Information Technology plays a dramatic role in global business, producing disruptions that upend industries and alter the manner in which business is conducted. However, the process of developing an effective IT strategy for business can be quite complicated involving in-depth analysis and input from various business areas to ensure a holistic view of the organization is captured.
According to a recent online global study by McKinsey Digital, a large percentage of companies realize minimal success in their efforts to digitize their business models and technology management. Interestingly, this aspect of IT strategy vs business strategy is evident even in the most cutting-edge industries.
The need for an agile IT strategy in business is clear, and yet it eludes many organizations. Below we’ve made a comprehensive guide on how to formulate and implement an effective IT strategy that facilitates your business goals and your business success.
Ensure IT Focuses Align with the Business Strategy
Your business operating model encompasses the way different pieces of your business fit together. Its main purpose is to ensure that everyone in the organization focuses on the value the business seeks to create. You can articulate how your business will uniquely deliver this value only when your business model is clear across the board.
As such, both IT and business leaders have to be on the same page on how the business operates as a whole before any strategies can be formulated. In many cases, business leaders and IT leaders tend to have varying visions on what the organization should look like. Isolated IT and business functions lead to misaligned and often times conflicting strategies.
Issues that misalignment between IT and business areas can include:
- Investing in technology upgrades in areas the business does not intend to grow in
- IT not aligning with growth plans causing future issues in designs and technologies
- Prioritizing the wrong projects
- Poor Merger and Acquisition planning & results may pave over areas of IT that were planned for a major upgrade or technology refresh
- New lines of business may not be properly supported by IT
- Customer self-service or sales thru digital channels may require digital portals with access to customer data requiring a different level of security vs traditional non-public facing applications
- Lack of transparency into budget planning
- Business may not understand the level IT sustainment for regular maintenance, upgrades, tech debt, capacity, and the importance and demand of resource and budget
As a business manager, you must be willing to not only understand the business, but also the implications of IT to the business. This way you can encourage IT to translate their concepts and ideas into your business language. A great practice would be to schedule brief weekly or bi-weekly IT strategy and business alignment meetings to create strategic plans and assess your strategy. On an ongoing basis you must ensure that the business strategy is aligned with the IT strategy.
Get the Right People Involved
One of the differences between organizations that successfully align business with IT, and those that fail; is the role of leadership in making decisions concerning IT. As a business leader, you must be directly involved in decision-making where major IT initiatives are concerned.
Senior business managers have to meet regularly with IT managers to discuss strategies that encompass both functions. It is much easier for employees to get behind a business IT strategy when the executive leadership team is involved as well.
Consider including these people at the table when planning out an IT Strategy:
- Business Unit Leaders
- IT Leaders and Management
- IT Architects
- Industry Analysts/Experts
- Business & IT Practitioners for bottom-up contributions/recommendations
- Financial analyst (Capex, Opex, ROI)
Getting the right people involved also includes getting external IT and business experts involved in your strategy. It is inadvisable to only use in-house talent for business-IT alignment. External parties bring several key aspects to the table, including better expertise, a different perspective, objectivity, access to more resources, and creative approaches for cost reductions.
An IT Consulting company experienced in developing IT strategies can bring forward frameworks and methodologies built on best practices so that your IT Strategy is aligned and covers all the necessary pieces to be successful.
Set Clear Objectives
Not so long ago, IT-related initiatives used to be knee jerk, unclear and lacking in a meaningful direction. Today, an effective business IT plan must include carefully formulated objectives aimed at developing various business capabilities such as product/service innovation, product/service delivery, collaboration across the department, and customer care. You should ensure that these objectives are divided into smaller, inter-related IT and business initiatives which cover different functional areas.
Formulate the objectives such that they can be adapted, accelerated, reconfigured, or cancelled depending on the overall business direction. Having well-defined and realistic objectives will provide both IT and business managers with a unified focus and direction. This will challenge them to think and move beyond current operations to meet the set objectives.
