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IT Investment Allocation and Organizational Performance: A Study of Information Technology Investment Portfolios in Federal Government Agencies Open Access

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This study examined Federal Government Information Technology (IT) portfolio investments for twenty-seven Federal Government agencies, as provided annually to the Office of Management and Budget (OMB) in their Agency IT Investment Portfolio Reports (Exhibit 53), and divided Federal agency IT investments into four categories: Innovation, Management Support, Process Automation and Infrastructure. Agency program performance was statistically compared, using the OMB's Program Assessment Rating Tool (PART), to determine the higher and lower performing agencies based on the PART scores of each agency's assessed programs. Agencies with total program performance in the top third of all agencies were considered "higher performing agencies" and those with total program performance in the lowest third of all agencies were considered "lower performing." Agency performance ranking was compared with agency IT investment allocations to answer the following question: Do higher performing Federal Government agencies invest IT assets differently than lower performing agencies?Evidence pointed to a significant difference in how higher performing and lower performing agencies invest their IT budgets. A causal effect between IT investment and agency performance could not be statistically proven, but distinct differences were found. This research provides a new perspective on IT investment allocation and suggests a comparative technique by which IT investments in Federal Government agencies can be evaluated.The research further categorized agencies from mission statement information available on their websites to determine those agencies with missions having either cost or agility as primary foci. A similar question was posed: Do cost-focused Federal Government agencies invest IT assets differently than agility-focused agencies?Evidence again pointed to a significant difference in how cost-focused and agility-focused agencies invest their IT budgets. This research illustrates an innovative way of looking at IT investment allocations and agency missions.Additionally, these agency results were compared with cost-focused and agility-focused corporations in the private sector, finding very similar patterns of IT investment. The results of this research may be useful to agency Chief Information Officers, Chief Financial Officers as well as Sub-agency Directors in considering their IT budget expenditures. These officials can directly compare their organization's IT investment portfolio with the top performing agencies and use that information to help determine whether their investment portfolios should be adjusted. Managers of cost or agility-focused organizations may also use the mission-focused results of this research to examine and consider adjustments to their current portfolio of IT investments.

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