Governance Arrangements for IT Project Portfolio Management: Qualitative Insights and a Quantitative Modeling Approach

292 Pages·2014·9.23 MB·English

by  Thorsten Frey (auth.)

Governance Arrangements for IT
Project Portfolio Management
Thorsten Frey
Governance Arrangements
for IT Project
Portfolio Management
Qualitative Insights and
a Quantitative Modeling Approach
With a foreword by Prof. Dr. Peter Buxmann
Th orsten Frey
Fachgebiet Wirtschaft sinformatik
TU Darmstadt
Darmstadt, Germany
Dissertation Technische Universität Darmstadt, 2013
D 17
ISBN 978-3-658-05660-5 ISBN 978-3-658-05661-2 (eBook)
DOI 10.1007/978-3-658-05661-2
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Foreword
Today, innovations are key to survival in many companies. As more and more innovations are
IT-enabled, corporate IT departments have to cope with a growing number of IT projects
proposed by different organizational units. At the same time, funds for new IT investments
are typically very scarce. Thus, procedures and mechanisms for selecting the most valuable
projects in alignment with the corporate and the IT strategy are required. In this context, other
factors like mandatory projects and the risk at the portfolio level need to be considered as
well. For this purpose, the concept of IT project portfolio management has received growing
attention in recent years.
In the current thesis, Thorsten Frey demonstrates how companies are struggling with the right
balance between local autonomy and centralized control in the context of IT project portfolio
management. This struggle is reflected in the governance arrangements employed. Thus, the
primary research objectives addressed in this dissertation are to describe governance
arrangements for IT project portfolio management as they are employed in practice and to
identify antecedents for and performance impacts of distinct governance arrangements on the
composition of IT project portfolios in different contexts. In order to address these research
objectives, Thorsten Frey employs qualitative empirical methods as well as a quantitative
analytical approach.
The first part of this book contains a comprehensive summary and analysis of theoretical
backgrounds for the two covered research disciplines. With regard to IT governance research,
relevant terms and concepts from organizational theory are introduced. While previous
research on IT governance is only briefly summarized due to the pervasiveness of existing
reviews, the state-of-the-art of IT project portfolio management research is analyzed in detail.
Based on an extensive review of scientific papers covering IT project portfolio management,
Thorsten Frey identifies key concepts of IT project portfolio management research. He
especially highlights the emergence of two different streams of research and the beginning
merge of these two streams. Based on his structured analysis, he identifies opportunities for
future research. Thereby, Thorsten Frey makes a significant contribution to the advancement
of this important new research discipline.
The second part of this book focusses on the design of governance arrangements for IT
project portfolio management. For this purpose, outcomes of a qualitative empirical study are
presented. Based on an extensive analysis of governance arrangements in ten case companies,
Thorsten Frey identifies major concepts that are combined into a comprehensive framework.
This framework explains relationships between different contingency factors and different
governance designs for IT project portfolio management. Impacts of distinct governance
VI Foreword
arrangements on the composition of IT project portfolios are also analyzed. Based on
insightful descriptions and citations, Thorsten Frey vividly demonstrates why different
governance arrangements for IT project portfolio management exist in practice and how
companies cope with the inherent conflict between local autonomy and centralized control.
The developed framework provides an important instrument for governance experts in order
to evaluate the appropriateness of distinct kinds of governance arrangements in a given
context.
In the third part of this book, coordination mechanisms for budget allocation and IT project
portfolio management are investigated based on a mathematical analytical conception. This
general conception allows for an analysis of the impact of various factors influencing the
composition of IT project portfolios. In particular, the impact of different governance designs
on synergy exploitation is formally analyzed in the current dissertation. This is of high
relevance for IT project portfolio management research due to the pervasiveness of different
kinds of interdependencies between IT projects. The conception is also of high relevance for
practitioners as it can be used in order to analyze the appropriateness of a particular
governance arrangement in a given organizational context. Thereby, costly failures of
reorganization projects can be avoided.
In the final part of the thesis the practical use of the findings and the theoretical frameworks
described in the previous parts of the book are discussed. In this context, Thorsten Frey also
outlines the steps IT governance experts should take in order to design appropriate
governance arrangements for IT project portfolio management.
Due to the provisioning of a comprehensive framework for governance arrangements for IT
project portfolio management, the presentation of insightful examples from practice and the
development of an adaptable analytical approach, this dissertation is of high value for
researchers and practitioners alike. Therefore, I hope that this book will find a wide
circulation in research and practice.

