IT Strategy Process

THE IT STRATEGY PROCESS IS COMPLEX

An internet search will bring up numerous articles that outline “five simple steps” to developing an IT strategy. Although the headlines may not technically be wrong, the steps cannot be executed without scoping, design of the (often complex) analysis processes, and, most importantly, gaining a clear understanding of the IT strategy process objectives. I honestly don’t understand why major websites like CIO.com lend their name to articles like these.

Nevertheless, when looking at major consulting organizations like Deloitte, Boston, and PA, they all have excellent strategy consultants, but even these companies don’t publicly share how they work. I think it is partly due to proprietary processes, but mostly because it is a very difficult topic to write decisively about. It is much easier to put the IT strategy processes into a broad, high-level perspective that sounds great in a business context.

However, there are a number of things you can do to increase your chances of success.

EXAMPLE IT STRATEGY PROCESS (TYPE 1)

In the remainder of this blog post, I elaborate on some of the main points to consider when creating an IT strategy process that aims to create common direction, frames, and identity (Type 1 of the above list).

Triggers may include:

• Changes in business, organization, staffing, customers, technology
• Pains, for example, regarding collaboration (internally or towards the business)
• Unclear governance and areas of responsibility (internally or towards the business)
• A lack of updated strategy

Strategic drivers to clarify and analyze in the process:

• Business strategy
• Financials (possibilities/restrictions)
• Flexibility (needs in business and IT)
• Competences (limitations, opportunities, challenges)
• Security (measures, needs, and trends)
• Technology (opportunities, trends, already-made decisions (frames))
• Market (changes, trends, effect on business, effect on IT)
• Legal (compliance, gaps, changes in legislation, trends)

Aims of the strategy process:

• Frame the identity and “DNA” of IT
• Define the governance, overlaps, and collaborations points of the business
• Analyze and establish common knowledge of the current state
• Define the future state of IT – and how to get there

Involvement:

• Involvement in the process varies a lot, depending on the organizational culture. As a minimum, IT management and key business stakeholders should be involved. The less strategy involvement, the more implementation and iterations afterwards.
• Involvement may include external parties such as key suppliers or customers.

IT strategy process

The process varies as much as there are different organizations and different leaders. However, the headlines’ flow somewhat follows the plan below.

STEP 0: CLARIFY VALUE AND OBJECTIVES

Clarify value to be generated from the IT strategy process and break down scope, aims, involvement, and desired outcomes.

Although this is just one line, it is important for the success of the strategy to be quite concrete regarding this, for example, supported by defining metrics for success.

STEP 1: ASSESS THE SITUATION

High-level analysis and input for IT strategy process design. Typically through workshop(s) with management and key stakeholders.

STEP 2: PERFORM ADEQUATE ANALYSIS

You can analyze forever; the key is to analyze to a relevant and adequate extent.

Typically, this involves the analysis of current plans and strategies, budgets, a current project portfolio, and numerous interviews with groups such as business management, IT management, key stakeholders in business and IT (and sometimes even key stakeholders outside of the organization).

Also, the existing key principles and operating model must be uncovered.

STEP 3: ENSURE COMMON UNDERSTANDING

This situation often occurs: Everyone involved thinks they all have the same picture of the situation – but the reality is that this is rarely the case.

A colleague of mine used to say, “There’s nothing like data that can kill a good discussion.”

The analysis is the data.

The results are to be documented in a concise manner that can be communicated and read independently. Furthermore, the strategy process must ensure that the analysis results are used to secure a common understanding/picture across all relevant stakeholders that participate in the process.

I have often encountered that various stakeholders have vastly different pictures and ideas of the state of things. In other words, when the observations/interpretation of symptoms are different, so is the possible diagnosis, and it is impossible to get a consensus for the planned treatment.

Typically, the analysis for this kind of IT strategy output can be summed up in the following headlines:

• Description of current state
• Pains
• Needs
• Opportunities
• Strategic drivers

STEP 4: SEEK CHALLENGE AND INSPIRATION

Based on the current state, it is often well worth it to be shaken up and get some outside inspiration.

Be disrupted and challenged in your thinking and perception!

