Most CIOs would claim to have an IT strategy, but what makes some IT strategies ‘good’ and others ‘bad’? Recently there was a discussion on LinkedIn on this topic. Here are some noteworthy comments from that discussion about what makes a good IT strategy.
‘A great IT strategy that sits on the shelf is useless, and a bad IT strategy that gets executed can be even more harmful.’
Is Strategy Understandable?
“Any strategy needs to be understandable. Top management is not interested in IT because they don’t understand it and always use “old school” management: cost reduction and a little effectiveness.”
Too many CIOs assume that the audience for their IT strategy is the technology team, the architecture team, or IT management. As a result, the strategy has many technology terms and jargon that no one outside IT understands. Smart CIOs know that a key audience for the IT strategy is the board and business leadership team. These CIOs want to know how IT will support the business agenda:
“While the quality of the content is obviously important, the quality of the communication determines whether it becomes a real strategy or just more shelf-ware.”
“However strategy will only be really good if (a) it is expressed in terms which are meaningful to the executive management team of the organisation, (b) they understand and buy into it.”
These comments show that commitment depends on how well the strategy is communicated. As one commentator stated, “simply good strategy is a product that must be sold to management and is successfully sold.”
An Integral Part of the Business Strategy
Most commentators state that good IT strategy is an essential part of the business strategy:
“A good IT strategy is an integrated part of the overall business strategy that supports the strategic direction of the organization; bad IT strategy is either out of sync with the business strategy or not considered in the overall business strategy. If executives believe IT is simply keeping the lights on and no role in improving business execution, there’s not much “strategy” in the IT strategy. Working to prove business value is the best way to mitigate that challenge;”
“If senior business leadership can read it and say, I can see how this will support where we are taking the business, it’s a good strategy. If IT leadership can read it and say, I can see what we how we are going to go about our business and what paths we are going to take in our decision-making, it’s a good strategy.”
Strategy also must expect and adapt to change. As business circumstances change, the strategy needs to adjust:
“A good IT strategy addresses the likely direction of travel for the enterprise and accommodates the range of reasonably plausible business scenarios and aims which are likely to occur.”
A good strategy lays out a roadmap of IT initiatives to support the business strategy. A commentator suggests that instead of referring to the strategy as an “IT strategy”, CIOs should refer to the strategy as a “business strategy with IT initiatives”:
“The IT strategy should align with the business direction’s goals and lay out a road-map of IT initiatives that will help the business meet its goals.”
Effectively Leverage Technology
Good strategy leverages technology for competitive advantage. This advantage can arise from reducing costs, improving customer satisfaction via better products and services, or finding new areas of growth that are enabled by emerging or disruptive technologies:
“Good IT strategy leverages technology for competitive advantage, including understanding how emerging disruptive technologies (such as mobile devices) can impact the business;”
“The point of IT strategy is to turn IT into a strategic asset, to give the organization a competitive advantage over their competition. That is why IT assets are best directed at those processes which corporate strategy suggests place the organization for competitive advantage in the market spaces they work in.”
While a good IT strategy is focussed on the business goals, the strategy is not solely about the business. A good strategy honestly acknowledges the challenges being faced and provides an approach to overcoming them. The IT strategy must also include strategic IT choices about technologies, architectures or ability that have been made by the IT leaders:
“To say that IT strategy is ALL about business is as far from the mark as saying that it’s all about IT. IT is a critical part of business infrastructure like finance and HR, it must address technical decisions particular to the discipline. Where decisions may have a business impact, the specialised discipline needs to make recommendations; such recommendations may be far-reaching enough to qualify as “strategy”. In IT’s case, such decisions might include the role of outsourcing, SaaS and use of the cloud. They are strategic choices with far-reaching impacts;”
“When the resource inputs, that drive the business processes responsible for delivering the competitive outcomes, are identified, the list will likely contain software, infrastructure and IT people. In that case, it seems hard to dismiss technology from the discussion on strategy.”
Strategy is no just about the goals but also about key actions to meet these goals. IT needs to have the ability to execute. Where gaps in capability exist, the IT strategy needs to discuss how capability will be created.
Actionable and Measurable
A good IT strategy must be executable; there must be clear goals and measures of progress. A good IT strategy should include a financial plan to make sure the right level of funding is available to deliver the strategic outcomes:
“The strategy should be measurable; milestones must be defined within the strategy where the effectiveness of the strategy is measured against business goals. The measurement will keep the strategy adaptable, provide visibility to stakeholders, and keep the risks well-managed;”
“Strategy needs to be translated into a financial plan (typically year 0/year 1 financials or targets;”
“From business goals IT must then put together IT goals that help or enable business to meet their aims with SMART measures that will help them know when they are or not achieving them.”
Additionally, there must be joint governance over the strategy to make sure ongoing alignment and participation in key discussions on sourcing and funding.
Richard Rummelt in his book “Good strategy Bad Strategy” says:
“A good strategy has, at the least, three essential components: a diagnosis of the situation, the choice of an overall guiding policy, and the design of coherent action.”
Good IT strategy becomes an part of the business strategy, as it enables the achievement of business goals. IT strategy shows business leaders how IT will help them meet their business goals. IT strategy also guides the technology choices IT leaders need to make and initiatives they need to take to support business performance and growth.
IT strategy is not just about business. It discusses the key IT choices and their impact on business strategy, goals, and finances. Good IT strategies engage business stakeholders in discussions and decisions about technology initiatives, investments, and directions.
Finally, unless the strategy can be implemented, the strategy is only fancy words on a piece of paper. The strategy must be doable and the results measurable. If CIOs have to show that they are supporting the business or generating IT value, the IT strategy must prove how this is being delivered. If the IT strategy cannot show how IT leaders are supporting the business, the IT strategy is a ‘bad’ strategy.