Transforming IT Blog
Join us in the Transforming IT HP Blog where we will discuss reinventing IT to overcome obstacles and take advantage of Instant on Enterprise opportunities.

6 steps to plan and prioritize IT investments

A recent article in Computerworld is titled IT investments deliver profits, study finds. I guess we shouldn’t be surprised by that, nobody would invest in IT if they didn’t get a return for their investment. The article reports the findings of research published in MIS quarterly which found that:


  • The effect of IT investments on sales and profitability is higher than that of other discretionary investments, such as advertising and R&D
  • Most of IT’s impact on profitability is accounted for by IT-enabled revenue growth
  • A $1 increase in IT expenditures per employee was associated with a $12.22 increase in sales per employee
  • There is no evidence for the effect of IT on profitability through operating cost reduction

The authors of this research also wrote a summary of their paper in The Impact of IT Investments on Profits, in MITSloan Management Review.


I have recently seen a number of other articles about how important it is for IT to invest in technology of one sort or another, and how this will deliver value for the business, for example IT Spending: Innovation Talk Vs. Survival Walk in Information Week and In the cloud era, let's start calling IT what it is: 'Innovation Team' on ZDNet.


Everyone seems to agree that we need to invest in IT to grow the business, but I have seen very little advice on how to identify the right investments to make. This is where IT service management can play a part. Processes such as strategy management, service portfolio management and demand management can help you to identify and prioritize the best investment opportunities, but it is really important to approach these the right way.


Here are some practical steps you can follow to carry out a review of your service portfolio:


1.   Ensure you have a good understanding of your overall strategy


You must have a clear understanding of what you are trying to achieve as a service provider before you can analyse your service portfolio. Make sure you know

  • The vision and mission of your organization
  • Which customers and markets you are going to work with
  • What will make you distinctive or special to those customers or markets
  • Your very high level objectives and critical success factors

This governance work is an important foundation to everything else that you do as a service provider.


2.   Understand customer outcomes


Listen to your customers. Forget about IT services and talk to your customers about their business. For each customer, make sure you understand:

  • Their vision and mission
  • Their objectives and critical success factors
  • Their business processes
  • The outcomes that are important to them

Create a list of all the important customer outcomes, and then ask:

  • How critical is each outcome to the customer?
  • How well do they currently achieve each outcome? (Don’t think about IT during this step)
  • How effective is IT support for this outcome?

I often use a simple 1 to 5 rating for each of these three factors, to provide a simple way of comparing and analysing the results of this work.


3.   Review existing services


Create a complete list of your existing IT services. If you already have a service catalogue then this step will be easy, otherwise you will have to do some discovery work to identify what services are being delivered.

Create a cross reference between existing services and customer outcomes. I usually use a spreadsheet for this, with outcomes across the columns and services down the rows.

When you can see the relationships between existing services and customer outcomes, combined with information about the criticality of each outcome and how well it is being met, you will find it very easy to identify:

  • Opportunities for new services that could create significant value for your customer(s)
  • Services that don’t contribute to any required outcomes, which should be retired (zombie services)
  • Services with overlapping functionality, which might benefit from rationalization
  • Services that are not making a good contribution to customer outcomes, which may need to be renewed or replaced


4.   Prioritize portfolio changes


You should now review all of the opportunities you have identified in terms of:

  • Criticality of associated business outcomes, and how well these are met
  • Cost of each new or changed service
  • Urgency in relation to business changes and opportunities
  • Risks of making the change, and risks of not making the change

This will result in a prioritized list of potential changes to your service portfolio, based on risks, costs and benefits.


5.   Document the service portfolio


Document the current and future state of the service portfolio, including information about the outcomes supported by each service. Ideally this should be a visual representation that is easy to share with other people.


6.   Next steps


Communicate the portfolio to your stakeholders, identify business sponsors for the changes that are needed and create business cases to support the investment required.


If you want more ideas about how to start thinking strategically, then read some of my other blogs:

Learn more about HP Consulting Services and how HP can help you shift your focus from operation to innovation.


For more info about me and what I can do for your organization, see my profile at our Technology Services Experts page.


Follow me on Twitter @StuartRance




Come to HP Discover2012. Explore strategies and technologies that shape next decade of IT. Register now



| ‎04-23-2012 04:53 PM

I think it is assumed in your post, but the role of having expectations, metrics and then adjusting based on what you've learned can't be overestimated. 


Now that environments are flexible and relatively unstable, recognizing when a shift is occuring or the results do not align with expectations significantly increases and orgnaizations responsiveness.

Stuart_Rance | ‎04-23-2012 05:19 PM



Thank you for your response. For me the key point about expectations and metrics is that they must be based on really understanding what your customers value, and how their business processes create value for their customers.

JoshuaBrusse | ‎04-24-2012 02:35 AM

Hi on...very well written and you nailed all the important steps. I especially like the fact that you write about customer outcome because that does label it correct and makes us think and work outside the box. The only thing you haven't actually addressed how you prioritize between customers. E.g. in a bank...who has the highest banking or wealth management? I often find that “the loudest” gets the most and that’s not necessary the best investment.


