There are a variety of applications of Markowitz's efficient frontier to information technology IT portfolio management. Some EPM software packages incorporate the Markowitz technique to be used to visualize the various information technology portfolio combinations in a frontier graph. The jury is still out, though, on its suitability to IT portfolios as compared to traditional financial portfolios. ...
Via Chief Project Officer: The Efficient Frontier Technique for Analyzing Project Portfolio Management
... "The Efficient Frontier simplifies a complex Portfolio Management problem to highlight and clarify some basic questions: scarcity, efficiency, tradeoffs, opportunity cost and the value of breaking the constraints. " ...
Additional resources on the efficient frontier approach to project portfolio management:
Markowitz efficient frontier definition: Via Forbes Financial Glossary: The graphical depiction of the Markowitz efficient set of portfolios representing the boundary of the set of feasible portfolios that have the maximum return for a given level of risk.
Modern Portfolio Theory: Driving project portfolio management with investment techniques: Via IBM Rational: The closer a portfolio is to the Efficient Frontier the closer it is to being efficient, which means: For its level of return, there is no other portfolio with less risk, or for its level of risk, there is no other portfolio with more value.
IT portfolio management – A banker’s perspective on IT: Via Department of Mathematics at the Vrije Universiteit: However, there is a precondition attached to Markowitz’s theory that presents problems when the theory is applied to IT portfolios: the marketability of stocks and shares. MPT concentrates on finding the right balance between risk and return. Theoretically, in MPT there is a curve – the efficient frontier – of optimal expected return for a given risk.
Labels: balance, ibm, portfolio-managment, project-cost, return-on-investment-roi, tools, value, value-management, visualization
