Money spent on information technology (IT) is either expense (money spent to operate and maintain the existing IT environment) or investment (money spent to change the IT environment to improve some performance measure for the business. This capability focuses on investments. The starting point is the motivation for investing in IT, which always starts with the need to improve one or more performance measures of the business as a whole. The business invests in business change, usually including process and/or organization changes, which may require investment in IT. Thus, an IT investment is always a component of some larger investment in business change. The specific investments required by the business can be identified using a planning tool such as the Balanced Scorecard or Strategy Map.
The set of IT projects can be viewed and managed as a set of IT investments. Taking this view will always ensure that IT projects are aligned with the needs of the business. Projects are prioritized in relation to their relative contribution to the overall investment in business change, including cross-project dependencies. Thus, it is no longer strictly necessary for every IT project to have a positive return on investment, so long as the larger business change has a positive effect on the performance of the business. This is a major change in how IT investments are viewed and managed.
This capability covers the ability to identify potential investments in IT and on methods to manage the IT investment portfolio as part of a larger business investment portfolio.
The business architect is uniquely positioned to evaluate the overall business change and determine the IT investments necessary to support it. Further, the function of business architecture is responsible for managing the overall investment portfolio, including investments in IT. While business architects do not own the investment portfolio, they own the processes used to select, value, and manage the investments that go into the portfolio. This includes participation in the budgeting process since the need for capital investment is driven by necessary changes to the business, not just investments in IT.
As a practical matter, it often falls to the business and enterprise architects to review projects as they are proposed for addition to the portfolio. In many companies, the results of this process is a set of wish list items for either business or IT leaders, and have little relationship with the investment needs of the business. With this progressive view of technology investment, project proposals are graded and ranked according to their contribution to business change goals as determined by the business change investment portfolio. In addition, projects that are required to maintain the current state of operation should also be included. Managing this pipeline in this way can be controversial, requiring that an architect draw on all of their stakeholder management skills.