What is not mentioned also, because it’s of the topic, but nevertheless very important to get in place is the connection between business investment portfolio, IT service portfolio (application portfolio) and program portfolio so we really govern the investments.


Last but not least we need to include enterprise architecture as this will tell us if it is uberhaubt smart to invest in the technology we had in mind to support the services…

Stuart_Rance | ‎04-24-2012 06:51 AM



Thank you for this reply, I fully agree with all your points. The link between service portfolio management and enterprise architecture is especially interesting, and would be worth a blog post all to itself - you could probably write a whole book on just this one topic!

tjlongo | ‎04-25-2012 05:06 PM

I am in the middle of the book Benefits Management: Delivering Value from IS and IT Investments (John Ward, Elizabeth Daniel), which presents a straightforward framework and supporting tools to relate business objectives, investment benefits, business changes, and IS/IT enablers.  Though I have yet to reach the chapter on portfolio management, I expect it will be a satisfying read if it matches the quality of the first few chapters, and the approach in the book complements your post very nicely, Stuart.

Stuart_Rance | ‎04-25-2012 07:24 PM



Thank you for this, I guess that is yet another book that I will have to find and read then.


Leave a Comment

We encourage you to share your comments on this post. Comments are moderated and will be reviewed
and posted as promptly as possible during regular business hours

To ensure your comment is published, be sure to follow the community guidelines.

