IT Strategy (Information Technology Strategy)

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What is IT Strategy?

IT Strategy, or Information Technology strategy, is a comprehensive blueprint outlining how an organization plans to use Information Technology (IT) to achieve its goals and objectives. It aligns investments in IT with business priorities and sets the strategic direction for the IT Organization. IT Strategy enables and drives business strategy. A well-thought-through technology strategy is critical to creating competitive differentiation and increasing process efficiency for an organization.

IT Strategy is a written document that covers the vision, approach, implementation, and key aspects of technology management. Practically, a lot of organizations do not have a written IT Strategy.

IT Strategy is developed by the IT Leadership of an organization, primarily the chief information officer (CIO) and chief technology officer (CTO). They collaborate closely with business functions that are active users of technology. Additionally, departments like finance, HR, legal, and other shared services are integral to the process, providing valuable governance to ensure that the strategy aligns with organizational standards and objectives.

An organization’s IT Strategy:

  • Clarifies the role and use of IT in an organization or business
  • Aligns investment in IT with the business’s imperatives/priorities;
  • Provides focus and direction to its IT Department or Function
  • Helps in better communication and coordination between business functions and lines of business with the IT Organization

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

A written IT Strategy should provide a roadmap detailing how the IT infrastructure and management will support the organization's overall business strategy. It outlines the disciplined approach that dictates how IT resources and capabilities will create business value, thereby contributing to the company's competitive advantage in its chosen context. The IT strategy also defines the operational model for IT departments, guiding the organization's investment, implementation, and technology management.

IT Strategy identifies the IT capability required for maximum and sustainable value for an organization. It bridges the gap between IT capabilities and business objectives, ensuring that technological efforts align with the organization's overall mission and goals. It guides the organization's technology decisions, helping it to create a competitive advantage, achieve operational efficiency, drive innovation, and deliver superior customer experiences.

Setting a strategic direction for IT efforts helps organizations avoid unnecessary or redundant technology investments. It also prepares organizations to be agile, adapting their technology stance in response to market changes, industry trends, or unforeseen circumstances like a global pandemic.

A comprehensive IT strategy extends beyond the organization's immediate technology needs. It encapsulates a future-focused perspective, providing an idea of where IT should head over the next three to five years. It incorporates current and future IT projects, potential technology advancements, and emerging trends that might shape IT requirements and innovations.

A comprehensive IT Strategy should cover key aspects of technology management, planning, and governance, including service management, risk management, cost management, human resource management, hardware and software management, and vendor management.

The Importance of IT Strategy: 6 Reasons Why Every Organization Must Have One?

The relentless march of digital technology has transformed the business landscape. Today, the role of technology extends beyond supporting business operations; it is a driver of business strategy and a key determinant of organizational success. With this shift, a well-crafted Information Technology (IT) strategy has never been more critical. Here's why every organization must have one.

1. Aligning IT with Business Objectives

A well-articulated IT strategy ensures that technology investments and initiatives align with the organization's business goals and objectives. When IT and business strategies are in sync, it guarantees that every technology-related decision, from software selection to infrastructure upgrades, is made with a clear understanding of how it will help the business achieve its goals. This strategic alignment maximizes the value of IT investments and enhances business performance and competitiveness.

2. Driving Innovation and Competitive Advantage

In the digital age, technology is not just a business enabler but a source of innovation and competitive advantage. With a robust IT strategy, organizations can leverage technology to develop new products and services, create superior customer experiences, streamline operations, and outperform competitors. Moreover, a forward-looking IT strategy can help organizations stay abreast of emerging technologies and trends, seize new opportunities, and respond effectively to disruptive forces.

3. Managing Risks and Enhancing Security

Increasing reliance on digital technology comes with increased risk, including cyber threats, data breaches, and IT failures. An IT strategy plays a crucial role in managing these risks. It defines the organization's approach to IT security, including measures for protecting sensitive data, mitigating cyber threats, and ensuring compliance with relevant laws and regulations. Moreover, an IT strategy includes business continuity and disaster recovery plans, ensuring that critical business functions can continue during and after a significant disruption.

4. Optimizing IT Resources and Investments

Technology investments can represent a significant portion of an organization's budget. An IT strategy provides a framework for optimizing these investments, ensuring they deliver maximum value. This involves making informed decisions about IT funding and investment priorities, managing IT costs, and ensuring a balanced portfolio supporting operational needs and innovation. By providing a clear roadmap for IT investments, an IT strategy helps prevent wasteful spending and ensures resources are used effectively and efficiently.

