Strategic Planning

Information Technology Strategic Planning

Edward K. Hong
IT Consultant

An IT strategic plan based on a shared vision with stakeholders is critical to any successful enterprise. Three building blocks are key to developing this plan.

he major driving force behind any business today is change. From retail to manufacturing to service industries, the need to manage change effectively is the single most critical factor for any organizations success. New technologies, more sophisticated consumers, new alliances, radical shifts in buying patterns, global competitionthese and other factors shape todays business climate, and the pace of change is quickening. IT solutions must also keep pace, so that they remain aligned with business needs. Understanding an enterprises IT requirements and providing innovative IT solutions are essential to keeping a business flourishing. An IT strategy based on a shared vision with stakeholders is critical to any successful enterprise and requires continual updating. This strategy must address business drivers; cost-effective IT solutions to help improve business performance; identification of a target IT environment to achieve the enterprises vision and goals;

alignment with the business plan and thus satisfaction of client and senior management expectations; specific management processes and practices to establish or improve them; identification of the most cost-effective way to integrate these processes; opportunity areas where IT can help the business gain a competitive edge; and identification of actions needed immediately and in the future. To address these issues and ensure that the IT strategic plan aligns with business needs, three building blocks are necessary.

Building Blocks to Strategic Planning

An IT strategic plan must ensure that business needs are the driving force for technology solutions. The plan must keep in mind business productivity and effectiveness, cost reductions, revenue generation, and customer satisfaction. The three building blocks for developing a technology strategy (see Figure 1) are as follows:

IT Pro November/December 2009

Published by the IEEE Computer Society

1520-9202/09/$26.00 2009 IEEE

Business and IT alignment strategies, IT assessment. What are the issues, and IT needs problems, and requirements that IT Initiatives planning must address to deliver outstanding service to its customers? Issues and Year 3 Target systems: strategic applications problems are critical items that reYear 2 programs infrastructure strategic quire fixing and for which a long technology Year 1 programs strategic term strategy must plan. Internal IT assessment programs IT requirements are items that reGaps and issues: Current Initiatives must be balanced to address quire investments in technology to applications environment current issues and gaps technology positioning for future systems improve service delivery, including management systems strategic applications service delivery new hardware and software as well quality as management process improvements. Business and IT alignment. Under- Figure 1. The three building blocks of strategic planning. The standing business drivers, manage- strategic-planning approach ensures that IT initiatives and projects ment expectations, and customer add value to business operations and performance. requirements for IT solutions is important. IT goals and strategies must align with to your customers. Then, decide how important business needs. As the business environment these elements are to the organization and how changes, the IT strategy must also change so effectively the organization currently performs that it always aligns with the business. them. The gap between importance and effec Initiatives planning. Once issues and business retiveness should help determine the priority for quirements are understood, the next step is to correcting some of the issues so that the imporformulate initiatives to address needs. Because tance and effectiveness ratings converge. Table 1 requirements will exceed available resources, it is an example of key elements in the three areas will be necessary to implement highest priorplus an assessment from your customers. You ity initiatives first. Completing these initiatives should include or exclude items on the basis of could take a few years, so the plan must specify your organizations structure. when to start and complete each one. Each iniAll managers in the organization should partiative might require multiple project completicipate in taking the self-assessment. Once the tions during its lifetime. results are tabulated, the largest gaps (accumulated to one decimal place) will show the priorThe sequence for executing these building blocks ity of the items to focus on. These items become is important. First, perform an IT assessment to initiatives, or projects within an initiative, during understand current capabilities. Then, ensure the initiative-planning step. that business needs and IT strategies are aligned. Finally, determine the initiatives necessary to deBusiness and IT Alignment liver value-added IT solutions. The IT strategic plan must reflect business needs. Therefore, aligning the IT strategy with the business plan is essential to helping the busiIT Assessment ness achieve its goals through IT solutions. BeTo understand whether youre delivering quality fore defining initiatives and projects, you must services to your users, you should perform a selfdetermine what the business needs are. A scan assessment of your capabilities. This assessment of available technologies will identify possible soshould encompass three major areas: strategy and lutions for business requirements. Once youve planning, application development, and systems identified the business elements, IT must develmanagement. In addition, you should conduct a op a model of its businessnamely, its mission, customer survey to gauge whether your customers goals, and critical success factorsso that they perceive you the same way you perceive yourself. align with the business elements. The following A very simple, effective way to conduct a selfsections give examples of the elements needed to assessment is to determine the critical elements accomplish this business and IT alignment. in these three areas for delivering good service Business goals,

