IT Strategy (Information Technology Strategy)

IT Strategy (Information Technology Strategy or Technology Strategy) is a plan of action to create an information technology capability for maximum, and sustainable value for an organization.1 IT Strategy helps create shareholder value. In other words, it helps maximize the return on IT investments.

  • IT Strategy creates IT Capability
    - The product of an IT Strategy is IT Capability. IT Strategy creates - modifies, aligns, changes - IT Capability not just "technologies" or "systems" as some have implied
    - However, this IT Capability is a means to an end: value
  • IT Strategy's objective is value
    - The end or objective of an IT Strategy is to create value - shareholder, or stakeholder or business value
    - This objective is not met unless we "maximize" value i.e. use the least amount of resources, and risk to create the most returns
    - This objective also requires that this value is "sustainable" - short term or "ephemeral" value is not the objective of a strategy. On the contrary, it symbolizes a failure of strategy
    - Often, the term competitive advantage is used instead of value. Competitive advantage does create value but it does not encompass all means of business value - new market entry, process efficiencies etc. deliver value without competitive advantage
  • IT Strategy exists by definition i.e. it may not be documented in the actions of an organization
    - IT Strategy uses an iterative process to create and align IT capability with business requirements:
    - It is a process not a point in time event
  • It is iterative - success comes after multiple - do and learn - cycles
  • The key is the alignment of business and IT capability rather than designing IT to address business requirements
    - The former assumes that both capabilities drive each other
    - The latter assumes that business drives IT and not vice versa
  • IT Strategy sets direction for IT function in an organization
    - Ensures that maximum IT dollars are spent on value creation activities for the business
    - Ensures that these dollars create the maximum value

IT Strategy is an iterative process to align IT capability with business requirements.
  • It is a process not a point in time event
  • It is iterative - success comes after multiple - do and learn - cycles
  • The key is the alignment of business and IT capability rather than designing IT to address business requirements
  • The former assumes that both capabilities drive each other
  • The latter assumes that business drives IT and not vice versa
  • IT Strategy sets direction for IT function in an organization
  • Ensures that maximum IT dollars are spent on value creation activities for the business
  • Ensures that these dollars create the maximum value

IT Strategy and Corporate or Business Strategy
IT Strategy is analogous to business strategy or corporate strategy - from the objective to the process these two share a common logical framework with the differences manifesting themselves in the specifics of implementation. Business IT Alignment, in part, aligns business strategy with IT strategy or vice versa. As discussed, business technology alignment is more than that as it is the alignment of business capability with IT Capability. IT Strategy is often included as part of the business strategy. Before IT strategy developed as a discipline, business strategy process was extended to include technology implications and the business strategy document became the de-facto home of IT strategic plan as well. Today, however, the CIO prefers to create their own IT strategy team, follow their own IT strategy process, and communicate the strategic plan for their organization through a separate IT strategic plan document. Given the complexity of modern day business, technology and the IT organization, this arrangement does provide optimal value for both the business and IT. However, an IT strategy cannot be developed in isolation so the IT strategy development team must comprise of business and IT people. The initiative must have both business and IT sponsorship. The recommendations must be bought into by both sides of the aisle. Business strategy and IT strategy processes must be closely coordinated. In general, there is a single logical process, organization, and communication document for business and IT strategy. The boundaries are a way of splitting work not responsibility. The delineation is simply done to facilitate delivery and nothing else.

Business IT Alignment
IT Strategy aligns IT Capability with Business Capability or vice versa. Also known as Business IT Alignment or aligning business with IT (information technology) or business technology alignment this process is often misconstrued as: "align business strategy with IT strategy." Strategy is a component of both business capability and IT capability. However, there are other equally important components such as organization and process. A focus on strategy alone loses the critical impact of the other components on business value. Consequently, we must consider ALL the components of business and IT capability not just strategy. The order of these words causes confusion as well. Business drives IT - so business IT alignment makes sense. However, increasingly, technology drives business and that meaning gets lost with this order of words.

IT Strategy Process
IT Strategy does not have to follow a specified series of steps and often does not. Different situations demand a different starting and ending point and the steps in between. However, the critical elements of an IT Strategy process are:
  • Business Drivers: what is prompting a change in business and/or IT capability? (and, by definition, IT Drivers)
  • Business Imperatives: what must be done to address or respond to these business drivers? (and, by definition, IT Imperatives)
  • Business Capability Implications: what does the implementation of these imperatives do to the business capability (and, by definition, IT Capability)

IT Strategy process can be summed up as a series of steps that determine each of these three critical elements of an IT Strategy.

7 Steps to Business IT Alignment
source: CIO Index

IT Strategy Framework
The creation of an IT Strategy is facilitated using a framework or methodology.
IT Value Mapping is a business focused IT Strategy Framework.

See Also»

Business IT Alignment
Business Strategy
corporate strategy
IT Strategy Framework
IT Vision
IT Governance
Enterprise Architecture
e-Business Strategy
IT Capability
Business Capability


IT Strategy Training»

IT Strategy 101 - online course
IT Strategy Online Course


References»

1 What is IT Strategy


External References»

  • Why your IT strategy may not help translate business strategy cio.com
  • Modeling an IT Strategy for Student Success educause
  • Developing the right IT strategy - How to support business strategy with technology cio.com
  • Strategy, not Technology,Drives Digital Transformation Deloitte - MITSloan
  • The Strategic Plan is Dead. Long Live Strategy SSIR


CIO Index Desk Reference»

(Relevant content on this topic in the CIO Toolkit on CIO Index)

Modified on 2017/08/29 11:45 by SuperUser Account  
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