5. Facilitating Change and Transformation

Technology is a powerful driver of change and transformation. However, implementing new technologies or systems can be disruptive and challenging. An IT strategy provides a structured approach to managing technology-induced change. It sets out clear plans for implementing new systems, including timelines, milestones, and resources required. It also includes strategies for managing the human side of change, ensuring that staff are adequately trained and supported through the transition.

6. Enhancing Communication and Collaboration

An IT strategy is not just a document for the IT department. It is a tool for communication and collaboration across the organization. By clearly articulating the organization's IT goals and plans, an IT strategy facilitates understanding and buy-in from various stakeholders, including business leaders, IT staff, and end-users. This enhances collaboration, ensures everyone is working towards the same goals, and promotes a culture where technology is seen as a strategic business tool, not just a technical resource.

In the digital era, an IT strategy is not a nice-to-have but a must-have. It aligns technology with business objectives, drives innovation and competitive advantage, manages risks, optimizes resources, facilitates change, and enhances communication and collaboration. Regardless of size or industry, every organization needs an IT strategy to navigate the digital landscape successfully, seize the opportunities presented by technology, and avoid potential pitfalls. Remember, a strong IT strategy is synonymous with a strong business strategy in today's business world.

Organizations that do not have an IT strategy 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 have a basic IT strategy and, instead, must actualize a comprehensive IT strategy 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; indeed, it has become necessary for survival. This means that organizations need a robust, coherent, and proactive IT strategy to harness the power of IT, leverage the synergies between their business processes, and capitalize on the efficiencies of the economies of scale. 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, like a corporate strategy, must first perform an internal and external analysis, providing a guideline for aligning its strengths, opportunities, weaknesses, and threats. The primary reason why organizations go in for an IT strategy is to reduce operational bottlenecks, actualize economies of scale, and derive value from technology. A good IT strategy can ensure a successful outcome for all these objectives. Thus, it could successfully meet external challenges, such as increased competition in these markets. A well-thought-out IT strategy can be a source of sustainable advantage as well. [1]

Basics of IT Strategy

An IT strategy is a vital component of any organization's business strategy. It charts the course for technology use in an organization and shapes and supports the broader business objectives. Its form, content, and characteristics reflect its role as a comprehensive, forward-looking, adaptable IT decision-making and investment roadmap.

The form of an IT strategy can vary from organization to organization, but it is generally presented as a written document, a balanced scorecard, or a strategy map. It should be clear, concise, and free of technical jargon, as it needs to be understood by various stakeholders within the organization, not just those in IT roles.

IT strategy should not be seen as a static document but as a living plan that evolves with business needs and market dynamics. Therefore, senior IT leaders should expect to reassess and redevelop the technology strategy regularly, ensuring it aligns with the organization's mission and responds appropriately to shifting market dynamics.

An effective IT Strategy must also be flexible to adapt to changes in technology, the business’s external environment, or internal circumstances, including the emergence of promising new technologies, market and industry conditions, business requirements, employee skills, organizational competencies, or budgetary constraints to name just a few.

An effective IT strategy must also be agile because change cycles are shortening, and so must be the response to them. Remember, there is a lag between formulating an IT strategy and the implementation of initiatives it identifies; the latter delivers capabilities.

The IT strategy of an organization is not a standalone entity; instead, it should seamlessly align with and support the broader business strategy. This symbiosis ensures that the technology and systems employed by the organization are wholly in service of its strategic business objectives.

IT Strategies must support business strategy. In the age of disruptive technologies, IT Strategies can also drive business strategy. For perfect business-IT alignment, an IT strategy must work with a business strategy. This is not to say that an IT Strategy cannot be created in the absence of a business strategy. IT Strategies are often created in the absence of clearly articulated business strategies.

As the leader of the IT Organization, the Chief Information Officer (CIO) is responsible for formulating and implementing the IT Strategy. In doing so, they work closely with other business functions and lines of business or divisions, especially the Chief Operating Officer (COO), Chief Marketing Officer (CMO), and Chief Financial Officer (CFO). Some organizations also have a Chief Technology Officer (CTO) role with or without the CIO role. The CIO and CTO work closely to create an IT Strategy for the organization.

