Evolution of decision rules used for IT portfolio management: An inductive approach

IT portfolio management and the related planning decisions for IT-dependent initiatives are critical to organizational performance. Building on the logic of appropriateness theoretical framework, we define an important characteristic of decision rules used during IT portfolio planning; rule appropriateness with regards to the risk-taking criterion. We propose that rule appropriateness will be an important factor explaining the evolution of rules over time. Using an inductive learning methodology, we analyze a unique dataset of actual IT portfolio planning decisions spanning two consecutive years within one organization. We present systematic comparative analysis of the evolution of rules used in planning over two years to validate our research proposition. We find that rules that were inappropriate in the first year are being redefined to design appropriate rules for use in the second year. Our work provides empirical evidence demonstrating organizational learning and improvements in IT portfolio planning capabilities.