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Table 1. IT self-assessment table example.
Importance Capability Not effective 1 2 X X X X X 3 4 Very effective 5

Low IT self-assessment Strategy and planning We have a very effective strategic-planning process. We prioritize our work on the basis of value to the business. We can obtain funding for discretionary projects as long as there is a positive rOi. Application development We deliver projects on schedule, within budget, and with satisfied customers. We have an effective project management process that ensures customer participation. We have an effective process to accept and provide feedback regarding customer service requests. Systems management We have service-level agreements (Slas) based on quality of service to our customers. We deliver services that meet or exceed our Slas. We respond effectively to customer issues and service requests. We plan hardware and software upgrades on the basis of capacity and performance projections. Customer survey Our customers are satisfied with our services (80% positive). Our customers are satisfied with our ability to help them improve their productivity. Our customers think it communicates well with them. Our customers believe were proactive in identifying it solutions for their operations. 1 2 3

High 4 X 5

X X X

X X X

X X X X X

X X X

X X X X X

X X

Business Drivers
From my experience in working with different companies, I list here some of the common business drivers and their implications for IT solutions. Not all of these drivers will apply to your companys situation, of course, but this list can provide a base to work from as your business tries to define its critical elements. Industry consolidation. A company must be positioned to assimilate and integrate acquired companies IT infrastructures without affecting business users productivity. Your company might need to extend its business systems to accommodate new users and integrate acquired companies applications into the existing IT environment.

Shortage of critical skills. Demand for talented business and IT workers normally exceeds supply. You must capture IT and business knowledge and distribute it in a reusable form so that new staff can become productive as soon as possible. Regulatory uncertainties. Government and industry policy changes affect internal operating procedures and reporting requirements. Architecting an environment for maximum flexibility is necessary so that your company can assimilate mandatory changes without major rework of the computing infrastructure and applications. Product time to market. Getting products and services to the marketplace first can give your company a tremendous advantage in gaining

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market share. Providing technology solutions to shorten the product development cycle will get products to market more quickly than those of the competition. Competition. Todays global business environment is dynamic and highly competitive, forcing companies to be more creative in innovating products and in taking a more entrepreneurial approach to business. IT must build solutions to leapfrog competitive products and services and to provide knowledge workers with the right information at the right time to make informed business decisions quickly. Quality products and services. Delivering quality products and services to customers is critical to maintaining customer loyalty. The cost of correcting quality problems after delivery directly affects a companys bottom-line profit. IT must provide systems to detect quality issues before products are delivered to customers, thus reducing the cost of quality. Operational cost reduction. Reducing operational costs is critical to a companys profitability. IT will need to quickly and accurately develop new applications to support changes in business processes. Systems availability, performance, and access to the right information on demand are critical to reducing errors and delays in business operations. Customer loyalty. Keeping your customers is critical to maintaining and increasing your companys market share and profitability. When customers are satisfied with products and services, a company can market complementary products and services. IT must provide capabilities for mining customer data to understand customer satisfaction, buying patterns, and propensity to buy, thereby increasing revenue. Revenue growth. Growing business revenue is crucial for business health. Its not enough to just reduce operational cost to improve profits; the business must show new, innovative ways to increase revenue. IT needs to help the business speed up its product development cycle to get products to market ahead of the competition. In addition, innovative uses of technology, such

as e-commerce, can reduce errors and business process delays in closing customer orders.