To understand the meaning of IT strategy in context, here is a summary of key points:

  • 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

10 Essential Points to Consider When Developing Your IT Strategy

  1. Developing a comprehensive IT strategy is essential for organizations that want to remain competitive in today's digital landscape.
  2. Implementing an effective IT strategy requires careful planning and coordination between departments and stakeholders.
  3. Aligning IT strategy with business objectives can help to ensure that technology investments are focused on driving value and achieving strategic goals.
  4. Optimizing IT infrastructure is a critical component of any IT strategy, as it can help to improve efficiency, reduce costs, and enhance security.
  5. Integrating emerging technologies such as AI and blockchain into an IT strategy can help organizations to stay ahead of the curve and gain a competitive advantage.
  6. Evaluating the performance of IT systems and processes regularly is important to ensure they meet business needs and deliver value.
  7. Investing in employee training and development is a key aspect of any IT strategy, as it can help build a skilled and capable workforce to drive innovation and growth.
  8. Adopting a cloud-first approach as part of an IT strategy can help organizations improve scalability, flexibility, and agility.
  9. Emphasizing cybersecurity as a key priority in an IT strategy is essential in today's threat landscape, as it can help to protect sensitive data and mitigate risks.
  10. Creating a roadmap that outlines an IT strategy's key initiatives and milestones can help ensure that everyone is aligned and working towards common goals.

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

Key Characteristics of an IT Strategy

  • Alignment with Business Goals: A key characteristic of an effective IT strategy is that it is closely aligned with the organization's overall business strategy. It should support and shape the organization's business goals and objectives.
  • Future-oriented: An IT strategy should be forward-looking, projecting three to five years into the future. It should be agile and adaptable to accommodate changes in the business environment and technological advancements.
  • Comprehensive: A good IT strategy covers all facets of technology management, including cost management, risk management, human capital management, hardware and software management, vendor management, data management, security, and more.
  • Stakeholder Involvement: Developing an IT strategy should involve stakeholders from across the organization, including business leaders, IT leaders, and end-users.
  • Regular Review and Update: The IT strategy should be reviewed and updated regularly to ensure it remains relevant and effective in light of changing business goals and technology advancements.
  • Clear and Understandable: The IT strategy should be written in clear, concise language that can be easily understood by all stakeholders.

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

In most contexts, "IT Strategy" and "IT Strategy Plan" are used interchangeably and essentially refer to the same concept. Both terms describe a comprehensive and coordinated plan outlining how technology will meet business and IT goals.

However, depending on the context, the term "IT Strategy Plan" might sometimes be used to emphasize the detailed and actionable elements of the strategy — the specific projects, timelines, resources, and responsibilities associated with the implementation of the IT strategy. This aspect is inherently part of an IT strategy, but using the term "IT Strategy Plan" may emphasize the planning and execution aspects.

  • On the one hand, a strategy is an approach because it involves a high-level, overall direction based on an understanding of the broader context. It defines how an organization will achieve its goals and objectives given the competitive landscape, resources available, and unique strengths and weaknesses.
  • On the other hand, a strategy is also a plan because it outlines the specific actions, resources, and timelines needed to execute the approach. It gives a concrete path to follow to operationalize the approach and realize the organizational objectives.

So, in essence, a strategy combines an approach (the "why" and "how") with a plan (the "what", "who", "where", and "when") to provide a comprehensive direction for an organization or a specific function like IT.

It's always good to confirm the specific usage within the context of a particular organization or discussion, as terminology can sometimes vary. But overall, both "IT Strategy" and "IT Strategy Plan" refer to the same overarching concept of a strategic approach to managing and leveraging technology in an organization.

13 Essential Components of IT Strategy [2]

Information technology (IT) is pivotal in driving business success and transformation. A well-defined IT strategy is a guiding framework that aligns technology initiatives with an organization's overall objectives, ensuring optimal resource utilization, enhanced operational efficiency, and sustainable growth. Organizations must consider various key components that address current and future technological needs to develop a robust IT strategy.

