Definition

Information Technology Investment Management (ITIM)

Information Technology Investment Management (ITIM) is a management process that provides for the pre-selection (identification), selection, control, and evaluation of business need-driven Information Technology (IT) investments across the investment lifecycle. ITIM uses structured processes to minimize risks, maximize return on investments, and support decisions to maintain, migrate, improve, retire, or obtain IT investments.

In addition, ITIM establishes a common language to:

• Organize IT investments and define their business value;

• Evaluate and prioritize the investments; and,

• Effectively manage change.

ITIM Background

Information technology investment management (ITIM) traces its roots to the 1952 work of Harry Markowitz on Portfolio Selection (Markowitz, 1952). In this work, Markowitz proposed a new theory of financial investing based on a portfolio of investments balanced by a number of factors, with expected return, diversification, and risk being primary. Markowitz suggested that a portfolio with the proper balance of investments provided a higher return over time to the investor than simply evaluating each investment on its own merits. This theory is now referred to as Modern Portfolio Theory (MPT) and Markowitz received a Nobel Prize in 1990 for his work.

If managed wisely, investments in information technology (IT) can enrich people’s lives and improve organizational performance. For example, during the last decade, the Internet has matured from being a technical novelty to a national resource where citizens can visit the Library of Congress or file their tax returns. Some organizations have realized substantial improvements in processing data and information by switching from centralized mainframe computing to decentralized personal computers linked by local area networks. The ability of software applications to locate and correlate relevant data in a data warehouse permits organizations to discover unknown fiscal or physical resource relationships and thus provide appropriate assistance where there had been none. However, along with the potential to improve lives and organizations, IT projects can become risky, costly, unproductive mistakes.