Management and Customer Expectations

Often, an IT organization isnt sure of what customers and management expect. Therefore, IT should explicitly solicit their expectations. Here, I discuss some of the expectations Ive accumulated over the years. You can use these expectations as a starter set to accelerate the interview process. Customer focus. Foster proactive relationships with customers to ensure that IT is considered a de facto member of each business units team. IT must clearly understand all customer support requirements and routinely exceed customer expectations in terms of project delivery, quality, and systems reliability, performance, and availability.

Foster proactive relationships with customers to ensure that IT is considered a de facto member of each business units team.
Alignment with business. The IT strategy must align with business directions and priorities so that IT solutions contribute to the enterprises success. This means developing the IT strategy in collaboration with business units so that IT solutions can improve business performance. Performance. The IT organization must establish the right measurements so that it can consistently meet or exceed service-level goals, including system availability, systems performance, project delivery, and financial budgets. Innovation. IT should innovatively use technology to improve business performance. Working with business units, IT management should recommend technology solutions to address revenue generation, profitability, cycle time reductions, and staff productivity. Responsiveness to change. The IT organization must be responsive and adaptive to change.

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It must be able to integrate acquired companies information systems into its business systems infrastructure without completely rearchitecting its environment. This means investing in an infrastructure that gives the enterprise the flexibility to support a broad range of heterogeneous information technologies necessary to meet business objectives. Cost-effectiveness. The IT organization must justify all expenditures, showing a realistic ROI in IT infrastructure and business solutions. IT must also improve its own productivity by minimizing labor-intensive activities and eliminating errors in its delivery process. IT cost must be competitive to avoid the threat of business units outsourcing their technology solutions to outside vendors.

can deliver them on time and within budget and satisfy business expectations.

Available Technologies
IT can innovatively use available technologies to provide solutions to many of the challenges in the business units. Obtaining a good grasp of these technologies and using them can cut the cycle time in providing solutions to user needs. E-commerce. Electronic communications with customers can increase revenue, improve customer loyalty, and shorten the operational process. In addition, many e-commerce applications, such as order entry and status checking, can improve internal business productivity by offloading work to customers. Business to business. Your company must be able to conduct business online with your suppliers and business partners to speed up the value chain. Therefore, you must continually find better ways to exchange information with the extended enterprise because vendors and suppliers are critical to reducing cycle time. Integration. The integration and interoperability of applications built on multivendor platforms or multiple database environments are the norm in todays environment. Integration and reuse of legacy functions and data must be easy so that you can avoid incurring expenses to redevelop these functions and data. Mobile computing. Providing any-time online information support to employees, regardless of where theyre located, is critical for global organizations. Employees become more productive because they can access information systems without being connected to telephone land lines or a specific IT workers office location. Telecommuting. Todays technology makes it feasible for employees to work anywhere. By using advanced communication technologies, virtual teams can be effective even if team members reside in different continents and time zones. Predictive analysis. The company should use predictive-analysis techniques and tools so that business units can understand trends on the basis

IT must be proactive in identifying potential problem areas and correct them before they impact customer productivity.
Access to information. The IT organization must give business users access to information on demand in user-defined formats. Information should be integrated so that all relevant information in a given subject area is available for analysis and reporting when required. Security. The IT organization must provide secure access to its infrastructure and business systems. It must prevent penetration into the IT environment by unauthorized personnel, including internal and external individuals with malicious intent. Quality. The IT organization must strive to deliver error-free results to its customers. It must establish the structure and processes necessary to manage and control the IT environment so that changes to the environment dont affect customers. IT must be proactive in identifying potential problem areas and correct them before they impact customer productivity. Finally, IT must plan, track, and control its projects so that it

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of historical information. This enables proactive action to prevent problems from impacting the business and to improve business performance. Component-based development. The pressure to improve delivery of IT commitments will continue to grow as the pace of business changes accelerate. Organizations must position themselves to meet this challenge. One way to do this is to shorten the application delivery cycle through reuse of components in building applications. Knowledge reuse. In todays IT world, expertise is often in short supply. Consequently, you need to capture expert knowledge in the organization and leverage it by making it readily available and comprehensible to less-experienced personnel. Once captured, this knowledge can minimize the pressure to find skilled personnel, especially when experts leave the organization. Security. With public access to some of the companys systems, extra precaution is necessary to prevent inadvertent access to confidential data. In addition, viruses, worms, and hackers are constant threats to the security of IT systems.

