#Portfoliomanagement within an insurer's applications as well as #BPO relationships. Portfolio management allows IT operations to be measured from a business process-centric perspective. Overall IT technology costs can be specifically associated with each business process, regardless of the type of IT #infrastructure.

1. Technology Insight
Technology
May 2004
By Gates Ouimette
Portfolio management allows IT operations to be measured from a business
process-centric perspective.
Packing the Portfolio
P
ortfolio management within information tech- As businesses continually and dynamically change, the chal-
nology—the systems and processes by which IT lenge becomes managing the gyration, or realigning business
investments can be financially monitored and processes and technology solutions at this intersection.
measured—continues to evolve.While strategic investments
Overall IT technology costs can be
having a significant inpact on a company’s business perfor-
mance will be measured against one another using portfolio specifically associated with each
management tools and techniques, it’s also important to
business process, regardless of the type
include IT operations within that portfolio.As opposed to
of IT infrastructure.
the traditional outsourcing-IT-operations-en-masse model,
portfolio management allows IT operations to be measured
from a business process-centric perspective. With the potential benefit being so great, one
As a backdrop to this concept, initial IT portfolio man- approach insurers can use to keep technology dynamical-
agement applications have evolved from merely capturing ly aligned with its core mission of supporting the busi-
and summarizing project time and expense costs to provid- ness is to evaluate technology implementation and man-
ing a more “real-time” perspective of business and technol- agement options using their IT portfolio management
ogy events which could affect the IT portfolio and its asso- system. Using this model, since IT operations costs can
ciated returns on investment. be tied to a specific business process, IT portfolio man-
In conjunction with this IT portfolio management agement lends itself well to simplifying “make” or “buy”
evolution, the role of business process outsourcing con- decisions for individual business processes, down to the
tinues to gain in importance. Studies show that the world- IT infrastructure level.
wide BPO market is expected to grow 13% annually, from Line of business, or process-centric, applications can
$110 billion in 2002 to $248 billion in 2005. If BPO is the then be more simply measured from an operations or
first stage in the evolution to process-centric IT, as coined delivery perspective—the premise of BPO. Options to
by IT research firm Forrester Research, it’s important to application delivery, including application service
understand how this can be impacted by and benefit providers, then become tactical implementation tools as
from the use of IT portfolio management. part of an overall IT portfolio management strategy.
Much like the manner in which software was first Looking at human capital management outsourcing,
decoupled from hardware, to allow more flexibility in its Gartner, a research and advisory firm, cited that “an HCM
mapping to business processes, data was then decoupled ASP or outsourcing solution can offer cost savings and
from applications.This technology layer separation has access to specialist skills that may be difficult for midmarket
continued into the separation of business rules from the enterprises to attract and retain. In addition, these solutions
data, one possible first step in the movement toward can enable enterprises to outsource tactical, administrative
process-centric IT. functions to allow a greater focus on strategic activities.”
Insurers, who as an industry understand process, are While this view specifically cites midmarket enter-
proving to be early adopters of this separation effort. On prises, BPO via an application service provider also can
the positive side, the benefits to companies include flexibili- become an operational tool as part of a large enter-
ty and choice. Don Ramsay, director of information architec- prise’s IT portfolio management system. Large insurers
ture services at CherryRoad Technologies, a New Jersey- have outsourced business processes such as claims pro-
based IT consulting and systems integration firm, is leading cessing and call center support for years.The use of an
an effort to map insurers’ business processes with each of IT portfolio management system supports
their underlying technology infrastructure components.The the same “en masse outsourcing,” while
end result will be a straight-line view of associated applica- at the same time providing a more
tions, processes and costs across the enterprise. Overall IT granular view of the myriad of other
technology costs can be specifically associated with each available options. Most importantly,
business process, regardless of the type of IT infrastructure. this view then becomes a business
While conceptually the process-centric view of IT is process-centric perspective. BR
promising, the downside is that separating the business
rules from the data and applications increases complexity. Gates Ouimette is an account
The challenge then becomes one of keeping the technolo- executive with USi. He can be
gy and the business it supports aligned at their intersection. reached at insight@bestreview.com.
1
BEST’S REVIEW • MAY 2004 •REPRINT
Copyright © 2004 by A.M. Best Company, Inc. All Rights Reserved. Reprinted with Permission.

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