Blue Cross CIO uses portfolio manager to justify IT costs

Blue Cross and Blue Shield of Massachusetts has found a cure for the pain of trying to justify its IT spending: portfolio management.

One of the biggest challenges facing CIOs today is the prospect of rationalizing IT spending to other senior level executives. For the CIO of health insurance provider Blue Cross and Blue Shield of Massachusetts Inc., the problem was solved using an IT portfolio management service.

In years past, the best way to get an accurate view of your company's end-to-end IT enterprise was to hire a management consulting firm to chart assets and expenditures. Few companies could afford this and, for today's businesses working with reduced IT budgets, the outlay might seem counterproductive.

Enter ITCentrix Inc., Framingham, Mass., which is marketing an IT portfolio management service aimed at companies with budgets of $20 million to $150 million.

For Blue Cross and Blue Shield of Massachusetts, the struggle was finding a method of proving business value for its different IT programs, including customer relationship management (CRM), data warehouse support and infrastructure maintenance.

"I found myself looking more and more for a way to rationalize investment in applications that weren't focused on administrative cost reduction," said Carl Ascenzo, CIO at Blue Cross and Blue Shield of Massachusetts. "Using IT portfolio management, we could put a quantitative value on what would otherwise be very soft, subjective expectations."

Ascenzo deployed ITCentrix's Value Accelerator Service in mid-2001. The service, which costs $50,000 annually, allowed Ascenzo to organize all his IT operations in relation to how they drive value to the company's business. "It helps us assess where we're investing in technologies that have the biggest value to the company going forward," he said.

According to Ascenzo, the ITCentrix service has also helped him become more of an equal player among the senior leadership at Blue Cross and improved his ability to defend increased investments in IT.

David Vellante, CEO and founder of ITCentrix, likens IT portfolio management to the investment strategy from which the practice takes its name.

"Managing a stock portfolio, you're not just paying attention to stocks you may be thinking of buying, you're keeping track of an existing portfolio as well," he said. "You have to be thinking of how adding stocks would fit into a larger scheme, and you constantly change and allocate strategy to fit the big picture. The same goes for IT spending."

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