Great IT strategies

By Linda Price | Monday, October 19 2009

CIOs should always ponder this questions: 'Given the external context, business strategy for success and business capability needs, how will IT help us win?'

I recently spoke with a Gartner Executive Programme member who was planning for a meeting with the organisation’s CEO. The purpose of the meeting, as advised by the CEO, was to explain “exactly what IT does”.

This type of high-stakes conversation is one that many CIOs are likely to encounter at some stage in their career — with the CEO, the CFO, a board member or a business-unit leader. Interestingly, the global financial crisis has afforded many CIOs the opportunity to initiate or revise one of the most powerful tools that can be used to support this type of conversation — the IT strategy.

A recent Gartner CIO research publication surmised that “most IT strategies focus on providing efficient and effective IT services. Great IT strategies focus on how IT will help the business win”. The author of this research, Dave Aron, was recently in Australia talking to CIOs about great IT strategies. Aron’s model for a great IT strategy is divided into three sections: Demand, Control and Supply. The Demand section pertains to the business side of the IT strategy. The Control section outlines the mechanisms by which the IT strategy will be funded, measured and governed. Supply is about what resources will be put in place to deliver the strategy — including services, technical resources and human resources.

As a tool for ensuring key stakeholders understand “exactly what IT does”, the Demand section of the IT strategy is vital. It describes:

• The macro-economic context in which the business operates.
• What the business will need to do to “win” in that context.
• What business capabilities are required to succeed and, most importantly …
• How IT will contribute to this success.

As a simple example of how this format might work, consider an organisation that delivers consulting services in the manufacturing sector within the Asia Pacific region. Assume characteristics of the macro-economic environment are a concentration of ownership, a growing trend to strategic alliances and increased competition from global players.

In response to these developments “winning” is likely to involve an expansion of scale and expertise through mergers and acquisitions, or alliances. Accordingly, among many other capabilities, the business will need to be able to intelligently identify, analyse and absorb appropriate acquisition targets. IT’s ability to support this essential business capability demonstrates its contribution to the business. In our sample case, the IT organisation needs an enterprise architecture that facilitates swift integration of an acquisition and also a fail-safe playbook for effectively assessing and absorbing or dispensing with the acquisition target’s IT elements.

IT strategies typically concentrate on the Supply component of the strategic framework — and within that, mainly the architectural elements of infrastructure and applications. Although a description of the Supply components is essential, without the clear links back to the business strategy that are provided in the Demand section, the IT strategy loses its ability to demonstrate the contribution of IT.

Furthermore, it will be unintelligible to all but the most tech-savvy of business colleagues. Ultimately, the IT strategy should be thought of as an integral part of the business strategy in the same way as manufacturing, logistics, marketing or finance. It should not be thought of as a separate strategy that is “aligned” to the business strategy.

Once the IT strategy is created and approved, it needs to form the basis of an ongoing conversation within the organisation. The danger is always that the strategy will not be executed as it was envisaged. The CIO’s challenge is to bring the strategy to life in the IT organisation – in the actions of the programmers, the vendor managers, operations staff and other members of the IT team. The CIO needs to create “strategy moments” wherever opportunities arise — communications about strategy embedded in all meetings, project updates linked to the achievement of the strategy, strategy as an integral part of all business case development. Each of these strategy moments reinforces the contribution of IT with an agreed framework directly linked to helping the business win.

Consider the question: “Given the external context, business strategy for success and business capability needs, how will IT help us win?” If your IT strategy addresses this question, and if you have managed to make strategy considerations integral to the way in which work gets done within your organisation, then chances are you won’t be asked about “exactly what IT does”. And if you are, you have a ready-made and compelling response.

Linda Price is group vice-president, executive programs, Gartner. Email comments to linda.price@gartner.com