IT Strategic Planning that Drives Business Success

By Gartner

Only 47% of enterprises meet strategy objectives, but those that do pursue the following practices to create a strategy and strategic plan and then execute on it.

Create an IT Strategy

An effective IT strategy details how IT will help the business meet its objectives.

A good business strategy clearly defines what success looks like for the enterprise and what priorities the enterprise will set to achieve it. A good IT strategy, in turn, defines how information and technology will help the business meet its strategic objectives. When there is a close relationship between an enterprise’s business strategy and its IT strategy, there is a greater chance that it will realize its strategic ambition.

To create this close relationship, IT executives engaged in strategic planning must connect each action IT will take to specific elements of the business strategy. CIOs do this by focusing the IT strategy on three key areas:

• Context. The internal and external factors that shape the operating environment and the opportunities and threats these factors create for IT. Context includes business and technology factors.
• Direction. The enterprise’s business objectives, goals and strategies, and the strategic principles that will be used to ensure IT is aligned with them.
• Actions. The IT actions required to move the enterprise toward its strategic direction, and the business outcome metrics that will be used to monitor the impact of these actions.

Define the IT actions that will contribute to enterprise strategic objectives by first identifying the capabilities that the business needs to pursue its strategy and assess those capabilities for gaps. Focus strategic IT actions on addressing those gaps.

In organizations that lack clarity in its business objectives, or have set transient objectives, IT strategy could focus on a base set of business capabilities. These should be either mandatory, urgent, foundational or common to a wide range of scenarios, as these will always be required. Focusing on them will therefore make the IT strategy more resilient to change.

Cultivate Commitment

Get commitment for IT from stakeholders by telling inspiring stories.

Effective communication about strategy takes stakeholders through a series of stages, from understanding, to support and then commitment. The levels are cumulative — without understanding, there will be no support and without support, there will be no commitment. To get to commitment, IT leaders must inspire, excite and motivate their business peers and other stakeholders in IT about the value IT can deliver for the business.

The IT strategy document — while essential for capturing the details and logic used by IT executives in strategic planning — is not the most effective communication tool. Instead, IT leaders should structure strategy communications around stories that are relatable, engaging and memorable. Different stories will inspire, excite and motivate different stakeholder groups. For example, the CFO will be engaged by different stories than a functional business leader.

Keep in mind that IT leaders must communicate the strategy and cultivate commitment not just with senior executives but also sideways and down in the organization.

Use these five questions to tailor communication for different audiences:

1. Who am I speaking with?
2. What’s important to them?
3. What’s my goal for this communication?
4. What story do I need to tell to achieve my goal?
5. What’s the best medium(s) to deliver my message?

Craft an IT Strategic Plan

Connect strategy to execution with a plan that specifies the projects and initiatives.

The IT strategy creates a common understanding of the actions IT will take to support enterprise goals. A strategic plan bridges the gap between the strategy and execution by identifying the roadmap of initiatives and the portfolio of investments required to achieve the objectives defined in the strategy.

The key differences between the strategy and the strategic plan are that the strategy defines the long-term vision for IT, whereas the IT strategic plan defines how IT will realize that strategic vision in the midterm. The strategic plan includes a roadmap of necessary initiatives that should unfold over a period of 12 to 24 months.

As with the strategy itself, IT executives must clearly align each initiative to the strategic objectives defined in the business strategy. This linkage ensures that IT clearly defines accountability for each element of the strategy and can cascade the plan to teams and individuals.

At the next level of detail, IT must develop individual operational plans that define the projects, programs and products that are required in the short term to deliver the initiatives identified in the strategic plans. Operational plans normally cover a period of six to 12 months.

Breaking down the strategy in this way allows IT to deploy teams and resources to deliver successful execution. It also helps IT to quickly identify the IT initiatives and projects that will need to change or recalibrate if the enterprise changes the high-level strategy.

Keep Strategy on Track

Establish a continual process to keep the strategy on track.

Increasing volatility and rates of change mean that both the strategy and its execution can go off track or become outdated. Delays in spotting and responding to change increase the risk of the enterprise failing to realize strategic objectives.

To prevent those delays, conduct regular strategy reviews as a part of a continual strategy process. To provide insights for these reviews, CIOs should establish two types of scanning — context and execution.

Context scanning primarily focuses outside the enterprise to understand how the environment in which it is operating might be changing. This may include looking at factors such as the economy, regulation, competitor behavior, customer preferences and technology trends, all of which can shape the enterprise’s business context.

Execution scanning focuses inside the enterprise to understand whether the strategy is being executed correctly and whether it is having the expected impact on the enterprise’s performance. Metrics defined for each of the strategic planning horizons provide the main source of insights for execution scanning.

Use the following four questions to review strategy and execution performance:

1 Is the strategy still valid?

There may have been a change in the business context that impacts or invalidates part or all of the strategy. If the answer to this question is no, then the strategy will need to be adjusted.

2 Are the execution plans still valid?

There may have been a change in the business context that impacts how the strategy is being executed — for example, context changes may require execution to accelerate or be delayed. If the answer to this question is no, then strategic and operational plans will need to be adjusted.

3 Is the strategy working?

As a strategy is being executed, it should have an impact on the enterprise’s performance. If this impact is not happening or is not in line with expectations, it could indicate that the strategy is not working. If the answer to this question is no, then the strategy will need to be adjusted.

4 Are the plans being executed correctly?

The strategic and operational plans will identify milestones that need to be met for success. If they are not, then it is likely that the plans are not being executed correctly. A no answer to this question will require adjustments to the strategic and operational plans to resolve the execution problems.

Align the Operating Model

Ensure the IT operating model is set up to successfully deliver the IT strategy.

An IT operating model (ITOM) defines how an IT organization delivers on its value proposition — that is, how IT contributes to achieving the enterprise’s strategic objectives. More simply, it shows “how things get done” and how value is created. CIOs must methodically design and explicitly document and communicate the target operating model to ensure IT delivers the expected value.

There are nine core components to an ITOM. These must work in synchronicity to achieve strategic outcomes and deliver on their value propositions. These components collectively make a system and have interdependencies. If the CIO adjusts one component, there will likely be a ripple effect across one or more components.

In practice, IT organizations focus their ITOM on one of three potential outcomes, depending on the business context, model, strategy, and the role of IT within the enterprise or business unit where it operates. The three potential outcomes are:

1. Enabling IT efficiency
2. Enhancing the business performance
3. Transforming the business by creating enterprisewide competitive advantage or growth

All three operating models can exist in the same IT organization or within multiple IT organizations across the enterprise. For example, an IT organization within a business unit or agency may have a transformation objective, while a global or central IT organization within the same enterprise may focus on enhancing overall business performance.

Each successive model builds on the capabilities of the operating model that came before it. As such, if an IT organization decides to transition to a different operating model (such as from Model 1 to Model 2), it should consider that the move:

• Requires a higher level of IT maturity from both the IT organization and the business
• Delivers higher levels of strategic value to the business
• Requires higher levels of engagement with the business stakeholders

CIOs must choose the most appropriate ITOM for each IT organization in the enterprise, based on the business expectations and in partnership with the senior leadership team. Choosing the wrong ITOM or misconfiguring the nine components could result in strategy execution failure. For example, if the ITOM’s expected outcome is enhancing business performance, but the talent is configured for IT efficiency, IT will not be able to provide the proactive technology leadership necessary to achieve the focus outcome. Alternatively, if the ITOM’s expected outcome is transforming the business, but governance and decision rights are focused on traditional control systems, the strategic plan execution will suffer.

Original Post on gartner.com