As recently as fifteen years ago, IT and digitalization were synonymous with automatization. Top leaders and the business made demands and the IT department realized them. Processes were digitized, made more efficient and we talked about ‘business-driven technology development’.
A lot has happened since then. Today we talk about ‘technology-driven business development’. Digitalization has a greater role and it is constantly growing. In many businesses it represents the core service. This has made many top leaders realize that the digital and business strategies should and must be integrated. It is not possible to develop a business strategy without keeping an eye on the IT strategy and vice versa.
That may sound good, but there is still a big problem.
If the business strategy, IT strategy and digital strategy are to be coherent, they must be developed in symbiosis, and this requires that IT is directly involved in the business strategic development work.
And that does not happen as often as it should.
The problem arises when there is not a deep understanding of technology nor digital competencies among the top leadership or boards of businesses
“When IT is not involved in the development of the business strategy, the result is that the business strategy is developed without the skills needed to rise to the challenge
It is still common practice in many digital businesses that the top leadership develops a business strategy that they then let IT translate into a coherent IT strategy.
Three consequences of not including IT competencies in the development of the business strategy
There are at least three major consequences associated with not ensuring the participation of people with sufficient IT skills as real collaborators in the development of the company’s business strategy.
- You are not able to take advantage of the creativity contributed by someone with a solid understanding of the options that technology and digitalization can offer.
- You end up making business strategic and business critical decisions related to IT on an uninformed basis. This means there is a risk that the strategy is off target, or becomes unnecessarily expensive, complicated or has to be rolled back.
- You do not put into force the technological opportunities or the knowledge that can give the business an edge in the market.
A symbiosis between IT and business create value
At IT ADVISORY it is our position and recommendation that IT strategy should be prepared at the same time as, and in full coordination with, the general business strategy. It should be a true co-creation.
It is on the strength of this mutual cooperation between IT and the business that there is an exchange of ideas between parties of equal standing. Joint ownership makes the business strategy sharper and more realistic as it is based on actual knowledge of digital and technological opportunities and conditions in-house and in the market.
When the IT strategy is created in parallel with the business strategy, long-term technical and strategic decisions can be made to support the aims of the business, while utilizing the company’s existing technology and planned investments. This maximizes value for the business.
A good business strategy is created in a symbiosis in which top leadership contributes business expertise and IT contributes the technological expertise.
Involvement from IT has to cover competencies within IT leadership and strategy, architecture, technological insight and prospects, knowledge of existing business systems, data, security and more. These skills ensure that the business strategy is supported by a solid understanding of the company’s technological foundation, as well as insight into what is realistic with in the framework, goals and visions set by top leadership.
In the development of the business strategy, it is usually relevant to involve the CIO, CDO a senior enterprise architect and/or an independent strategic advisor (such as IT ADVISORY). In order to be able to contribute long-term solutions, it is essential that those involved from IT have great insight into the market and the technological development.
This may seem like common knowledge, but we often see that the complexity of system integrations or changes in architecture are not fully understood from the start. This can set off an avalanche of poor business decisions that cannot be supported technologically. This leads to mutual frustrations, conflicts and a lot of wasted resources. In the same way, obvious technological breakthroughs are not put into action due to a lack of shared understanding.
Three steps to a business and IT strategy in symbiosis
This is a call for better strategic cooperation between the business and IT and for creating business and IT strategies simultaneously.
What can be done in common business situations in which the top leadership develops a business strategy without involving IT? How is it possible to create value-generating synergy if the strategies are disconnected?
At IT ADVISORY, when we help organizations coordinate efficiently between business strategy and IT strategy our focus is primarily on the three steps listed below.
About the authors
Kristian Sørensen is CEO & Sr. Principal at IT ADVISORY. As a trusted management advisor and IT strategy expert, Kristian helps organizations set structure and direction for strategic initiatives and projects. Reach out to him at firstname.lastname@example.org.
Claus Paulsen is Ass. Partner at IT ADVISORY. Claus advises companies and organizations in IT and digital strategic development and implementation. In addition, Claus has expertise in due diligence assessments of IT as well as mergers and acquisitions. Reach out to him at email@example.com