Introduction
IT Strategy is required to define an IT vision and a strategic roadmap for developing IT capabilities that are in line with the corporate strategy, business strategy, business objectives and goals. The focus of developing a formal IT strategy through a top-down analysis is to ensure that IT is investing in the right programs and earning the confidence of business stakeholders. The strategy development is an effort that results in a strategic plan and a set of tactical plans that identify the project portfolio with collective contribution from key business and IT stakeholders and leaders. It is an opportunity that enhances the stakeholders’ understanding on innovation-by-technology as a means to build competitive advantage. The strategy development is an iterative process that gets refined based on the learning from the execution of the plan.
Business IT Challenges
Business IT alignment is possibly the biggest challenge faced by many IT functions. The most fundamental issue is the inability to link IT to enterprise value creation. As IT capabilities are built bottom-up based on stakeholder influence driven by a competitor strategy or a perceived market need, the contribution of IT to enterprise value is not understood. IT capabilities are not determined based on a top-down analysis of long-term corporate strategy and near-term business objectives and goals. As business strategies are realigned to changing economic and market conditions, IT capabilities are not necessarily revisited. Instead, IT investments continue to be based on incremental budgets which make the IT delivery owners incognizant of the enterprise value proposition of their projects. As most IT delivery organizations map to silo business functions faced with shrinking budgets and demanding silo needs, and with the lack of a formal vision of an enterprise IT strategy, the asset efficiency possible to achieve is low resulting in higher IT delivery costs.
The case for IT Strategy
Defining a formal IT Strategy will pave the path for a structure and process orientation in the IT organization to help define, execute, measure and communicate IT value. Without a formal strategy, IT will continue to struggle to earn business confidence. Taking the effort to define a formal strategic plan for IT will help answer the business alignment questions CIOs are challenged with.
c
On one hand IT is faced with the challenge of earning and gaining business confidence in its ability to envision, execute and deliver IT programs from which business can realize immediate and long-term value. On the other hand, business leaders believe that their ability to generate pro-active and intelligent information about all participants in the business model and to automate business processes that deliver high efficiency and to shift from product centricity to customer centricity will earn them a sustainable competitive advantage. The more the business leaders understand what IT organization is capable of and what its vision to align with business is, the more are the chances of business leveraging IT for gaining marketplace competitiveness. The first step in the direction to enable IT as a partner to business stakeholders is performing a situation analysis and getting a grasp of where IT stands relative to a maturity model and defining a strategy and roadmap to achieve a target maturity level.
IT Strategy provides a framework for guiding investment decisions and enables consistency in the decision making process. It emphasizes on business alignment and mandates on business case development by a consistent process. Most importantly, it makes the process transparent and builds partnership oriented working relationship with business earning their trust and confidence. This partnership model when executed successfully can appreciate the value IT is able to deliver and can motivate technology innovation in the organization. Over time, by institutionalizing the alignment and innovation, the organization is bound to gain competitive advantage.
As business processes and operations are increasingly dependent on efficient and effective functioning of IT, a common and consistent understanding of IT value and an assurance on the generation of such IT value under the guidance of a business aligned strategic plan for IT becomes critical. Such a strategic plan can be developed and maintained only with the help of a structured process and framework. This framework should define a maturity model for IT and assess the enterprise’s current maturity level, set a target maturity level and develop a plan to incrementally realize the target maturity level.
The focus of the strategic plan is about doing the right things which are driven by those that are aligned to the strategic business direction and immediate business goals and objectives. Doing things rightly which becomes a question of efficiency in IT delivery capability through robust enterprise architecture and delivery excellence are part of the strategic plan execution.
IT Strategy Maturity Model
The maturity model discussed here is based on CobiT Framework which is a comprehensive IT process and governance framework. The maturity model level ranges from Initial or Ad hoc (1) to Optimized (5), derived from Software Engineering Institute’s maturity model for software development capability. The proposed model does not include ‘Non Existent (0)’ as invariably ad hoc plans are bound to exist in all organizations.