This can, for example, come via a session with companies which overlap on processes or technology, or where businesses complement, but do not compete. Fashion retail is not a rival of retail banking, but mutual inspiration there is certainly a possibility. Inspiration can be obtained on creating breathing ground for innovation across cultures by masters of mediation. Companies can also get together to learn about the latest research at a university… and much more.

The possibilities for inspiration are endless, but remember – it is not mandatory.

STEP 5: FRAMES AND DIRECTION

Where we are going must be aligned with how we are getting there – and vice versa.

How to approach this varies a lot from organization to organization. It depends upon the given situation, and it is always an interactive process to find the right match.

However, an approach could look like this:

(A) Clarify current frames and guiding policies of the organization (the important and relevant ones only, of course).

(B) Determine the future desired state (you may call it the vision). Some like this to be very high-reaching and ambitious. I vote for ambitious, but definitely realizable. If the future state is not rooted in reality, there is a very high risk that the strategy will look good on paper, but will contain fluff and be difficult to implement.

A sanity check can be to develop OKRs for the future state. OKR = Objectives and Key Results. The system is implemented as a management system in Google, and is recently elaborated in the book Measure What Matters by John Doerr. To gain a quick overview, see this blog post or watch Doerr’s TED Talk (10 min).

(C) Develop guiding policies for reaching the desired state. Basically, this is framing the execution and direction so that it is clear (at a high level) what is within the boundaries of the strategy and how do we approach it — especially how we utilize expertise, technology, innovation, organization, geography, etc. to “win” by playing according to the strategy.
This sounds simple, but it often takes several iterations to get right.
When done right, the guiding policies “become” the strategy; i.e., they will be the reference points from the entire organization working commonly towards the future state.

(D) Develop themes/tracks to reach the future desired state.
Here we are getting closer to execution. Which areas need work in order to lead us to the future state. Do the guiding principles support the themes? There need not be an 1:1 overlap or complete coverage. But the direction and execution of all themes must be supported by at least one guiding policy.
A further step is to ensure the strategic drivers, pains, needs, etc. are covered by the themes.

(E) Create goals for each theme.
Verify they correlate with the overall desired future state, and consider developing OKR(s) for each theme to test that it all makes sense.

STEP 6: ROADMAP, BUDGET AND METRICS

The steps above yield the playing field of the strategy – and now comes the easier part: Develop a high-level roadmap, and identify and prioritize coherent actions/projects that will lead towards the future states within each theme.

Ensure transparency regarding budget, and design clear metrics for success and as a basis for follow-up pr. theme.

It may be relevant to add more details to the immediate projects – but at this state, that should be straightforward.

STEP 7: FINALIZE DOCUMENTATION AND VISUALS

Although documentation is integral to the above steps, the last part of the process typically includes preparation of the IT strategy pitch to the business and organization. This may include compiling slides covering key parts of the strategy, and – if at all possible – a one-pager highlighting the strategy.

If the strategy cannot fit into one or two visual pages, you need some rework there.

STEP 8: IMPLEMENTATION AND FOLLOW-UP

From the entire history of both computing and management consulting, one thing is clear: Implementation (or lack thereof) can kill even the best strategies, initiatives, or technologies.

Design a dedicated process for the implementation of this specific IT strategy, including:

• A process for follow-up, both high level, and within the organization
• Governance that covers how to incorporate the adjustments in the strategy, which may become obvious when implementation starts. (Note: If the guiding policies are spot-on, strong, and relevant, then they tend to stay fixed over time, although the other content may change)

For strategy implementation to succeed, managers must be able to buy in on the strategy, and clearly communicate the guiding principles, goals and “local impact” to the employees – such as what’s in it for me? for us? and why does it matter what I do?

I find that implementation plans gain the highest degree of success if they become quite concrete, and that managers take their responsibility for implementation to the top of their agenda. I recommend assisting managers in understanding the strategy in-depth, giving them adequate sparring with items such as the creation of OKRs and concrete plans for the themes that affect their departments.

PERSPECTIVE

The above process outlines an example of eight steps for the “Type 1” IT strategy – namely, the “Common frames, direction, and identity”. As mentioned, it is really an iterative process, and no two organizations are the same – and thus, the process always varies.

I will share perspectives on how to approach the process of the other types of IT strategies in later blog posts.