So, what should you include in an IT Strategy? There is no set outline because there are many good ones to choose from. Organizations

Here are the essential components of an effective IT strategy:

  1. Stakeholder Engagement: Engaging stakeholders across all levels of the organization is crucial to ensure that the IT strategy addresses their needs and expectations. Collaboration with business leaders, department heads, end-users, and IT professionals enables the identification of pain points, business process improvement opportunities, and emerging technology requirements. Regular feedback loops and communication channels foster a sense of ownership and create a more inclusive IT strategy.
  2. Analysis of IT's strengths and weaknesses.
  3. List internal and external forces (e.g., market and industry trends) shaping current technology requirements, innovations, and anticipated future forces.
  4. Identify potential opportunities and vulnerabilities that require technology responses to best position the organization for success.
  5. Vision and Alignment: A successful IT strategy begins with a clear vision that aligns with the organization's broader objectives. It should reflect a deep understanding of the business's current state, future aspirations, and technology's role in achieving those goals. Organizations can effectively prioritize IT initiatives, allocate resources, and drive measurable outcomes by establishing alignment between IT and business objectives.
  6. High-level overview of the IT department, covering its mission, core values, objectives, and approaches to achieving these objectives.
  7. Enterprise Architecture/Technology Infrastructure: A sound IT strategy encompasses a well-defined technology infrastructure plan. It involves evaluating the current infrastructure, identifying gaps, and planning for future needs. Considerations may include network architecture, hardware and software requirements, cloud computing strategies, scalability, and disaster recovery plans. A well-designed technology infrastructure ensures seamless operations, optimal performance, and the ability to adapt to evolving business demands.
  8. Application Portfolio Management: The IT strategy should systematically manage the organization's application portfolio. This involves assessing existing applications, identifying redundancies, evaluating potential upgrades or replacements, and aligning applications with business priorities. Effective application portfolio management optimizes resource utilization, streamlines processes, and enables agile decision-making for technology investments.
  9. Outline of current and future IT projects and initiatives, along with timelines and milestones.
  10. Governance and Change Management: Governance and change management are critical components that support the successful execution of the IT strategy. A governance framework defines decision-making processes, roles, and responsibilities, ensuring accountability and transparency. Change management practices facilitate smooth transitions during technology implementations, minimize resistance, and maximize user adoption. Robust governance and change management frameworks provide the structure and support for the IT strategy's implementation and ongoing evolution.
  11. Current budgets and spending forecasts for a multi-year timeline.
  12. Performance Measurement and Continuous Improvement: To gauge the effectiveness of the IT strategy, organizations must establish key performance indicators (KPIs) that align with the defined objectives. Regular monitoring and measurement of these KPIs enable organizations to track progress, identify areas for improvement, and make data-driven decisions. By fostering a culture of continuous improvement, organizations can adapt to changing technology landscapes, capitalize on emerging opportunities, and maintain a competitive edge.
  13. Risk Assessment and Security: Technology advancements bring new opportunities and introduce various risks and security challenges. A comprehensive IT strategy should include a robust risk assessment framework that identifies potential vulnerabilities, safeguards sensitive data, and implements effective cybersecurity measures. By integrating risk management into the strategy, organizations can proactively address security threats, comply with regulatory requirements, and enhance overall resilience.

IT Leaders have many different models and outlines for developing an IT Strategy. Each picks one that suits the specific requirements of their organization. However, here are the five key 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 it, and the means to pay for it.

A well-crafted IT strategy acts as a roadmap that guides organizations toward leveraging technology for enhanced productivity, innovation, and business growth. By encompassing the essential components discussed above, organizations can ensure that their IT strategy aligns with business objectives, mitigates risks, optimizes technology investments, and adapts to evolving needs. As technology continues to evolve rapidly, embracing a comprehensive and dynamic IT strategy becomes indispensable for organizations seeking to thrive in the digital age.

History of IT Strategy as a Discipline

Information Technology (IT) Strategy, a cornerstone in the modern business landscape, involves crafting a comprehensive plan that aligns technological resources and capabilities with organizational objectives. Its history is inextricably linked with the development of computer technology and the broader digital revolution. This article aims to provide a comprehensive view of the evolution of IT Strategy, exploring its origins, present status, and future possibilities.

Origins and Early Evolution of IT Strategy

IT Strategy evolved as a distinct discipline in the 1960s with the advent of mainframe computers, which allowed organizations to automate repetitive tasks and manage data more efficiently. These developments drove companies to create a strategic plan for integrating and using these technologies, marking the birth of IT Strategy. Initially, however, IT was often viewed as a support function—primarily a cost center rather than a source of competitive advantage.

