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IT Strategy

 

What is IT Strategy?

Is it:

  • Business and IT alignment?
  • Reducing IT budget and costs?
  • Improving return on investment?
  • Leveraging new IT developments?

When we read discussions or writings on IT strategy, we often see these definitions. While an IT strategy may aim to achieve some or all of these objectives, it is not limited to just one of them. IT strategy is about defining the future direction of IT and its activities to support long-term business objectives.

How to Develop an IT Strategy?

The process of creating an IT strategy begins with understanding the business context. The following key steps outline the approach:

1. Understanding Business Context

IT strategy should align with business goals. Understanding business priorities and corporate strategy is crucial in defining the right IT strategy to support them. Key elements to assess include:

  • Corporate Strategy
  • Mission, Vision, and Values
  • Future Goals
  • Corporate Programs

2. As-Is vs. To-Be Analysis

Assessing the current state of IT is essential to understand its existing capabilities and limitations. This involves an inventory of IT infrastructure (hardware, networks), applications, and the business processes they support. Identifying challenges in meeting current business needs helps highlight shortcomings in the existing IT environment.

The As-Is analysis can be presented using a SWOT framework:

  • Strengths: Existing capabilities, applications, and infrastructure.
  • Weaknesses: Gaps or inefficiencies in the current IT setup.
  • Opportunities: Emerging technologies and products that could enhance IT cost-effectiveness and efficiency.
  • Threats/Challenges: External risks (e.g., competition, industry changes). For example, if competitors have superior online presence, the organization must enhance its digital presence. Similarly, if mobile applications are the future, IT must prepare for mobile-enabled applications and infrastructure upgrades.

After assessing the current IT environment, the desired To-Be state must be defined. This involves addressing current challenges and aligning IT with future business strategies. For example, if an organization plans to expand globally, acquire companies, or open new sales channels, IT must be prepared for increased demand and new requirements.

Gap analysis should be conducted to determine what needs to be done to transition from the As-Is to the To-Be state.

3. Setting IT Objectives and Focus Areas

Based on the As-Is/To-Be analysis and gap assessment, IT objectives should be identified. Areas of focus should be determined to help IT reach its future state.

4. Identifying Projects and Programs

IT objectives are achieved through specific projects and programs. These may include:

  • Implementing a CRM system
  • Upgrading or refreshing hardware
  • Enabling new business processes via mobile applications

5. Estimation and Planning

Once IT objectives and projects are identified, the next step is estimating resources, effort, and costs. The execution plan should include:

  • Major milestones
  • Review checkpoints

6. Optimization and Resource Management

IT strategy should ensure efficient resource utilization. Even if new infrastructure, applications, or channels are required, cost optimization should be a key consideration. Examples include:

  • Cloud-based services (e.g., Infrastructure-as-a-Service, Software-as-a-Service)
  • Virtualization to optimize existing hardware resources

7. Governance

A governance framework must be established to periodically review IT strategy. This ensures the strategy remains aligned with business goals. Governance should include:

  • Risk Management
  • Progress tracking of projects and programs
  • Reviewing IT objectives
  • Assessing strategy effectiveness

Adjustments can be made based on review findings to ensure continued relevance and effectiveness.

8. Communication Strategy

For an IT strategy to succeed, it must be effectively communicated to stakeholders. Engaging stakeholders ensures their support and involvement. Key considerations for communication include:

  • Target Audience: Executive committee, IT management, IT teams, business users
  • Communication Methods: Meetings, teleconferences, town hall sessions
  • Communication Frequency: Some updates may be one-time introductions, while others (e.g., progress updates) may be periodic (monthly, quarterly, or semi-annually)

Key Elements of an IT Strategy

An effective IT strategy typically includes:

  • Business Objectives
  • IT Objectives
  • Strategic Initiatives (What to do and how)
  • Programs and Projects
  • Expected Benefits
  • Execution Plan
  • As-Is and To-Be Architectures (Functional and Physical)
  • Resource Plan
  • Organizational Model
  • Budget (CapEx/OpEx)
  • Governance Framework

Common Pitfalls in IT Strategy Development

Several common mistakes can lead to IT strategy failure:

  1. Lack of Alignment with Business Strategy – IT strategy should support long-term business objectives.
  2. Confusing Planning with Strategy – A strategy defines a long-term vision, while planning focuses on execution.
  3. Creating Strategy for the Sake of Documentation – Strategy should drive real actions, not just exist as a document.
  4. Unrealistic Goals – Goals should be achievable and based on real business needs.
  5. Assuming Strategy Alone Solves All Problems – Factors like skills, culture, and accountability must also be addressed.
  6. Lack of Time-Bound Planning and Success Metrics – A strategy without milestones and KPIs is ineffective.
  7. Unclear Ownership and Accountability – Clear roles and responsibilities must be assigned.
  8. Treating Strategy as a Static Document – IT strategy should be reviewed and updated regularly to remain relevant.

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