IT Strategy (Information Technology Strategy)

What is IT Strategy?»

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


IT Strategy is an iterative process to align IT capability with business requirements.3

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Why is IT Strategy Important?»

The Importance of IT Strategy4
Organizations that do not have an IT strategy in place are akin to clueless organizations adrift in the sea of the 21st century marketplace, rudderless, and directionless. Moreover, with technology becoming the norm rather than the exception, organizations cannot afford to simply have a basic IT strategy and instead, must actualize a comprehensive IT strategy that is aligned to their business and corporate strategies. With the rapid spread of IT (Information Technology) and the increasing interconnection and connectivity in the contemporary world, having an IT strategy is no longer a luxury for organizations and indeed, it has become the very necessity for survival. This means that for organizations to harness the power of IT, leverage the synergies between their business processes, and capitalize on the efficiencies of the economies of scale, they need a robust, coherent, and proactive IT strategy. Further, with IT become ubiquitous, it is no longer the case that business strategy alone is enough and the alignment of the business strategy with that of the IT strategy has become paramount. A typical IT strategy just like a corporate strategy must first perform an internal and external analysis, which would provide it with a guideline on the alignment between its strengths and opportunities and weaknesses and threats. The primary reason why organizations go in for an IT strategy is to reduce the operational bottlenecks, actualize economies of scale, and derive value from technology. A good IT strategy can ensure the successful outcome for all these objectives. Thus, it would be able to meet the external challenges such as increased competition in these markets successfully. A well thought out IT strategy can be a source of sustainable advantage as well.

How is IT Strategy Related to Business Strategy?»

IT Strategy vs. Corporate or Business Strategy5
An IT strategy is typically a long-term action plan for achieving a goal, set in the context of a rapidly changing technology environment. For any IT strategy to be effective it must have measurable links to a business strategy - and it is here that many IT strategies fail. The most effective IT strategies are those which not only link to a business strategy, but also combine tactics and logistics.6
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.

What is Business IT Alignment?»

IT Strategy vs. Business IT Alignment7
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.

What are the steps to create an IT Strategy?»

IT Strategy Process8
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, a well-defined process and can help you create an effective IT strategic plan. The critical elements of an IT Strategy process are:

7 Steps to Business IT Alignment
source: CIO Index

Of course, the IT strategic plan won’t be static. Changes in corporate goals and objectives will impact strategic IT implementations. Other factors, such as changes in the economy and new technology could also require adjustments to your strategy. Your plan needs to be fluid to accommodate changing conditions.

What is an IT Strategy Framework?»

IT Strategy Framework9
The creation of an IT Strategy is facilitated using a framework or methodology. 'IT Strategy Framework (Information Technology Strategy Framework) is a formal definition of the essential elements or components of IT Strategy, and their inter-relationship. An IT Strategy Framework can define strategic IT concept(s) in general or relate to a specific IT Strategy solution.
Listed below are some of the known IT Strategy frameworks:

What are Business Drivers?»

Drivers that Influence IT Strategy10

As an IT leader, you must understand your business, build consensus and synergy among factions, break down the information silos and prioritize IT initiatives to benefit the entire organization. You must align IT Strategy with your business’s core values, guiding principles and goals. To succeed with technology, you must have the support and commitment of company leadership and the financial resources to make these changes. There is a definite cost to implementing a successful IT Strategy. But the real question you need to ask is “What is the cost to your company if you don’t?” You must weigh and balance many factors that drive your IT decisions. An IT Assessment is an excellent way to identify and prioritize technology initiatives.

What are the elements of an IT Strategy?»

IT Strategy Components and Enablers11

How is IT Strategy Implemented?»

Implementing IT Strategy12

Image
Process model for implementing IT strategy source: Jens Bartenschlager

What is Agile IT Strategy?»

Traditional Approach vs. Agile Approach to IT Strategy13

The figure below show's how the approaches compare across the major attributes:

Image
source: Wall Street Journal

What are IT Strategy Best Practices?»

IT Strategy Best Practices14
The rapid advancement of technology is placing IT at the forefront of industry leaders. Executives and stakeholders are increasingly turning to IT for innovative solutions that not only lower costs, but also increase efficiency and add competitive value. Given the wide range of business expectations, successfully implementing an IT strategy can be challenging. But following these five practices can position IT departments to better understand and deliver on strategic goals.

What are the Challenges in creating an IT Strategy?»

Challenges of IT Strategy 15
IT strategy projects seem to have a higher chance of failure than almost any other business pursuit. Indeed, it’s a rare organization that has developed an IT strategy, followed it for a few years, and lauded it as successful, all under the leadership of the same CIO. The challenge in crafting and executing IT strategy essentially boils down to this: IT is still a relatively new field that is rapidly evolving and requires increasingly larger and more complex projects to meet the needs of the business. These three challenges don’t operate independently: they compound one another and work against the success of an IT strategy.

How are IT Strategy and IT Governance connected?»

IT Strategy and IT Governance Connection16
IT Strategy makes a promise while IT Governance ensures delivery against it.


IT Strategy Training and Certification»

Listed below are IT Strategy training courses offered through American Institute of Management and Information Technology (AIMIT)
IT Strategy 101 - online course
IT Strategy Online Course


See Also»

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


References»

1What is IT Strategy
2Explaining IT Strategy
3Defining IT Strategy
4Why is important to have an IT Strategy? MSG
5Overview of IT Strategy
6Definition of IT Strategy Oakleigh
7Business IT Alignment
8 IT Strategy process
9IT Strategy Framework
10What are the drivers that influence Information Technology Strategy Advance 2000
11IT Strategy Components and Enablers University of Sussex
12Process Model for Implementing IT Strategy Jens Bartenschlager
13An Agile Approach to IT Strategy deloitte.wsj.com
14Best Practices for an Effective IT Strategy Milestone
15Understanding the Challenges of IT Strategy WSJ
16The relationship between IT Strategy and IT Governance


Further Reading»



CIO Index Desk Reference»

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