By the 1970s and 1980s, IT Strategy focused primarily on improving operational efficiency. During this period, advancements in hardware, software, and networking technologies expanded the role of IT, allowing for advanced data analysis and more efficient communication. Concurrently, frameworks such as the Strategic Alignment Model emerged to guide the alignment of IT and business strategies. In the late 1980s and early 1990s, Michael Porter's theories of competitive advantage began to influence IT Strategy. Businesses started recognizing the potential for IT to provide a competitive edge, and strategic thinking shifted towards deploying IT to create value, not just cut costs.

The Internet Era and Beyond

With the rise of the internet in the mid-1990s, IT Strategy experienced a significant transformation. The Internet revolutionized business operations, creating new opportunities for customer engagement and e-commerce. IT strategies focused on leveraging the internet for business growth, emphasizing system integration, data security, and privacy.

The 2000s ushered in the era of big data and cloud computing. Companies began focusing on data-driven strategies, analytics for decision-making, and cloud technologies for scalability and flexibility. During this period, IT Strategy also had to consider the risks and opportunities presented by the burgeoning field of cyber security.

In the 2010s, digital transformation became a key element of IT Strategy, driven by developments in artificial intelligence (AI), machine learning, the Internet of Things (IoT), and mobile technologies. This era has shifted towards agile and flexible IT strategies that can adapt to rapidly changing technology landscapes.

The Current State of IT Strategy

Today, IT Strategy is a crucial part of the overall business strategy. The digital revolution has blurred the lines between 'business' and 'IT', as digital capabilities are often central to a company's value proposition. IT Strategy now frequently involves aspects of innovation, customer experience, and digital marketing, and it plays a crucial role in areas such as cybersecurity and data governance. Furthermore, IT strategies are increasingly being developed in the context of broader ecosystems. Companies no longer see themselves as standalone entities but as part of interdependent networks of suppliers, partners, and customers. This trend requires an IT Strategy that can leverage external and internal resources and capabilities.

The Future of IT Strategy

Looking ahead, the evolution of IT Strategy is likely to be shaped by several key trends. First, AI and machine learning will become increasingly integrated into business operations and strategy. This will require IT strategies to effectively leverage these technologies while addressing data privacy and algorithmic bias challenges. Second, as digital and physical realities become increasingly intertwined through technologies like IoT and augmented reality, IT Strategy will need to address the complexity of these hybrid environments. Third, cybersecurity threats will likely become even more significant as our reliance on digital technologies grows. This will make security a central element of IT Strategy. Finally, the ongoing shift towards sustainability and social responsibility will likely impact IT Strategy. This could involve strategies for reducing the environmental impact of IT operations, for example, or using technology to promote social inclusion.

IT Strategy has evolved significantly from its origins in the mainframe era to its central role in today's digital revolution. As we look to the future, the ever-increasing integration of digital technologies into every aspect of business operations will likely make IT Strategy even more crucial. IT leaders must continuously adapt and innovate strategies to leverage new technologies, address emerging risks, and meet evolving societal expectations.

13 Guiding Principles for a Winning IT Strategy

IT (Information Technology) strategy principles are foundational guidelines that organizations establish to guide their approach to utilizing technology effectively to achieve their business goals and objectives. These principles provide a strategic framework for decision-making, resource allocation, and the overall management of IT resources within an organization. IT strategy principles help ensure that technology investments align with the broader business strategy and support the organization's growth and competitive advantage.

These are some common IT strategy principles:

