IT Strategy (Information Technology Strategy)

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IT Strategy Definition: What is it, what is its role, and why is it important?

IT Strategy is defined as the approach to using information and communications technology (IT or ICT) in support of a business's goals and objectives. It is used to ensure that the right information technology capability is in place to support the business strategy. A well-thought-through technology strategy is critical to creating a competitive advantage and increasing process efficiency for an organization.

IT Strategy is used to identify and implement the technology solutions that will help an organization achieve its business goals. The strategy should be aligned with the business goals and objectives.

An effective IT strategy will take into account the ever-changing landscape of technology and how it can be used to support the business. It should also be flexible enough to adapt to changes in the business environment.

An IT Strategy usually aligns with the business strategy of the enterprise with the goal being business IT alignment. However, this is a two way street because IT doesn't just enable business but also can and does drive business.

IT Strategy helps create shareholder value. In other words, it helps maximize the return on IT investments.

IT Strategy is an approach to create an information technology capability for maximum, and sustainable value for an organization.

IT Strategy is implemented using an IT Strategic Plan which documents specific steps, initiatives, deliverables, and timelines.

  • IT Strategy creates IT Capability.
    • The product of an IT Strategy is IT Capability. IT Strategy creates - modifies, aligns, and 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 creation
    • The end or objective of an IT Strategy is to create value - shareholder, 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 the direction for the 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

Creating an IT Strategy is an iterative process that aligns 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 the direction for IT to 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

The Five (5) Components of a Good IT Strategy

  • IT Vision: Where are you headed?
  • Current IT Capability: What people, processes, and technology do you currently have and how are they operating together?
  • Future IT Capability: What people, processes, and technology do you need and how should they operate together?
  • IT Capability Gaps: What are the gaps in people, processes, and technology between current and future IT Capability?
  • Migration Plan: What are the steps to fill these gaps? Who is responsible? What are the deliverables and timelines?

An IT Strategic Plan must also include an estimate of the business value derived, the cost of implementing the plan, and the means to pay for it.

The Importance of IT Strategy [1]

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 with 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 becoming 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.

Alternative Names for IT Strategy

IT Strategy is also known by these names:

  • Information Technology Strategy
  • Technology Strategy
  • ICT Strategy (Information and Communications Technology Strategy)
  • IS Strategy

IT Strategy vs. Corporate or Business Strategy

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.[2] 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.

IT Strategy vs. 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, a well-defined process can help you create an effective IT strategic plan. 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
source: Business IT Alignment Process

Of course, the IT strategic plan won’t be static. Changes in business 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.

IT Strategy Framework helps Create a Structured IT Strategy

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:

Drivers that Influence IT Strategy [3]