Higher the maturity of the strategic planning capability of the IT organization, higher they are likely to leverage IT for strengthening their competitive advantage. A higher maturity indicates that there are no business alignment issues and there is a formal and repeatable process that ensures the right things are being done by IT. There is transparency in what IT investments are taken up with a rational of why they are taken up. A lower maturity reflects the ad hoc nature of planning as decisions are managed intuitively due to non-existence of a formal strategic plan and lack of any structured guidelines for decision making.
M
Assessment of Maturity Level
The maturity level of strategic IT capability of an organization has to be understood before initiating the planning. One has to understand relative to the above maturity model, where the IT organization stands and decide the required and feasible target level and then draw the strategic and tactical plan to reach the target state from the current state.
The assessment of the maturity level is accomplished by a survey that covers key components of a strategic IT planning. The survey is administered with corporate executives, business leaders and key stakeholders, IT senior leadership and IT managers. The outcome of the assessment will position the maturity level in one of the 5 positions outlined by the maturity model above. The transition to a target maturity level should be achieved incrementally with measures that can facilitate the organizational and cultural changes needed to be successful.
The assessment does not focus on the technology or enterprise architecture maturity level of the firm, but emphasizes on the firm’s ability to define, execute and measure business oriented IT plans. The assessment focuses on doing right things than doing things right. A firm that may be doing things right with high efficiency through leveraging the latest technology could still be at a lower maturity level if they are not doing the right things that are well-aligned with business.
IT Strategy Framework
The overall focus of an IT Strategy development is to build an understanding of the right set of business and IT capabilities that align with the business strategy and translate that understanding through a strategic roadmap plan of business-technology initiatives and a tactical set of portfolio plans that will help materialize the strategic vision.
The IT Strategy is developed using a framework that emphasizes on doing the right things with heavy business stakeholder and leadership participation to transform IT as a business partner. The framework focuses on four major domains of analysis as shown in the picture below, with an overall objective of creating and enhancing enterprise value. The effectiveness of the plan is measured on a set of performance parameters on a regular basis allowing room for detecting early warnings and adjusting the plan accordingly.
Click on the image to navigate to the respective domain frameworks.
The four major disciplines of IT Strategy development as shown in the above picture in line with industry standards based CobiT framework are:
Click the above links to navigate to the approach used by respective frameworks.
Performance Measurement
Appropriate performance measures will be identified to measure the effectiveness of the IT strategy. The protocols related to when such measures will have to be measured and analyzed for deviations from the expected results. Such deviation analysis will identify and incorporate any refinements to the IT Strategy.
Relation to CobiT Framework
The CobiT framework is an IT controls framework that defines 34 processes under four domains of Plan and Organize, Acquire and Implement, Develop and Support, and Monitor and Evaluate. The IT Strategy Framework discussed here is consistent with the scope of the Define strategic IT Plan process under the Plan and Organize domain. The CobiT framework outlines the scope of process and control objectives and what needs to happen while does not specify how the objectives have to be accomplished, which is what the IT Strategy Framework discussed here addresses. Instead of proposing yet another proprietary set of thoughts, our framework is built on the foundational principles of standards based IT control framework CobiT.
The picture provides an overview of CobiT framework and how the IT Strategy Framework discussed in our Point of View links to the CobiT.
Delivery Methodology
The delivery methodology is built on an iterative cycle of three major phases on the four major threads of work which are the domains of IT Strategy we discussed earlier in the framework. The three major phases involve assessing the current state, defining the future state and developing the necessary processes or roadmap plans as relevant. The development phase includes the gap analysis and socializing the new concepts, models, templates with various stakeholders in the organization.
When the strategic and tactical plans are put to practice through their execution in terms of portfolio of projects, any lessons learned and realizations as deviations from expected outcomes will have to feed in back to the strategic plan as adjustments. From this viewpoint, the process of formulating the IT strategy and implementing them work together iteratively.
The delivery methodology outlined in the picture below concentrates on the core activities in different threads or domains of the IT strategy framework and the deliverables that will be created. However, the success of the IT strategy development is highly dependent on how well the definitions, concepts and models we build using the strategic framework are socialized with all the stakeholders of the organization and how well the stakeholders are educated and trained in those to drive home success in the overall execution of the strategy.
