, including the IRS, Bureau of Engraving and Printing, and Office of the Comptroller of the Currency.

The use of commercial software to help manage investment portfolios likewise is spreading.

Sophisticated tools can provide the financial calculations, surveys, scorecards and benchmarks needed to link projects and goals and help managers make sound investment decisions.

And that's critical at a time when the bottom line is on everybody's mind.


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