  • Rapid Change: Technology is constantly changing and changing quickly. Your response to these changes must be in near real time to be effective. You can’t ignore change, you must continually respond to changes in technology, to stand still is to lose ground.
  • Competitive Landscape: The economy and competition force you to take a closer look at the way you run your IT operations. You must be as efficient as possible to remain competitive. All new technology provides a competitive advantage at first. Eventually, it becomes a competitive necessity and finally a competitive disadvantage as it ages out and needs to be replaced. Do you still use older technology that no longer provides a competitive advantage? Consider replacing it.
  • Social Media and Networking: Social Media and networking have emerged as a way of providing person-to-person connections and sharing information. Both are critical, customers are changing the way they research and find solutions to their business problems. Don’t write off Social Media as “something kids do”, it is much more than that. Take the time to learn and integrate Social Media into your process.
  • Smart spending / Cost containment: You need to be smart about technology spending. Some companies use open source hardware and software to cut costs. But it is not enough to simply cut costs, the money saved should be targeted to other revenue-generating initiatives. There is a smart way to spend your IT dollars, make sure you’re getting the most for your IT spend. Stop thinking that IT is just an expense or a commodity, hardware and software might be commodities BUT HOW YOU USE IT defines your strategic advantage. IT is more than buying stuff.
  • Green IT: Green IT, using less energy leads to immediate cost savings. Being green uses less resources, enables you to produce more with fewer resources, and saves money. In addition, it demonstrates to your clients that you are committed to running your business in a responsible way. Additionally, make sure that your vendors participate and are part of your IT Green Team.
  • Virtualization: The virtualization of servers drives down business costs. It lowers the total cost of ownership, reduces support costs, increases hardware utilization and stretches your IT dollar. Many companies have already taken advantage of server virtualization. The next logical step is to virtualize your desktops (VDI), you can realize the same benefits for your desktops as you did for your servers.
  • Mobility: As users become more tech savvy, they are requesting (demanding) the capability to work anywhere anytime. Many employees personally own newer and better technology than you have in your office. Your technology strategy should support employees to be as productive and efficient as possible. In addition to increased mobility, employees are also working flex hours and working from home as well. As an employer, you need to provide the most flexibility without losing control. This flexibility will also help with staff recruitment and retention.
  • Cloud: Cloud solutions and web hosted applications make it easier to collaborate and work together virtually. While there are some security concerns, if well managed, the risk is minimal and the benefits excellent. The cloud is also much more scalable. The cloud is not only scalable up but also scalable down. Your business is not always in a growth mode. When you need to cut back, the cloud makes that easier as well.
  • Knowledge Management / Data: Knowledge Management is critical in today’s global economy. Knowledge management leverages your most important assets – your people and your information. Your people take information, add knowledge and create value for your business. You can support them by implementing the systems and policies to enable knowledge creation and foster innovation. Also, plan how you will capture, store and share institutional knowledge once it is created. Make sure Knowledge Management is integrated into your work processes.
  • Security: You can spend an infinite amount of money on security. New threats to your company are appearing daily. You need to decide which to guard against and how much to spend to stay safe. Often the biggest security threat is uninformed employees. Educate your people to recognize the basic ways to keep your business safe and guard your intellectual property. It will be the best investment you can make in your business. Ransomware is the latest security threat.
  • Putting it all together: Your IT Strategy should reflect an understanding of your practice and support the goals and values of your organization. This cannot be an individual effort. You must ENGAGE and ENCOURAGE participation by your entire staff. Clearly communicate your commitments and expectations, carefully manage change and reward excellence and address failure. Take extra time to gain buy-in for your ideas and work with your company leaders to make sure that you have met as many needs as possible.

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.

IT Strategy Components and Enablers [4]

  • Strategy Components
    • Service Strategy: deliver better and cost-effective services to the business and customers
    • Information/Data Strategy: maintain integrity, availability, and accuracy of business data across business processes
    • Platform/Application Strategy: deliver the required business functionality with lower TCO, easy maintainability, and reduced delivery time
    • Infrastructure Strategy: provide a high-performing, reliable, energy and cost-efficient environment to run IT services
    • Security Strategy: protect confidentiality, integrity, and availability of information by establishing physical and logical controls
    • Sourcing Strategy: procure services with the right quality, at the right price and with right controls
  • Strategy Enablers
    • Governance: processes, structures, and mechanisms to control and manage the strategy and ensure the realization of IT strategic objectives
    • Operating_Model|Operating Model: functional alignment of business and IT structures and IT supplier groups
    • Architecture: business process and technology map to enable effective change delivery, business continuity, and strategic decision making
    • Processes: Industry frameworks and models (e.g. ITIL for service delivery) to ensure consistent delivery, reduced rework, and greater productivity
    • Skills and Capabilities: Expertise and proficiency in aligning IT with the business, managing the business relationship, understanding business strategy and plans, delivering solutions and services, and enabling continuous improvement

Implementing IT Strategy [5]

