Systemic Risk in IT Portfolios - An Integrated Quantification Approach

Recent trends in digitalization combined with continuous innovation pressure lead to an increasing number of IT project, which nowadays are accomplished within huge IT project portfolios. Even though numerous IT project and portfolio evaluation and planning approaches have been developed and applied in companies all over the world, about 25% of IT projects still fail, which may result in a global value destruction of approximately 900 billion USD. With one main reason been detected in the lack of transparency regarding dependencies within IT portfolios, this paper draws on graph theory to provide a rigor consideration of the systemic risk that is based on different kinds of direct and indirect dependencies within IT portfolios. Based on this assessment, it provides an integrated novel, and quantitative approach for IT portfolio evaluation that strives to mitigate IT project failures, as it helps decision makers to evaluate their IT portfolios more adequately.