What portfolio management can teach you about technology strategy

by | Apr 22, 2021

In a normal world, organizations would soon be laying out this year’s planning cycle for 2022 and beyond. Perhaps you’re dusting off the old plans that COVID potentially rendered null and void. One of these artifacts might be the technology portfolio or technology plan. 

If you look closer, however, you could make the case that there is no technology plan – it’s all business planning. And just like managing a portfolio, it requires advanced planning, selection of the right components, and diligent management on a daily, monthly, and yearly basis.

As you lay out your planning cycle for your technology, we recommend these three perspectives:

  • Treat technology as a portfolio
  • Integrate business and technology plans
  • Adopt integrated technology portfolio planning

Establishing perspective for your technology portfolio

Technology is diverse, distributed and pervasive in today’s business processes and ever more so in products/services themselves.  But what is all this stuff? What does it do for the business? Do we need all of it? 

Organizations that apply a bottom-up approach to technology acquisition and deployment can easily lose the “forest” view and just see trees (servers, clouds, workstations, apps, networks, etc.). 

Even more, these “trees” can just seem to grow on their own and take the budget with them, without rationale or business context.

Technology organizations can become unbalanced if the wrong driver is in charge – the budget versus the strategy. As we often discuss with our clients, the budget should not drive the outcome – but should be viewed in tandem with the strategy in according to three purposes: run, grow, or transform. In fact, you can gain a considerable amount of control of your technology budget when you break out costs in this manner.

>> Explore 5 Questions Every CEO Should Ask About Their Technology Budget

Additional portfolio management concepts can also help:

  1. Legacy versus disruptive
  2. Overlapping capabilities
  3. Risks
  4. Cost per user

As you can see, the portfolio view establishes visibility on your positioning within extremes. For example:

  • What is the mix of legacy or COTS (commercial off-the-shelf) technology versus disruptive trials?
  • Legacy technologies can offer standardization of function, scalability and stability but may mean high costs, vendor lock-in and delegation of Innovation to the provider.
  • Disruptive technology might transform a product, automate laborious processes or deepen customer insights, but guard against a “flavor of the month” whipsaw.

Because your technology can be viewed as a portfolio, it is desirable to explicitly decide where to throw organization weight. But how do you find your “balanced” technology portfolio? The answer: Integrate it with your business plan.

Overcoming the challenge of integrating business and technology plans

The question of how to achieve business and IT alignment has puzzled chief executives since the phrase “information technology” first became widely used in the 1950s. Perhaps the word “alignment” isn’t a strong enough term, as it implies separate entities that merely seek to move in the same direction.

Instead, business and technology planning must move beyond simply traveling in the same direction and become integrated in their approach. The technology portfolio plan needs to emphasize the same direction and priorities as the business plan.

Test yourself – do the respective plans have integrated approaches to the following key business levers?

  • Digital processes
  • Digital transformation
  • Business processes and automation
  • Product strategy
  • Customer knowledge and insight
  • Business mission: Evolve versus disrupt
  • Agility and innovation
  • Risk management

It would be no surprise if a first inspection illustrates an imbalance of prior plans versus each other, and, like a financial portfolio it may be necessary to “overweight” development areas to bring about the necessary balance in the plans.

Putting integrated technology portfolio planning to work in your organization

To start working toward integrated business/technology plans, know that the degree of difficulty in this process will also indicate your organization’s starting point – and the maturity of prior technology portfolio integration with business objectives.

Here are the steps toward integrated planning:

Step 1) Technology portfolio assessment

Key question: Where am I now?

Action items:

  • Map out existing technology capability using portfolio “views” highlighted earlier
  • Identify existing “pain points” in maintaining and in further developing the technology portfolio
  • Identify your run/grow/transform (RGT) mix of technology effort, staffing and all-in costs

Step 2) Alignment assessment

Key question:  Am I aligned?

Action items:

  • Call out business’ highest-level priorities
  • Calculate business RGT “mix” of effort, staffing, and costs; compare mix with existing technology portfolio
  • Determine the gaps in priority and in existing capability
  • Use a technology assessment tool or checklist to make the process easier

Step 3) Document findings and recommendations

Key question: What should our next steps be based on this information?

Action items:

  • Prepare an initial readout of the assessments and what has been learned
  • Suggest next steps (deeper levels of assessment needed, new topics to bring into scope, help needed, obvious quick wins)
  • Keep it in “draft” at this point

Step 4) Checkpoint review with CEO, other stakeholders

Key question: What does the group think?

Action items:

  • Get feedback
  • Test for buy-in of findings
  • Agree on next steps

Building your technology planning team

To drive integrated planning, an integrated business and technology team must own and be accountable for the process and the outcomes. The team should include the following:

  • CEO as sponsor
  • COO as lead executive
  • Steering committee of CIO/CTO lead, plus relevant business line/business function leaders
  • Program/planning manager
  • Integrated business and technology staff resources

Many of us at Mod Op Strategic Consulting have directed technology organizations with an applied passion for realizing business value. We have used the concepts and methods described here to integrate technology efforts with business priorities. We can introduce, guide, oversee or review your organization’s efforts to achieve similar successful integration.

Please reach out if you’d like to chat further.

Author Spotlight

Mark Carberry


Did you know that organizations with a greater depth of digital savviness significantly outperform industry peers by 26%?


Pinpoint your organization’s “digital maturity” in just 15 minutes!

Company We Keep