Darmstadt, January 2014 Prof. Dr. Peter Buxmann
Acknowledgements
This thesis has been written during my work as research assistant at the chair of Information
Systems | Software Business & Information Management at Darmstadt University of
Technology.
I am especially grateful to my supervisor Prof. Dr. Peter Buxmann, who always greatly
supported me and gave me many helpful suggestions. Likewise, I want to thank my second
referee Prof. Dr. Alexander Benlian for his valuable support.
My knowledge concerning IT project portfolio management has significantly broadened
during the case study research described in this dissertation. In this context, I want to thank all
interview partners who participated in this project. Likewise, I want to thank all other experts
consulted during the dissertation project for their openness and the fruitful exchange of ideas.
During my time at the department, I had the pleasure to supervise the theses of a large number
of excellent students. Like the respective students, I have gained valuable insights during
many lively discussions and the joint development of new artifacts and concepts.
Unfortunately, I cannot list all their names here, but I particularly want to mention Peter
Dietrich, Maximilian Gräf, and Sebastian Weimer.
I want to express my special gratefulness to Stefan Harnisch for his valuable feedback with
regard to the contents of this dissertation. I also want to thank my friends and colleagues
Alexander Schütz, André Loske, Anton Pussep, Christoph Burkard, Helena Wenninger,
Henriette Heidbrink, Janina Matz, Jasmin Kaiser, Jin Gerlach, Jochen Strube, Markus
Eckrich, Markus Schief, Martin Kowalczyk, Nicole Eling, Patrick Johnscher, Ruth Haiß,
Sonja Lehmann, Stefan Harnisch, Sven Schade, Thomas Miklitz, Thomas Widjaja, Tobias
Ackermann, and Tobias Draisbach, for their support and the enjoyable and inspiring time at
the department.
My special thanks go to my wife Tamara and to my family for their encouragement and
support during the eventful past six years.
Darmstadt, January 2014 Thorsten Frey
Contents
List of figures XIII
List of tables XV
List of symbols XVII
Acronyms XIX
Abstract XXI
Zusammenfassung XXIII
1 Introduction 1
1.1 Motivation 1
1.2 Research objectives 3
1.3 Outline 5
2 IT governance – Structures, processes, and relationships in IT decision-
making 7
2.1 Historical developments in corporate IS functions 7
2.2 Centralization and decentralization 10
2.2.1 Definitions 11
2.2.2 Comparison of centralized, decentralized, and federal arrangements 17
2.3 From centralization and decentralization to IT governance 21
2.4 IT governance 24
2.4.1 Emergence of the IT governance concept 25
2.4.2 Definitions 25
2.4.3 The IT governance framework of Weill and Ross 27
2.4.4 Structural, procedural, and relational mechanisms 29
2.4.5 The difference between governance and management 30
2.5 Business/IT alignment 31
X Contents
3 IT project portfolio management – Evaluating, selecting, and staffing IT
projects 35
3.1 Research approach 35
3.1.1 Definition of the review scope 37
3.1.2 Conceptualization 39
3.1.3 Literature search 42
3.2 Literature analysis and synthesis 45
3.2.1 Definitions 46
3.2.2 Modern portfolio theory 54
3.2.3 Key characteristics of IT projects 56
3.2.4 Theoretical backgrounds of IT project portfolio management research 64
3.2.5 Classification of the identified contributions 66
3.2.6 Mathematical approaches and decision support systems 68
3.2.7 Empirical findings and concepts 75
3.2.8 Convergence of empirical and mathematical contributions 81
3.3 Research agenda and implications for future research 83
4 Governance arrangements for IT project portfolio management –
A case study in ten companies 87
4.1 Purpose of the investigation 88
4.2 Research questions 88
4.3 Conceptual framework 89
4.4 Research approach 90
4.4.1 Research design 90
4.4.2 Data collection 92
4.4.3 Data analysis 95
Contents XI
4.5 Findings 96
4.5.1 Fields of activities 96
4.5.2 Governance arrangements for IT budget allocation 97
4.5.3 Governance arrangements for IT demand management 101
4.5.4 Governance arrangements for IT project portfolio selection 108
4.5.5 Governance arrangements for IT resource management 115
4.5.6 Contingency factors 122
4.5.7 Consequences 141
4.6 Integration of findings 151
4.7 Summary and limitations 152
5 The impact of different governance arrangements on IT project portfolio
selection outcomes – A quantitative modeling approach and simulation
studies 157
5.1 Motivation 157
5.2 Problem background 158
5.2.1 Centralized, decentralized, and federal arrangements for IT project
portfolio selection 158
5.2.2 IT project interdependencies and synergies 160
5.3 Related contributions 163
5.4 Conception and model development 166
5.4.1 Conception 166
5.4.2 Assumptions 169
5.4.3 Model parameters 170
5.4.4 Model formulation 173
5.4.5 Illustration 175
5.5 A computational study based on a 2k-factorial simulation design 183