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Enterprise Integration & IT Strategy Blog

 

I - The Need for IT Strategy

Gregg Powers, Senior Management Consultant  :  05 August 2009 / 4:58 PM  :  1

This represents the first in a series of 10 blogs designed to give a bottom up approach to looking at IT Strategy.

Have you heard some of the old adages related to strategy and planning?

"If we fail to plan then we plan to fail"

"If we don’t know where we are going, any road will get us there"

The most applicable metaphor for me as relates to IT management without a plan is the wandering of the Israeli tribes through the desert for 40 years.  Although this was divinely orchestrated, the results are similar.  Groups of people treading over the same ground, inefficient use of their individual energies and resources, lack of a common direction, and ambling along responding to tactical needs, but not towards a defined destination.

In reality, this is an over simplification of what happens within many IT organizations but the lessons learned from it are relevant to most IT organizations.  Organizations often hire IT executives which possess a wide range of capabilities.  In some cases, the capabilities of the individual are sufficient to meet at least part of the needs of the larger organization – at least for awhile.  As the organization matures and the business landscape changes (and the business with it), even the most savvy CIO’s can find themselves in a compromised position without a plan.

In a more pragmatic vein, individuals within the organizations not having effective IT Strategic Plans often are overheard saying the following things.

"The IT Department is out of sync with our company's needs."

"Our IT department is not responsive."

"Why is IT working on that?"

"We don't understand why we are spending so much in IT."

But the key question is – will anyone notice?  The short answer is yes.  Aware business executives are becoming more and more aware that IT is one of the primary enablers (and in some cases drivers through IT-based innovation) of achieving their business goals and objectives.   IT, with a sufficient base of business knowledge (processes and strategy) can directly contribute to both top and bottom line gains.  In organizations where effective accountability frameworks are employed, corporate executive management will hold business unit executives accountable for their results.  If business unit executives perceive that IT is a stumbling block to achieving those goals and objectives, this will be relayed to quickly to corporate executive management with IT receiving its due visibility.   Strategy is a core element of IT to business alignment.  There are many cases studies showcasing what an aligned organization can accomplish. 

As the United States and the world enter a new phase of a global and integrated economy, business executives are going to be held to increasing levels of scrutiny with respect to their results.  The need to deliver business value through the judicious application of information technology has never been greater. 

If we take this need as a given, we must further acknowledge as a fundamental axiom that there are simply too many moving parts to an IT organization to be able to effectively manage all aspects of IT without a plan.  Even builders, which have less to deal with in terms of complexity, will not build a house without a plan.  Combine this with the continuing pace of technology advancement and it provides any CIO with a challenge to manage effectively.    A Strategic Plan provides exactly that – a plan that defines the strategies which must be executed to meet business objectives.  A Strategic Plan has a counterpart, an operational plan which bridges the gap between strategy and implementation.  The greater need however is the Strategic Plan as individuals have historically shown improved capabilities in terms of finding a way to execute defined strategies.

This blog entry looks at the basics of the value proposition associated with the IT Strategic Plan.    Some of the most compelling value propositions of an IT Strategic Plan are explored below.

Identifies how IT generates business value
IT strategy, when properly developed, assists in defining how IT generates business value for the organization.  In fact, the primary purpose of an IT Strategic Plan is to guide IT in a manner that generates this value.   With IT becoming so much more central to the development and execution of aspects of business strategy, much more attention needs to be paid to IT strategy development than it has been paid in the past. What businesses want to accomplish with their IT and how IT shapes its own delivery strategy is increasingly vital to the success of an organization.

Provides linkages between business goals and objectives and IT
Many times, IT organizations may be challenged by those inquiring as to why IT is working on a given activity (or why it is prioritizing a certain type of work) over other types of work.   IT Strategic Plans (along with governance and portfolio management) provide a defensible basis for expenditures of resources answering critics issuing such challenges.    This can be an organizationally unifying effect as no longer are subjective bases used to critique IT as either unresponsive or working on the wrong things.  All parties are working off the same plan – IT has proactively discovered and documented the core business drivers behind its activities.

Identifies required organizational capabilities
Organizations evolve their capabilities over time.  Organizational transformation plans should be developed consistent with the needs of the larger organization.  Although some of this can be done “by feel”, assessing key goals and objectives, defined strategies and activities supportive of achieving business goals and objectives will result in a logically defensible basis for organizational transformation.   Once a plan has been developed, the plan will allow an IT organization to grow its capabilities in lockstep with organizational needs.  This will establish both a perception and reality that IT is more proactively prepared to address business needs, when they need to be addressed rather than catching IT by surprise.

Optimizes IT channeling IT investments towards improved value propositions
Although IT Strategic Plans do not normally embody specific technologies, they do embrace mechanisms to ensure that IT technology standardization, optimization, and architecture are present throughout the entire technology life cycle management.  Organizations often tend to invest in too many technical platforms, too many redundant applications, point-to-point network structures, and ever replicating data.  In most cases (but obviously not all), this results in higher than necessary IT costs. 

IT optimization is a worthy objective when it does not conflict with business objectives however there are times that IT costs are summarily slashed because IT is viewed as an expense rather than an investment designed to deliver business value.   This can occur when IT is perceived as wasting resources or when the work that IT is engaging in not understood to be delivering business value.  To the degree that IT can tie what it does to business value (and specific business operations), the lesser tendency the organization has to “slash and burn”.  In addition, optimization of IT is a given. When IT resources are not optimized, IT deprives other areas of the business from resources needed to execute the business strategy.

Provides a basis of tactical decision making
Strategic Plans provide foundational and institutional knowledge giving guidance into how tactical decisions should be made.  If short term activities are undertaken without testing against consistency with the plan, there is great potential that these activities may not support organizational objectives or may support organizational objectives but in the wrong order and should not be undertaken at this time (ex. should be deferred to more value generating work).  In many cases, when used by a governance committee owning execution of the IT Strategic Plan (or even simply managing the portfolio of IT activities), it ensures that significant IT activities are tied directly to the plan before they are approved, or at the very least ensures that only thoughtful deviation from the plan occurs.   Within the IT organization itself, a well defined and communicated plan helps even the most junior worker to make decisions which are aligned with the organization’s needs.

Provides the foundation for a responsive organization
Through the planning process, IT becomes more aware, both implicitly and explicitly of what types of services the business community will need to support them.  In some cases, these are simple services like Help Desk or desktop support, but in other cases, the process identifies organizational capabilities and services that need to be developed to support the business.  These may include data analysis capabilities, extended support capabilities, remote access to systems and information, and similar services.

Summary
IT Strategy is not an inhibitor of flexibility as some fear – far from it.   What it does provide is a framework against which decisions can be thoughtfully tested and made, providing a basis for undertaking activities which, if the IT plan is aligned with the business, supports execution of the business strategy.  There can be no better claim that an IT organization can make that its products, services, and activities are in direct alignment with the defined business strategy.  This is one of the crucial factors separating great from good organizations.

Next time, Part II, we will look at some of the fundamentals of a good IT Strategic Plan.

Posted in Enterprise Integration & IT Strategy on 05 August 2009
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Tagged: Business Value  IT Planning  IT Strategy  IT to Business Alignment  IT Value  

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