ing to understand the customers business and priorities through joint planning and close collaboration on initiatives. It must also act as the catalyst in providing innovative technology solutions to solve business issues. Second, align with business needs. IT must understand business strategic goals and initiatives so that technology strategies and initiatives can help achieve business goals. Technology investments must deliver added-value results by improving business performance. Third, leverage technology. IT must strive to be the go to organization for technology issues within the business. It must achieve breadth and depth in its technology skills set so that there will be few questions IT cant answer. By using advanced or existing technology, IT must design innovative ways to improve productivity and business performance.

The IT organizations purpose is to support the enterprises business plans and meet or exceed customer expectations.
Fourth, maintain industry-recognized processes. IT must continually refine and improve infrastructure and project management processes. Processes require continuous improvement because the environment in which they operate is constantly changing. Environmental factors such as customers, infrastructure, governance, automation tools, adherence issues, and organizational reporting influence processes. Fifth, ensure service quality and continuity. Ensure that IT services are responsive, reliable, stable, and available and that they meet or exceed customer performance expectations. IT must proactively identify potential problems through metrics and trends before they impact service to customers. IT must also protect and recover computer assets from malicious destruction and from unforeseen disasters. Critical success factors. CSFs influence whether IT can achieve its stated goals. CSFs are normally point-in-time items, meaning they can

IT Business Model
The IT business model consists of ITs mission, goals, and critical success factors, which are based on business drivers, technology drivers, and customer and management expectations. In addition to addressing technology issues and solutions, goals should also address how to interface and interact with stakeholders. Mission. The IT organizations purpose is to support the enterprises business plans and meet or exceed customer expectations. IT must work collaboratively with business units to help achieve business goals. Therefore, the mission statement should say something like, Improve business performance through innovative IT solutions. Goals. A companys goals are the broad, longterm results it wishes to achieve, to support its mission. Examples of goals that the entire IT organization should buy into include the following. First, ensure customer focus. IT must recognize the importance of the voice of the customer by listening and communicating effectively and try-

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IT strategic plan Mission The IT organization exists to deliver high-value IT solutions and support to customers. Customer expectations relevant service leveraging of technology business alignment proactive communications quality support technical skills cost-effectiveness acceptable performance project delivery Management expectations customer focus alignment with business member-centric solutions performance metrics innovation responsiveness to change cost-effectiveness secured assets quality Goals 1. Ensure customer focus. 2. Align with business needs. 3. Leverage technology. 4. Maintain industryrecognized processes. 5. Ensure service quality and continuity. Business model Critical success factors customer satisfaction funding culture change open communication and respect continuous process improvement buy-in to clearly articulated stragegy Strategic initiatives Customized support Provide support to customers on the basis of their technology maturity and support requirementsfrom minimal to full support. Application sharing Take best of breed applications developed by subgroups, generalize them, and make them available for reuse by other subgroups. Interactive computing Create the umbrella for Web interaction by providing features and services relevant to each stakeholder and ensuring consistency in Web content across the corporation. Digital repository Create a nationwide repository for storing, organizing, retrieving, and downloading digital information across the corporation. Application development Develop solutions that reach out to customers, reduce business process cycle time, and reduce cost for the business. Infrastructure Continually improve the infrastructure to meet business demands, including wide-area networks, prevention of problems, security integration, and business continuity. Process management Continually improve the project management processes so that projects can be compiled on time, within budget, and according to business expectations.