  • As part of the first phase Pre-Implementation, the analysis of the IT strategy (as the result of all IT strategy development related activities) and the implementation environment (e.g. organization structure) depicts how profound the desired change will be. Implementation complexity, quality of the IT strategy as well as a feasibility study will lead to agreed implementation objects. This step allows for the identification of important implementation carriers and responsibilities throughout the organization. The objective is to install a first anchor in terms of content and human resources needed to implement the IT strategy.
  • The purpose of the second phase Implementation planning is to first derive and agree on specific implementation goals and initiatives by taking all stakeholders into regard. The IT Balanced Scorecard (IT-BSC) can be used as a technique within this activity. To fulfill the given goals within a set timeframe, it becomes necessary to define and evaluate an implementation plan. This plan consists of a number of different projects to be detailed and bundled to programs. Resource requirements and business cases need to be defined for every project. Hence, a comparison and prioritization creates the basis for a detailed implementation plan. According to the plan, an adequate coordination structure as well as an adequate implementation tactic needs to be determined. Finally, the project teams need to be brought together. It is of high importance to remediate existing conflicts and to prevent new ones.
  • According to the results of the previous phases, the phase Implementation execution puts emphasis on the enforcement of the implementation plan. Initially, the focus is on soft facts, which the implementation success fundamentally depends on. To avoid fear of change, potential behavioral resistances, and divergence in objectives, all impacted personnel need to be treated according to their situation and interest. Therefore, the audience is to be identified and divided up into target groups. A comprehensive communication plan comprising target group appropriate information details is to be developed and maintained centrally. A structured and systematically conducted communication can help to avoid implementation problems concerning human resources.
  • The phase Completion of implementation comprises all actions necessary to establish the results within the organization. First, there is the need to agree on the dimensions of IT strategy implementation: the time dimension and the detail dimension. The time dimension differentiates between installed, completed and benefits, whereas installed marks a simple installation (e.g. without user training) and benefits can be considered as the effect of the change (difference of the current and proposed way of work is done). The detail dimension refers to the implementation content, which may be the whole plan, one or more projects or even one or more systems in one project. In our definition, the whole plan needs to be completed. Hence, trainings for future users need to be prepared and executed; lessons learnt need to be documented. Additionally, according projects need to be dissolved to allow for a new resource allocation.
  • The last phase Implementation control is about setting up appropriate qualitative and quantitative control measures to allow for a continuous implementation control and navigation. Measurement of the actual implementation state at any time during the implementation allows for an early identification of discrepancies. Therefore, possible causes can be identified and corrective actions can be taken. Implementation control acts as the central component in our process model and can therefore influence activities within previous and following phases.

Process model for implementing IT strategy

IT Strategy (Information Technology Strategy)
source: Jens Bartenschlager

Traditional Approach vs. Agile Approach to IT Strategy [6]

  • Under the traditional approach, the IT strategy team—whether an internal team or an external consultancy—spends 12 to 24 weeks interviewing business leaders and gaining an understanding of the business, the organization, and its capabilities. Next, working with IT leadership, the team develops a vision of the IT environment three or sometimes five years out. The working group then determines the discrete project list that will enable the company to achieve that vision. Finally, the initiatives are set out in a “roadmap” and delivered to the Chief Information Officer (CIO) - and the team disbands. The traditional approach produces a new vision every three years - probably delivered by a different team to a different CIO - with a new list of goals and initiatives.
  • With an Agile Approach (Agile Strategy Program (ASP)), a team also determines the baseline and develops a three-year strategy and a roadmap; however, after the initial work is complete, the team reconvenes for two weeks every quarter or perhaps semi-annually to review not only progress against the roadmap, but to discuss technology changes and industry trends, and adjust the roadmap accordingly. As a result, the end state for the program is less precisely defined up front; the strategy provides a general direction but not a final destination. This method delivers a fresh course correction every three to six months, along with an actionable “report card,” delivered by a consistent team that is familiar with the business. Moreover, the use of a consistent team improves the potential for ongoing collaboration on technology trends. And if those advantages weren’t enough, the cost of maintaining an agile model for IT strategy can actually be comparable to the traditional approach in the long run.

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

IT Strategy
source: Wall Street Journal

IT Strategy Best Practices [7]

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.

