Saturday, April 19, 2008

IT Portfolio management

IT portfolio management is the application of systematic management to large classes of items managed by enterprise Information Technology (IT) capabilities. Examples of IT portfolios would be planned initiatives, projects, and ongoing IT services (such as application support). The promise of IT portfolio management is the quantification of previously mysterious IT efforts, enabling measurement and objective evaluation of investment scenarios.

Debates exist on the best way to measure value of IT investment. As pointed out by Jeffery and Leliveld (2004) [1], companies have spent billions of dollars into IT investment and yet the headlines of mis-spent money are not uncommon. Nicholas Carr (2003) has caused significant controversy in IT industry and academia by positioning IT as an expense similar to utilities such as electricity.

IT portfolio management started with a project-centric bias, but is evolving to include steady-state portfolio entries such as application maintenance and support, which consume the bulk of IT spending. The challenge for including application maintenance and support in portfolios is that IT budgets tend not to track these efforts at a sufficient level of granularity for effective financial tracking.[2]

The concept is analogous to financial portfolio management, but there are significant differences. IT investments are not liquid, like stocks and bonds (although investment portfolios may also include illiquid assets), and are measured using both financial and non-financial yardsticks (for example, a balanced scorecard approach); a purely financial view is not sufficient.

Financial portfolio assets typically have consistent measurement information (enabling accurate and objective comparisons), and this is at the base of the concept’s usefulness in application to IT. However, achieving such universality of measurement is going to take considerable effort in the IT industry.

Blue Chip and Par Value

A blue chip stock is the stock of a well-established company having stable earnings and no extensive liabilities. The term derives from casinos, where blue chips stand for counters of the highest value. Most blue chip stocks pay regular dividends, even when business is faring worse than usual.

Par value is a nominal value of a security which is determined by an issuer company at a minimum price. Par value of an equity (a stock) is a somewhat archaic concept. The par value of a stock was the share price upon initial offering; the issuing company promised not to issue further shares below par value, so investors could be confident that no one else was receiving a more favorable issue price. This was far more important in unregulated equity markets than in the regulated markets that exist today.

Most common stocks issued today do not have par values; those that do (usually only in jurisdictions where par values are required by law) have extremely low par values (often the smallest unit of currency commonly used), for example a penny par value on a stock issued at USD$25/share. Most states do not allow a company to issue stock below par value.

No-par stocks have no par value printed on its certificates. Instead of par value, some U.S. states allow no-par stocks to have a stated value, set by the board of directors of the corporation, which serves the same purpose as par value in setting the minimum legal capital that the corporation must have after paying any dividends or buying back its stock.


The NASDAQ (acronym of National Association of Securities Dealers Automated Quotations) is an American stock exchange. It is the largest electronic screen-based equity securities trading market in the United States. With approximately 3,200 companies, it lists more companies and on average trades more shares per day than any other U.S. market.[1]

It was founded in 1971 by the National Association of Securities Dealers (NASD), who divested themselves of it in a series of sales in 2000 and 2001. It is owned and operated by The NASDAQ Stock Market, the stock of which was listed on its own stock exchange in 2002, and is monitored by the Securities and Exchange Commission (SEC).

With the impending purchase of the Nordic-based operated exchange OMX, following its agreement with Borse Dubai, NASDAQ is poised to capture 47% of the controlling stake in the aforementioned exchange, thereby inching ever closer to taking over the company and creating a trans-atlantic powerhouse.

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