Examples of clear business IT-related objectives would be to “use IT resources to make the company a great place to work” or “improve the customer experience and increase engagement through digital solutions.” When you tailor business and IT initiatives around such concise objectives, it is easier for leaders to track and steer crucial strategic goals over the deployment period of the plan.
- Selection, and implementation of strategic business applications that meet the future state business objectives identified in the business strategy
- Implement workflows and productivity enhancements via technology and processes that allow more work to be accomplished at lower cost
- Integrate applications to avoid rekeying, reduce error rates, and allow for faster processing of business transactions
- Use data in strategic ways to generate sales through analytics, cross selling, manage risk, fraud detection, and provide faster consolidated data to decision makers
- Protect data and privacy at each and every level of it’s use
- Ensure IT capacity stays in alignment with the growth objective of the company
Example from the Government of Canada Information Technology Strategic Plan 2016-2020.
Balance IT Infrastructure Investment and IT Business Strategy
Among the challenges of implementing an effective IT strategy for your business are the different ways that you can apply technology. As such, determining how to allocate your IT budget is key to your business IT strategy.
Gartner divides IT spend into three categories.
- Run – typically business operations.
- Grow – keeping up with the growth of the company.
- Transform – using technology to enhance or change service delivery through automation, IoT, and other cutting-edge technologies.
In this regard, there are a few main components you must consider. The first is how to drive down fixed costs (doing more with less). The second consideration is how to allocate resources towards IT investment opportunities that further your business strategy.
Driving down fixed costs can include initiatives such as outsourcing some or all of your IT, using Application Services Providers (ASPs), shared services, and grid computing. When it comes to IT investment opportunities, there are several types that support and further business strategy. They include:
- Business Improvement – Initiatives that help your business streamline its processes and save resources by eliminating duplicate or unnecessary activities.
- Business-Enabling – Initiatives that transform or extend how your company conducts business. They focus more on high level revenue-growing or top-line aspects of the business.
- Business Opportunities – Experimental small-scale initiatives which test the viability of new technology to support your business.
- Risk Management – This includes investing in disaster recovery planning, IT security, and ensuring measures are in place to keep critical systems and data protected.
- Infrastructure – This includes the hardware, software, communications, and data infrastructure that support overall business operations.
Each type of IT investment detailed above provides a different kind of business-IT value. As such, your strategy must reflect an appropriate balance in all the dimensions of IT investment and technology strategy.
Set Success Metrics
Setting success metrics is central to business and IT alignment as it establishes common goals and binds all parties to the strategy itself. Success metrics provide quantifiable methods for visualizing performance measures and its direction as well as key responsibilities and actions that need to be taken.
Good baseline IT Strategy success metrics include:
- Identified initiatives delivered to the cost delivered to the cost and timeline
- Service levels that are aligned with the importance, priority and level of service
- Financial budget management
- Adoption rates
- User satisfaction
Success metrics will make management and staff strategically aware and able to respond quickly, with a clear understanding of how their actions/inactions affect the achievement of the business-IT alignment strategy.
Apply a Set of Principles that Govern High-Level Strategy Items
This covers high-level decisions like whether you decide whether you are going to be cloud-first, cloud native, or on premise.
Whether you will source work internally or partner with an IT firm, these are some of the IT principles you should decide on before you land on your IT strategy:
- Cloud adoption level (cloud-first or hybrid)
- Buy vs build
- Source externally for need (capacity, niche skills, etc.)
- Appropriate level of security for managing risk, adhere to compliance, and ensure privacy is protected
- Selection and implementation of size appropriate solutions
- Leading-edge functionality for client service applications and mainstream for core systems
- Communication via all channels to keep business and IT aligned by being transparent on the alignment to business goal or objective being achieved thru IT
Overall, effective IT strategy and business strategy formulation and implementation are an integral part of any organization in the long term. While there is no definitive business IT strategy, the aforementioned best practices are some of the crucial success factors for where IT infrastructure and business strategy meet. As a business leader, learning to implement them well ensures the business is well-placed to tackle the dynamic business environment.