  • Align with Executive Expectations: A growing number of executives consider business alignment to be the primary concern for IT leaders. Thus understanding and exceeding executive expectations should be a top priority for every IT team. As key decision-makers, executives are responsible for establishing and directing organization-wide initiatives that reinforce business goals. The onus is on IT leaders to develop tailored strategies that align with the executive direction, forging a supportive relationship between the enterprise and IT. Having executive support is helpful for multiple reasons. A mutual partnership between IT and management can be beneficial for securing crucial resources. When IT and executive teams are unified, stakeholders are more likely to accept transitions to new systems and processes that may disrupt the status quo. Finally, working with organizational decision-makers ensures that all IT projects serve a business purpose and support overarching objectives, for example increasing market share or outperforming competitors.
  • Listen to Enterprise Needs: All functional enterprise departments rely on IT to enable and drive day-to-day operations. So driving a successful IT strategy is highly reliant on an open dialogue between departmental and IT leaders. When asked to evaluate the pace of technological change in the workplace, 63 percent of managers found progress to be slow, due mainly to poor communication regarding the strategic benefits of new tools. It’s important, therefore, for IT leaders to be mindful of how they communicate technical concepts with department heads by using language that emphasizes potential benefits – improved customer service or smoother business operations, for example. As tech experts, IT leaders should address and define operational objectives with department heads and then design solutions for achieving those objectives with the rest of the IT department. On the other hand, when IT is delegated tasks from other departments without considering alternative approaches, businesses risk missing opportunities for improvement. One way to ensure that IT initiatives are aligned with stakeholder expectations is to create a framework for defining enterprise-wide strategies. In some businesses, this could be a SWOT (strengths, weaknesses, opportunities, and threats) analysis or the OGTM (objectives, goals, tactics, and measurements) method. Frameworks like this also enable IT departments to compare departmental plans to find common objectives and suggest consolidated solutions.
  • Examine Different Solutions: IT solutions are critical for driving innovation, value, and cross-functional business operations. After partnering with upper and departmental management on defining strategic initiatives, IT departments should consider which technologies and processes are best suited for meeting the needs of the enterprise. For example, if a business is having challenges tracking devices, how can IT facilitate effective asset management? A small organization might only require basic tagging and inventory documentation. However, for expanding organizations, implementing a comprehensive Configuration Management Database (CMDB) provides device lifecycle visibility and automated inventory alerts, enabling scalability and longevity for future expansion. Similarly, if an ring a smooth flow of information across departments? In order to avoid chaos and boost confidence, IT and HR departments should create a detailed communication plan to clearly address all of these questions before introducing new technology to the workplace.
  • Analyze and Revise: No IT strategy is flawless. But in order to evolve, IT departments must be diligent about leveraging analytics to facilitate data-driven improvements and revisions. Outcomes of major IT programs should be evaluated against benchmarks defined by business stakeholders early on, such as the number of employees transitioned to a new technology or the amount of reduction in system-wide interruptions. If there is a discrepancy between results and expectations, then is there a key functionality that IT has overlooked?[v] Network Operations Centers or IT Service Management tools are effective mechanisms for gaining insight on fluctuations in business performance. Even by following basic practices such as tracking IT contracts or using standard terminology for components, IT departments have the opportunity to consolidate equipment, reduce spending, and achieve deeper technology knowledge.

Challenges of IT Strategy [8]

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.

  • Computers are New. Computers are a relatively recent invention. Many of us have seen the mainframe, the mini, the PC, the laptop, and now the mobile device each take its turn as the crucial computer of the decade. After only 50 or 60 years, it is difficult to imagine life without computers. Yet the discipline of IT strategy has not matured as quickly as the technology itself. (Were cloud computing and social business on your agenda three years ago?)
  • Technology is Continually and Rapidly Changing. This is the fundamental challenge. The power and storage capacity of devices seems to be increasing exponentially. Some of us can remember thinking, “Who could possibly ever need a 10 MB hard drive”? These days, your phone may have close to 1000 times that amount of storage. Not only is the technology changing more rapidly, but mass adoption rates are speeding up. Consider this: it took one year for Apple to sell the first million iPods—and one month to sell the first million iPads, just 10 years later.
  • Technology Projects are Getting Bigger. There was a time when a “major” application developed for a Fortune 100 client took only a month or so to get up and running. Consider an example, circa 1982, of an application, written in Basic, that estimated the time and resources needed to clean and inspect offshore oil rigs. It took two weeks to develop the algorithm (based on 50 or so previous inspections); one week to design the screens and reports; one week to program and test; and two days to write a manual—and then it went live. Compare that with the projects we see today. One company is implementing a worldwide ERP system across its 25 process-manufacturing locations. The project has a multimillion-dollar budget and an eight-year plan. Admittedly, the client is unusually methodical and conservative, but the contrast is striking.

IT Strategy and IT Governance Connection

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

IT Strategy and Enterprise Architecture Planning

Enterprise Architecture Planning transforms an IT Strategy into IT Implementation. In other words, Enterprise Architecture converts the logical (vision, strategy, goals, objectives) into its physical manifestation (business applications, network, databases, etc).

IT Strategy Training and Certification

Listed below are IT Strategy training courses offered through the American Institute of Management and Information Technology (AIMIT)

See Also


  1. Why is important to have an IT Strategy? MSG
  2. Definition of IT Strategy Oakleigh
  3. What are the drivers that influence Information Technology Strategy Advance 2000
  4. IT Strategy Elements: Components and Enablers University of Sussex
  5. Process Model for Implementing IT Strategy Jens Bartenschlager
  6. An Agile Approach to IT Strategy
  7. Best Practices for an Effective IT Strategy Milestone
  8. Understanding the Challenges of IT Strategy WSJ

Further Reading