Following the scoring, the team drew a line based on how many projects it could do with existing resources. In the case of the large technology portfolio, the line was calculated where demand (the list of projects) met supply (resources - in this case, the cumulative dollar value of available application engineers plus overhead); the line was a little less than halfway down the list. Those projects above the line could be done in 2003. The team then presented that list to the president's council, which approved it in an hour and a half, a process that used to take weeks, according to Nielsen.

There is no one method to categorize your IT investment portfolio. One approach is to categorize it as you would your own financial portfolio, balancing riskier, higher reward strategic investments with safer categories, such as infrastructure. Meta Group's Rubin recommends a portfolio divided into three investment categories: running (keeping the lights on), growing (supporting organic growth) and transforming the business (finding new ways of doing business using technology). Those categories can then be cross-tabulated with four to five value-focused categories, such as how those investments support revenue growth, reduce costs or grow market share.

Since 1999, Eli Lilly has used Peter Weill's model to categorize its IT investments. Under the Weill model, companies view their IT portfolios on multiple levels and at different stages, by visualizing their investments in aggregate and placing them in four categories, with the percent of IT expenditures apportioned across each. "We tend to want to have 5 percent [of our projects] in strategic areas, 15 percent to 20 percent in the informational category, and the remaining percentage split between the infrastructure and transaction modules," says Sheldon Ort, Lilly's information officer for business operations. He says that at the enterprise level, those percentages have remained fairly consistent. That model allows Lilly to balance the risk and reward of its IT investments. (The average percentage of annual IT spend of the 57 companies in Weill's 2002 survey breaks down as follows: infrastructure, 54 percent; transactional, 13 percent; informational, 20 percent; strategic, 13 percent.)

The payoffs that come from a thorough evaluation and prioritization process is the primary reason portfolio management is so effective. First, communication between IS and business leaders improves. And portfolio management gives business leaders a valuable, newfound skill - the ability to understand how IT initiatives impact their companies.

Second, business leaders think "team," not "me," and take responsibility for projects. One tried-and-true method for how a business leader got money for his unit's projects was to scream louder than everyone else. Portfolio management throws that practice out the corner office window; decisions are made based on the best interests of the company. At BYU, Nielsen observes that after its portfolio process was implemented, "instead of vice presidents fighting for their own lists of projects, they noticed projects below the line, not in their areas. They said to one another, 'I could provide some funds for you to get [your project] above the line."