Technology business-to-business communications application integration component reuse knowledge reuse security mobile computing and collaboration Business and technolgy drivers Business business growth government and governance requirements skills shortage business continuity quality information cost reduction redundant data and applications secured access systems development effectiveness

Risks and dependencies funding governance user buy-in human resources

Figure 2. Sample roadmap showing the relevant items of a technology strategy. The business and IT alignment depicted here depends on several factors, including IT funding, involvement of senior business management, buy-in to the strategy, and availability of the right resources to execute the plan.

change depending on the criticality they have on the current business and IT environments. The environment keeps changing, so CSFs may also change accordingly. Some CSFs that could affect a strategys implementation include the following: Customer satisfaction. IT must establish formal partnerships with its customers, understand their business requirements, and consistently exceed customer service expectations. Funding. As long as theres a demonstrable value to the business, funding must be available for technology initiatives. The business must explicitly define priority-setting criteria to help IT formulate its initiative plans. Culture change. IT must focus on providing better services and communications to customers by instilling a sense of urgency, ownership, teamwork, responsibility, and pride in daily activities.

Continuous process improvement. IT must continually improve its management processes so that it can deliver responsive, outstanding service to its customers. Buy-in to a clearly articulated strategy. Buy-in from senior management, business units, and the IT organization is critical to achieving the goals, strategies, and initiatives outlined in this plan. The IT business model provides the high-level technology direction for the company. Its the basis for formulating the strategic-plan initiatives.

Initiatives Planning
Initiatives refer to the actual work that must be done. Theyre the programs that create business solutions and internal IT improvements on the basis of business drivers, customer and management expectations, and the gaps identified through the self-assessment. Theyre also the key elements that align the IT strategy with the business.

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Initiatives are long-running programs that could continue for several years. The strategic plan should identify multiple projects for each initiativeeach having its own scope, costs, schedules, and deliverables. All projects within an initiative should contribute to achieving that initiatives goals. Because organizations have limited resources, you should prioritize the initiatives on the basis of value returned to the business. This will require developing a high-level business case to rank the work, slotting lower-priority items for later years.

Technology Strategy Roadmap

Figure 2 is a roadmap depicting the relevant items in the technology strategy discussed thus far. On the left are the business drivers and the management and customer expectations. In the center is the IT business model, which must align with the business drivers and expectations. On the right are the initiatives necessary to improve both business operations and IT service to customers. The strategic planthe end result of the three building blocks just discussedexplains each element in the roadmap in more detail.

eveloping a strategic plan in this manner can help ensure the alignment of business needs and IT activities. Having such a plan can benefit the enterprise in several ways. First, the plan provides a clear roadmap for important items. IT projects should fall into one of the initiatives identified in the plan, thus eliminating unnecessary projects. Second, everyone will be rowing in the same direction. When people row in opposite directions, little or no progress is made in moving the boat forward. Third, the business financial team will have a high-level view of IT funding needs each year. Finally, a strategic plan is a great way to motivate user departments to buy into the strategy because theyre intimately involved in the strategy development process.

Edward K. Hong is an IT consultant focusing on IT management and advising clients on critical issues for improving IT performance. His technical interests include developing IT strategies and plans and implementing effective project management disciplines. Hong has a BS in mathematics from the University of Hawaii and is an executive partner with the William & Mary MBA program. Contact him at ed.hong@cox.net.

Technology Solutions for the Enterprise

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Mobile Computing

Publication: May/June 2010

Submission Deadline: 1 December 2009

he successful dissemination of mobile computing devices is the result of multiple technologies and trends growing together simultaneously. increases in the computing ability of embedded processors that require little power has enabled mobile devices to perform and support more and more diverse applications.at the same time, the gradual upgrade of network infrastructures to support higher bandwidths has allowed devices to transfer more highly interactive data. Moreover, an increasing number of applications are becoming mobile aware and thus able to efficiently operate in a mobile environment. For information about the theme, contact the guest editors: Wes Chou, cisco Systems; wes_chou@yahoo.com Joseph Williams, Microsoft; Joseph.Williams@ microsoft.com Jinan Fiaidhi, lakehead University; jfiaidhi@ lakeheadu.ca

to tie some of these trends together, IT Professional seeks submissions on all aspects of mobile computing. Feature articles should be no longer than 3,500 words (with tables and figures counting as 200 words). illustrations are welcome. For author guidelines, visit www. computer.org/itpro/author.htm. For the complete call for papers, see http://www2. computer.org/portal/web/computingnow/itcfp3.

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