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© 2024 N. Dean Meyer and Associates Inc.
Excerpt from www.NDMA.COM, © 2024 N. Dean Meyer and Associates Inc.

Provocative Essay: IT Strategy

why IT strategy should not be driven by business strategy

by N. Dean Meyer

Every CIO assumes that an IT department needs an "IT Strategy." And every major consulting chain is eager to sell it one.

But the definitions vary widely, as do the benefits. Too often, the IT Strategic Plan winds up as shelfware, a multi-year plan that's obsolete by the time it's published. In some cases, IT strategic planning can even be harmful!

In the usual style of this column, let's take an irreverent look at the buzz and the fundamentals, and see what it takes to make the concept of strategic planning relevant to IT.

Traditional Definitions

The traditional view of IT strategy is a document, prepared once a year, that includes some combination of the following:

  • An analysis of clients' business strategies and the IT opportunities (projects) that might support them

  • Priorities, and a work plan for the year ahead

  • Future technologies and how they might be incorporated in the company

  • Architectural standards and infrastructure design directions

  • Capacity analysis and infrastructure development plans

All these things are forecasted a year or more out.

It's this, the most popular type of IT strategy, that causes the most harm. Consider these questions:

When should IT work with clients to analyze their strategies and derive strategic IT projects?

The answer, of course, is all the time!

This is no longer the post-WW2 era of steady growth. We're living in a world of intense global competition, volatile economies, environmental and regulatory constraints, and rapid technological change.

In this modern reality, business strategy is certainly not long-term, stable, and simple. It's highly volatile and multi-faceted.

As such, IT staff must learn to be agile to remain aligned with clients' strategies.

And note that I say "strategies" in the plural. There may be an overall corporate strategy, but execution of strategy happens deep within the business units, with each client department signing up for its own unique share of the corporate strategy.

IT generally doesn't deliver corporate strategies directly (except in technology companies). IT makes the company money by helping clients succeed at their strategies. Thus, strategic systems are discovered by talking to individual clients about what they're trying to accomplish and how information technology can help. To find strategic value, this discussion has to focus on what's unique about clients (their unique role in corporate strategies), not what they all have in common (eg, not the way they administer the business, as in ERP).

An IT strategy that purports to analyze business strategies once-a-year, all at once, has two fundamental flaws: The process is not dynamic (continually adjusting to a changing world). And it views strategy only at the highest level, and not through the eyes of specific clients.

This traditional approach generally results in IT-sponsored projects (a problem from the start) that may or may not be strategic by the time they're completed.

Discovering strategic systems has to be an ongoing, dynamic process -- not a once-a-year, high-level document.

The same must be said of project priorities. A portfolio-management process has to be dynamic to keep IT aligned with ever-changing business strategies.

In fact, every chapter of the traditional IT strategy should be an ongoing, dynamic process. When people think of the IT strategy as a substitute for dynamic processes, then strategic planning does more harm than good.

What is IT Strategy Really?

Let's imagine an IT organization that understands the dynamic nature of business strategy....

They've established "Account Representatives", and trained them to work with clients to translate business strategies into requirements for strategic systems.

They've studied market economics as applied within organizations, and set up a dynamic portfolio-management process.

They've built an entrepreneurial culture such that all their technology specialists are continually tracking future technologies, evolving standards, and assessing service-delivery requirements and capabilities.

What, then, is left for an IT strategy to do?

The answer becomes clear when you think about IT as a business within a business. In that paradigm, IT strategic planning is no different from corporate strategic planning.

A corporate strategic plan doesn't lay out exactly what sales will be made to which clients for the year ahead. Instead, it answers the following question:

What businesses do we want to be in, and what do we need to do to get there?

A corporate strategy analyzes the marketplace. In IT's case, the market is the client community throughout the company.

It examines trends such as business conditions, demand, changing tastes, and emerging needs.

It compares the organization's strengths and weaknesses to its competition. In IT's case, the competition for market share is decentralization and outsourcing.

It identifies the market segments that it wants to better penetrate or enter for the first time, and plans what it will take to do so. For example, in the case of IT, it might identify a new technology or service offering as strategic, and plan how to get into the business of offering it.

This kind of thinking is captured in the acronym "SWOT" -- strengths, weaknesses, opportunities, threats. While SWOT represents only a subset of the analysis that goes into a corporate strategy, it illustrates the right level of planning for IT strategic plans.

NOT Driven by Business Strategy

With this perspective, let's put to rest a popular misconception: that IT strategies should be driven by business strategies.

This isn't right. IT Strategies should not be directly driven by business strategies.

Business strategies drive IT "sales" -- specific requirements for solutions and services that IT provides during the year.

IT strategy is at a higher level. Sure, clients' strategies are one input, an aspect of the marketplace that IT needs to consider.

But just as a corporation's strategies are not "driven by" the strategies of any one external customer, IT strategies must be conceived at a much higher level. An IT strategy has as its purpose developing an IT organization that will serve the diverse needs of the entire community of clients.

Remember, a once-a-year plan is not a substitute for ongoing dialog with clients about their ever-changing needs and opportunities. An effective IT strategy doesn't attempt to substitute for ongoing needs assessments. It builds an organization that generates strategic value day after day.

Time Frames

I hope it's clear by this point that "strategies" are not necessarily "long-term." Confusing those two very different terms is highly dangerous, leading organizations to be cumbersome rather than agile.

Some strategies may indeed span multi-year horizons. There may be some long-term corporate business strategies. And IT may have some long-term strategies in the more stable areas of its business, like infrastructure and commodity services.

But just as some business strategies have windows of opportunity counted in months or weeks, IT must be prepared to respond to new strategic needs and to adjust its own strategies quickly as needed.

As we design our planning processes, we've got to take into account the shortest time frames. Consider this metaphor:

If you're driving onto a highway in the countryside, you probably have a nice long on-ramp giving you plenty of time to get up to speed. Any low-powered car will do.

But if you're entering a parkway in the Northeast built during the Depression, you may have just a few car-lengths of on-ramp to get up to highway speeds. You'd better have the power to get rolling quickly!

We've got to design IT processes to get up to speed quickly. Then, when a long-term strategy is appropriate, we'll have more than enough horsepower to do the job.

We must design our planning and alignment processes assuming that business strategies are volatile and diverse. To do so, we must learn to drive requirements (sales) from these rapidly changing business needs dynamically throughout the year, and reserve the concept of annual strategic planning for IT's own business-within-a-business strategy.


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