Be sure to enter a unique name. You can't reuse a name that's already in use.
Be sure to enter a unique email address. You can't reuse an email address that's already in use.
Type the characters you see in the picture above.Type the words you hear.
About the Author
I help clients use service management to create business value for themselves and their customers. I am a senior ITIL examiner and I have wr...
About the Author(s)
  • I’m a Global Strategist, a certified (PMI) Project Manager, specializing in business to IT alignment, agility consulting, Infrastructure Transformation and Strategic Architecture for Big Data, Mobility, Private Cloud, Unified Communications and Collaboration. I drive the strategy, vision and content of strategic consulting services in the Big Data IT Infrastructure services area at HP. As part of this, I meet with senior level customers to understand their challenges, conduct workshops to determine future vision and roadmaps as well as presenting at industry and analyst events.
  • Craig Partridge is the WW strategy lead for HP Technology Services Networking group. His role now covers strategy for consulting, professional and support services. The major areas of focus are Mobility, UC, Cloud Networking and IPv6. All aligned to core HP networking solutions - simplified, secure, optimized and available.
  • Don has held roles with the business and marketing of consulting for HP. Currently he supports HP's Client and Microsoft Solutions and the emerging Mobility Consulting services. He holds a MBA from UCLA's Anderson School.
  • Over 12 years of consulting, new technology services development and marketing experience covering data center, IT infrastructure, cloud technology domains. Hande holds a M.B.A degree from Bentley College, MA.
  • Having joined HP in 2003 Ian Jagger is the world-wide marketing and program manager for HP Technology Consulting's Strategic Consulting Services, Critical Facilities Services and Energy and Sustainability Management Services, as well as emerging IT services Prior to his current role, he served as the HP Services Marketing Manager for Central and Eastern Europe, Middle East and Africa, having joined HP in a similar role in the Middle East. Prior to HP Jagger had a 15 year international sales career, culminating in being Sales and Marketing Director for Steelcase Inc addressing Northern Europe before focusing more specifically on marketing. His initial focus was consultancy and interim marketing management, primarily for small to mid-sized customers based or looking to expand in the Middle Eastern region. Immediately prior to joining HP he was a strategic marketing consultant addressing investment targets for a technology fund. Born in Rochdale, United Kingdom, Jagger holds an honors bachelor of science degree in economics and a degree in social psychology from Loughborough University, England. He also holds a Masters Diploma in Marketing from the Chartered Institute of Marketing, is a Member of the Chartered Institute of Marketing and a Chartered Marketer. He has one daughter and lives in Cary, North Carolina.
  • Jeff Enters works in the HP Technology Services Networking organization and consults with customers on their IT strategies. He has over 20 years of consulting, design and integration experience in multi-vendor Voice and Data environments.
  • Editor and writer with 12+ years experience in the corporate software and technology sectors.
  • Jordan Lee has over twenty years of consulting and industry experience, helping some of the world’s largest firms craft and implement their business and IT strategies. His priority is to advise Hewlett-Packard clients how to best prepare for and take full advantage of the dramatic shifts in the IT economy taking place today. Over his career, Mr. Lee has held executive positions both in industry and consulting organizations, where he has provided consulting to some of the largest firms in the US. Over the years, he has helped his clients redesign business processes and organizations, and implement strategic IT programs around ERP, System Integration, Business Intelligence, and IT Infrastructure.
  • Jordan owns the worldwide mobility portfolio for TS Network Consulting and is a OneHP Mobility ambassador. His expertise centers on mobility strategy, client and applications virtualization and enterprise mobility management technologies.
  • Eduardo Zepeda, WW TS Social Media Program Manager & Internal Communications for WW Technology Services Blogging on behalf of HP Technology Services (TS_Guest)
  • Ken Larson has over 30 years of experience in Information Technology aligning business to technology. As an Enterprise Architect, he has delivered many successful architecture related services across business and government sectors in manufacturing, insurance, banking, oil, utilities, US state and federal governments. He is certified in TOGAF and IT Service Management.
  • Laura Cunningham is a CPA and business consultant with HP Technology Services Consulting. She helps CIOs and their teams bridge the gap between what the CIO wants and what the CFO requires by building a comprehensive business case that can withstand financial scrutiny.
  • I am on the WW Cloud and Big Data Solutions Team. I help our customers adopt HP advanced solutions that are made up of products and services from across HP. I have over 30 years experience in the technology business including 17 years of business ownership.
  • Broad mix of experiences developed in more than 20 years of technology-driven innovation. Fascinated by changes triggered by mix of behavior, needs and technology. Bachelor in Theoretical Physics.
  • Working for EMEA TS Consulting, I am a Specialist in end to end management of customer data, from creation through consumption, to protection and preservation and ultimately (controlled) destruction. This includes, host, connectivity, storage, data protection and backup and archive, from a technical and more importantly, operational perspective. I have worked in the storage and data management industry for over 15 years, on both sides of the desk, as a customer and now as a consultant.
  • Patrick Lownds is a Senior Technology Consultant and is involved in designing and delivering both Client Virtualization and Cloud Computing solutions in the datacenter. Patrick co-authored “Mastering Hyper-V Deployment
  • I’m a Global Chief Engineer certified Exchange Architect and Master (MCA and MCM), specializing in Messaging, Mobility, Private Cloud, Unified Communications and Collaboration. This relates to all work to coordinate sales, pursuit and delivery readiness in all services that relate to HP's portfolio around Microsoft Exchange. Includes internal readiness as well as external events, analyst briefings. With 25+ year’s experience in the industry. Thomas has been involved with Microsoft products since 1993. Specialties: - Architecting complex public and private Cloud solutions for Exchange, SharePoint and Lync in standard, dedicated or hybrid scenarios. - Lead the HP specialists team unit to win and acheive our business targets and budget - Drive HP's Exchange Services for Private Cloud - Working with partners, vendors and internal teams to align, expand and grow HP's strategy.
  • Tim Swiader has twenty plus years in the Information Technology industry. He has worked primarily with the fortune 100 and legacy carriers transforming their applications, networks and data center facilities.
  • Tom Clement has over 30 years experience in the areas of adult learning, secondary education, and leadership development. During this time Tom has been a consistent champion of “non-traditional” training delivery methods, including blended learning, virtual delivery (self paced and instructor led), the use of training games and simulations, and experiential learning. Tom has spent the past 25 years of his career at Hewlett Packard, focused most recently on HP’s global Virtualization, Cloud, and Converged Infrastructure customer training programs. Tom manages the strategic direction and overall performance of these training programs, ensuring these worldwide programs help HP’s customers capitalize on the business opportunities made available by IT advancements in each of these subject areas. Tom and his global teammates utilize best in class instructors, course content and supporting equipment infrastructure to deliver these training programs to HP’s customers. The team prides itself on providing the Virtualization, Cloud, and Converged Infrastructure content customers need when and where they need it, anywhere in the world. Tom is based in the Washington, DC suburbs and can be reached at
  • Tari is a Distinguished Technologist with 30 years of IT and cyber security experience. He is dual board certified in information security/business continuity and is responsible for a wide range of management and technology consulting services encompassing information security, disaster recovery, privacy, and risk management. His problem-solving skills, knowledge of various technology platforms, compliance statutes, industries, as well as his experience in deploying defense-in-depth and InfoSec Program solution architectures is commonly applied when advising CIOs/CISOs as well as leveraged in numerous HP client engagements throughout the world. Tari has designed, built, and managed some of the world’s largest InfoSec programs allowing them to defend against even the most aggressive attackers.
  • I provide technical consulting services at all phases including analysis, planning, design and implementation. I have a wide range of experience in WAN and LAN technologies, as well as providing security solutions and deploying operating system infrastructure. Besides working directly with clients to deploy technology in their data centers, I also find myself architecting or discussing solutions with a business’s chief information officer, helping to lay out a roadmap for the coming years.
  • Bill is the Principal Data Center Energy Technologist for HP Technology Services. Kosik is a licensed professional engineer, LEED Accredited Professional, a Certified Energy Manager, and a Building Energy Modeling Professional. He is responsible for research and implementation of sustainable, energy-efficient, and environmentally responsible design strategies for data centers. He is currently a subject matter expert for the USGBC on the new LEED Data Centers, the EPA/DOE on unification of energy metrics, and the Green Grid on responding to the EPA’s Energy Star for Data Centers program. He has an engineering degree from the University of Illinois at Urbana-Champaign.

Follow Us