A methodology for IT Strategy

Broadly speaking, IT strategy can be defined as a mix of implicit and explicit guidelines and plans regarding the supply and demand of information within an organization and the alignment with the internal and external environment aimed at the realization of the visions and objectives of the company.

In the real world however many organizations operate without such a clear strategy and development of IT is rarely driven by strategic objectives, but rather it has grown-up in a piecemeal fashion due to many reasons. In most cases IT is used to create tactical solutions for specific business challenges leading to successive overlapping generations of technology. Big corporation and multinational companies’ carry-out planning, prioritization and resource allocation decisions in silos or stovepipes and the various IT strategy governance activities do not embrace an enterprise perspective nor do they coordinate across these barriers. Finally the whole governance processes (business planning, IT planning, prioritization, budgets, and performance measurement) are poorly connected each other; for example, a company may have strategies, but its management performance measurement is not consistent with those strategies or similarly, business and IT planning may not be coordinated.

The final result is that IT management focus on immediate problems as they arise; but without a plan, an understanding of where their organization wants to be, and how the planned direction is to be achieved; the more likely it is that tactical solutions and related problems will occur. The absence of an IT Strategy means that investment decisions have to be made on their own merits and usually in relation to just one part of the organization. Inconsistency leads to inefficiency and frustration and IT becomes an obstacle to achieving the aims of the organization rather than one of the most powerful resources at its disposal.

Despite this typical scenario there is a general understanding that if IT is required to deliver value, then it must be subject to a set of management disciplines that are called IT Strategy which should enables an organization to make appropriate, cost-effective decisions about enabling technologies for business purpose.

However having clear in mind the need to define an IT Strategy is just only the starting point; after this awareness has been achieved the IT Strategist needs to check if the IT Organization is able to define and then execute this IT Strategy. To better understand where your IT department position respect to these abilities a simple matrix can be introduced to help IT functions analyze where they are located prior to defining their strategic approach; this matrix shows both the importance of defining the IT strategy (understanding business objectives and defining a target architecture and IT resources allocation) and its implementation (plan and team performance for programs execution).

Based on this matrix IT departments can be classified in four major categories:

‘Beginner’: this represents nearly half of organizations whose IT strategy is either poorly defined or not defined at all, or where, even if it were, the IT function would be poorly placed to execute against that strategy.

‘Visionary’: this represents IT organization whose IT strategy is more or less in place, but the IT department is unable to execute it and to keep it up to date

‘Challenger’: here the IT Department is well placed to execute against any given strategy; the problem is that it does not have one, or the one it have is inadequate.

‘Master’: that minority of IT Department (let’s consider optimistically less than 10% of all) that not only have a strategy, but are also capable of delivering against it and update it continuously.

This categorization clearly show that IT strategy practice is rarely applied inside companies, mainly because the approach is not so clear, the steps to follow are not straightforward and is not so simple to apply them on the everyday IT lifecycle.

Four key principles must be considered when defining an IT strategy methodology: it must be business aligned, comprehensive, actionable and agile.

First principle states that all IT strategies must run throughout the entire lifecycle, managing both business and IT elements, and facilitating the alignment of these two perspectives towards a common set of objectives. An effective approach is therefore essential to ensure that the delivery of IT services meets the requirements of the business, policies and procedures must be in place to guide investment decisions. In delivering this business and IT strategy an organization must define a unique value proposition, or a set of benefits, different from what their competitors offer. Robust strategies involve also trade-offs meaning that a company should abandon some product features, services, or activities in order to be unique compared to others. Such trade-offs, in the product and the value chain, are what make a company truly distinctive.

A good example for explaining this concept is the “Henderson & Venkatraman” framework which is a great Business-IT strategic alignment tool that is quite comprehensive and very business oriented.

Exhibit 2 – Henderson & Venkatraman framework

This framework provide separate perspectives to reach Business vs. IT alignment, which are “Strategy execution”, “Technology transformation”, “Competitive potential” and “Service level” alignment perspectives.

Second principle highlights that in defining an IT strategy the effort should not be focused only on the development of an application architecture as main outcome; in other words, the completion of the IT strategy discussion is not only an inventory of systems that are needed to support overall corporate strategies. It is just one component of the larger set of IT strategy outcomes; IT Strategy is a matter of planning not only the IT architecture (including applications, infrastructures, etc.) but also other IT assets and resources (staff, suppliers, etc.) for reaching both effectiveness (meaning doing the right thing) and efficiency (meaning doing things right).

Third principle underline that an IT strategy framework need also to be really actionable; considering again the “Henderson & Venkatraman” framework, even if it is a great visionaries framework it lacks of ability to be immediately applicable for real-life needs. It provides only an high level description on how to proceed with the IT strategy definition, but do not provide a detailed framework to use and a step-by-step description of the approach to adopt; while typically who approach for the first time an IT Strategy definition a set of instruction, examples and template should be provided. In other word it should have a lightweight footprint (being easy to use, low expensive,…) on the running IT Organization, providing prebuilt patterns and practices ready to use even for small and medium IT organization.

Finally the traditional way of approaching IT Strategy is still quite static; the IT organization envisions an “end state” for IT three-five year and creates a roadmap for getting there. Then the team responsible for executing the roadmap seemingly disappears into a labyrinth of initiatives, emerging years later into a business and technology environment that’s very different from the one they left. Those days, when IT strategies could be rigid multi-year plans, now have gone definitively. A company’s goals remain reasonably steady over a two to four year period but the IT strategies employed to accomplish those goals need to be continuously adjusted. In fact many times the IT Strategist experienced the typical situation of an IT department challenged by its inability to adequately support business initiatives and their prior strategic plans or defining them and then see how rapidly they became obsolete and not applicable. Shortly, in designing and building a IT strategic plan a combination of speed and agility is required; speed is necessary to respond effectively to high change environments while agility makes adjustments possible and increases the chances of plan success.

To support IT strategists in their complicated journey we have factorized all previous principles and past experiences in a proven and lightweight IT strategy methodology that can be helpful for all CIOs and IT leadership teams. This methodology is composed by a framework, a data model, an approach and finally an optional companion software.

Read more on this topic from my eBook…or stay tuned for new posts.

About FrankITecture

I'm an IT Consultant with many years of experiences in IT Architecture, IT Governance and IT Strategy projects in many Market Sectors (Telco, Finance, Retail...)
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