Information Technology Portfolio Management Proof of Concept: Modern Portfolio Theory With KVA and ROI Analysis

Abstract

The basic research question guiding this thesis is: "How can Modern Portfolio Theory (MPT) be defensibly applied to DoD Information Technology (IT) portfolio optimization problems?" The research will demonstrate how to derive the appropriate raw performance, volatility data, required to remain consistent with MPT assumptions and methodology. This thesis accomplishes this research objective by establishing a notional IT (beta) to apply a MPT approach for asset allocation within the Department of Defense (DoD). Data from three previous RFID implementation case studies were used, where the Knowledge Value Added (KVA) methodology was applied to estimate the return on investment (ROI) produced by IT. The KVA methodology is essential for the application of this thesis because it provides the framework for the allocation of surrogate revenue and cost streams into core processes where RFID technology was implemented. The ROI estimates of volatility act as a surrogate for equity price volatility, allowing application of the Modern Portfolio Theory (MPT) approach in the nonprofit sector.

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Document Details

Document Type
Technical Report
Publication Date
Sep 01, 2010
Accession Number
ADA531494

Entities

People

  • Marco Nelson

Organizations

  • Naval Postgraduate School

Tags

Communities of Interest

  • Human Systems
  • Materials and Manufacturing Processes

DTIC Thesaurus Topics

  • Accounting
  • Acquisition
  • Business Administration
  • Capital Investments
  • Case Studies
  • Commerce
  • Department Of Defense
  • Finance
  • Governments
  • Health Services
  • Information Science
  • Information Systems
  • Investments
  • Knowledge Management
  • Organizational Structure
  • Supply Chain
  • Supply Depots

Readers

  • Defense Technology Research and Development.
  • Life Cycle Cost Analysis
  • Systems Analysis and Design