Kartic's Musings on Corporate Information and Knowledge Management

August 20, 2015

Idiot’s guide to developing IT Strategy

Filed under: SharePoint — kartickapur @ 6:26 am

All too often CIO falls in the trap of formulating IT strategy in order to justify next year’s budget. This results in weak plan leading to IT staff constantly playing catch-up. Increasingly, business leaders including CEOs have started to embrace the notion that IT planning needs to go beyond simply including IT budget in current year’s budget process.

Here is an interesting article from forbes to ponder upon: ‘GE and GM: Old companies become a new breed of software companies‘. Here is an excerpt from the article worth considering:

In a recent interview, GE’s Jeff Immelt said that every company has to be a software company. “It’s our belief that every industrial company in the coming age is also going to have to be a software and analytics company,” he told Charlie Rose. “The people that deny that digitization is going to impact every corner of the economy is going to be left behind. So we’re investing massively in that, but really around industrial assets and not around things like the consumer Internet.”

From <http://www.forbes.com/sites/joemckendrick/2015/06/22/ge-and-gm-old-companies-become-a-new-breed-of-software-companies/>

Three German car makers, for instance just bought Nokia’s mapping business for $3.1 Billion. They have realised that car manufacturing business can only beat the competition by being ahead of the curve in driver-less car technology.

Source: http://www.businessinsider.com.au/german-automakers-buy-nokia-here-2015-8

Now that we have settled that all traditional business will have to include technology as part of their key growth and survival goals, let’s look at essential attributes of a well-defined IT strategy in order to ensure continued support from CEO for technical initiatives:

  • Align back to corporate goals.
  • Prioritise strategic outcomes in order to address most important business priorities.
  • In addition to strategy document, create a one page succinct version that you can show to stakeholders regularly.
  • Ensure agility and flexibility to support organisation’s success.
  • Enable sustainability which ensures organisation’s current and future needs.
  • Balance future initiatives with manageability, maintainability and security.
  • Plan metrics to measure real benefits/value derived from technology.
  • Lastly, refresh regularly to incorporate changes in business focus/direction/priorities.

Cerge Thorn (CIO of architecting the enterprise) has come up with a pyramid theory where he illustrates alignment between IT and business strategies. He demonstrates how IT vision (which supports company’s vision) is underpinned by three pillars of Integration, Improvement and Innovation. Overall he breaks down IT strategy into following sub-elements:

  • Infrastructure strategy
  • Application strategy
  • Integration strategy
  • Service strategy
  • Sourcing strategy
  • Innovation strategy

From <http://blog.opengroup.org/2011/11/22/what-does-developing-an-it-strategy-mean/>

Here is the pyramid from Cerge’s blog:

it_strategy_and_vision_pyramid

From <https://opengroupblog.files.wordpress.com/2011/11/it_strategy_and_vision_pyramid.jpg>

Here is step by step guide for formulating your strategy bible:

1. Reviews the current business strategic and tactical goals and anticipate future needs.

If a business strategy is available, it would be advisable to start by reviewing organisation’s strategic plan. Often after listing down these plans, areas where technology could either enhance or enable them become apparent. Although it may differ for industry but as a general trend, if a strategic plan does not exists, organisational units may have their own:

  • Growth plans
  • Performance related plans
  • Spending plans and budgets
  • Sales targets
  • Upcoming acquisitions and partnerships
  • Plans for cost reductions

In order to nut them out, interview key stakeholders from top executives to operational staff within key functions of your business. Strategies can include questionnaires, surveys, SWOT analysis but I prefer individual interviews. An interview could include pointy questions around:

  • Pain paints that keep them up at night
  • Top 5 business objectives
  • Any plan to achieve these objectives
  • What issues do you need to resolve around efficiency, processes, security, personnel etc.
  • Key frustrations from previous technology initiatives
  • What would you like to see in the future
  • Key business risks and plans for managing them. Can technology play a part
  • Any competitive pressures

In short get a good understanding of key drivers within your business. Once you list them down, you will start to get clarity about areas where technology can play a part. Some common themes would start appearing as well.

2. Review Industry trends (IT trends for industry business operates in and general IT trends).

Generally forgotten as a step in formulating a plan, overlooking this could spell disaster. As an example, current IT trends like:

  • Big data analytics
  • Cloud computing
  • Mobility
  • Internet of Things (IoT)
  • 3D Printing

Gartner defines the following top ten IT trends for 2015

Top-Ten-Strategic-IT-Trends-for-2015

From <http://www.forbes.com/sites/peterhigh/2014/10/07/gartner-top-10-strategic-it-trends-for-2015/>

Once you have listed these down, start by analysing where one or more of these can be leveraged or aligned to deliver on strategic outcomes listed in step 1 above.

Going further, there would be emerging trends in your industry that you should be aware of. Car industry (in my previous example) is going through tectonic shift. Driver less technology is fast becoming a reality and those manufacturers who fail to include this in their strategy, are setting themselves up for failure.

3. Identify capability that need to be developed and their priority.

The strategic goals, combined with industry trends will lead to list of capabilities and key themes that will need to be developed in your organisations.

4. Review your current IT capabilities, applications & systems. Benchmark your organisation on these capabilities.

This may be difficult to achieve internally without bringing in consultants but given below are the important criteria’s where it is important to benchmark yourself in order to evaluate your current maturity level:

  • Size, scope and IT spending compared to peers.
  • IT leadership – is leadership proactive or reactive. Does CIO have a seat on the executive decision making group.
  • Rank the capabilities of your internal IT staff
  • Rank satisfaction of your business users
  • Is IT considered a cost of doing business or enabler – where does your company stand
  • System upgrade levels
  • Vendor management capability
  • Operational capability

5. Review gaps between strategic goals and current operations and set targets. Include plans to measure success.

I suggest that you create a matrix which lists down all the capabilities identified in step 3. Score these capabilities on current status and where you want to be and by when. You can get creative with how you represent them but in use a simple spreadsheet. The example below could be subset of capabilities that your strategy needs to address. (generally there are about 30 to 50 capabilities in an organisation)

Gaps

It is also important to come up with metrics on measuring the maturity over time.

6. Develop short term and long term project plan/timeline – Project Roadmap.

By now it would be clear that when it’s time for allocating budgets for next financial year, management is not dreaming up projects to grab biggest chunk of the budget. An cohesive IT management team would collaborate and prioritise areas of the IT where capability uplift is critical to business success. In my example above, by quick look it is apparent that System integration is number 1 priority for 2016. Resource management and Business intelligence could be other two capabilties. Here is what your project list could look like in the System Integration bucket:

Projects

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