Does IT Synergy Matter in IT Portfolio Selection?

This paper proposes a framework of IT portfolio selection and examines the impact of IT synergy on a firm’s IT portfolio selection. IT resources can be distinguished from other forms of resources by their great potential of enhancing synergy between IT units. Based on prior discussion on types of IT synergy, we classify IT synergy into three types and examine the effects of the different types of IT synergy on the IT portfolio selection. We found that firms of moderate and high risk tolerance are likely to obtain a superior IT portfolio by enhancing IT synergy, whereas firms of low risk tolerance may not benefit from enhancement of IT synergy.