  1. Alignment with Business Goals: IT strategy should be closely aligned with the organization's overall business goals and objectives. Technology decisions and investments should directly contribute to the success of the business.
  2. Agility and Flexibility: IT strategies should be adaptable to changing market conditions, technological advancements, and evolving business needs. Flexibility allows the organization to respond quickly to new opportunities and challenges.
  3. Innovation: Encouraging innovation within IT is essential for staying competitive. This principle emphasizes exploring new technologies, processes, and solutions to drive business innovation.
  4. Security and Risk Management: IT strategy should prioritize the security of digital assets, data, and systems. Effective risk management practices should be integrated into all IT initiatives to safeguard against cyber threats and data breaches.
  5. Simplicity and Efficiency: IT systems and processes should be designed for simplicity and efficiency. Complexity can lead to increased costs, maintenance challenges, and decreased user satisfaction.
  6. Customer-Centric Approach: IT should focus on delivering solutions that meet the needs and expectations of customers, both internal (employees) and external (clients or users).
  7. Collaboration: Encouraging collaboration between IT and other departments is crucial for successful implementation of technology solutions. IT should work closely with business units to understand their requirements and challenges.
  8. Data-Driven Decision Making: IT strategy should leverage data analytics to drive informed decision-making. Data insights can help optimize processes, identify trends, and guide strategic planning.
  9. Scalability: IT systems should be designed with scalability in mind, allowing them to handle increased loads as the organization grows.
  10. Integration and Interoperability: IT solutions should be designed to integrate seamlessly with existing systems and technologies, promoting interoperability and reducing silos of information.
  11. Cost Effectiveness: IT investments should be evaluated based on their value and return on investment. Striking a balance between cost and value is crucial.
  12. Continuous Improvement: IT strategy should be dynamic and open to continuous improvement. Regular assessment and adaptation of the strategy ensure that it remains relevant and effective.
  13. Ethical Considerations: IT strategy should incorporate ethical considerations related to data privacy, security, and responsible technology use.

These principles guide IT leaders and decision-makers to make strategic choices that align with the organization's overarching goals and values. They help create a cohesive and effective approach to technology management and utilization within the organization.

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.[3] IT Strategy is analogous to business or corporate strategy - from the objective to the process, these two share a common logical framework, with the differences manifesting 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; it is aligning business capability with IT Capability. IT Strategy is often included as part of the business strategy. Before IT strategy developed as a discipline, the business strategy process was extended to include technology implications, and the business strategy document became the de-facto home of the 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 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. Generally, 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 different starting and ending points 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: CIO Index 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) (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 the strategic IT concept(s) in general or relate to a specific IT Strategy solution. Listed below are some of the known IT Strategy frameworks:

  • IT Value Mapping: It is a business-focused IT Strategy Framework.
  • EFQM Excellence Model
  • Applied Information Economics (AIE)
  • Function Point Analysis (FPA)
  • Analytic Hierarchy Process (AHP) Framework
  • Gartner Business Value Model

Drivers that Influence IT Strategy [4]

  • 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 how 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 how 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; ensure you get 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 fewer 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, ensure 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 request (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 must 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 are 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 to 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 must decide which to guard against and how much to spend to stay safe. Often the biggest security threat is uninformed employees. Educate your people on 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 ensure 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 Enablers [5]

  • 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 the 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 [6]

  • 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 objectives. This step allows for the identification of important implementation carriers and responsibilities throughout the organization. The objective is to install a first anchor regarding content and human resources needed to implement the IT strategy.
  • The purpose of the second phase of 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 into programs. Resource requirements and business cases need to be defined for every project. Hence, a comparison and prioritization create the basis for a detailed implementation plan. According to the plan, an adequate coordination structure and an adequate implementation tactic need to be determined. Finally, the project teams need to be brought together. It is of high importance to remediate existing conflicts and 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's success depends on. To avoid the fear of change, potential behavioral resistances, and divergence in objectives, all impacted personnel must 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 must 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). Benefits can be considered as the effect of the change (difference between 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, training for future users needs to be prepared and executed; lessons learned 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 continuous implementation control and navigation. Measurement of the actual implementation state at any time during the implementation allows for 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 [7]

  • 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 of the program is less precisely defined upfront; 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, using 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

16 IT Strategy Best Practices For a Robust IT Strategy

What makes an IT strategy truly effective? Here are the best practices for IT strategy development and implementation, ensuring that IT aligns with and drives business objectives. Whether you're refining an existing strategy or crafting one from scratch, these practices offer a comprehensive roadmap to IT success. [8]

Foundational Best Practices

  • Alignment with Business Strategy: Ensure IT initiatives support and shape the organization's overall business objectives to drive value.
  • Comprehensive Coverage: Address all facets of technology management, such as cost, human resources, hardware/software, vendor relationships, and risk management.
  • Collaborative Development: Engage the CIO, CTO, and various departments (e.g., business, budget, legal) to align the strategy with broader organizational needs.
  • Listen to Enterprise Needs: Foster an open dialogue between departmental and IT leaders to ensure IT projects serve a business purpose.
  • Research-Based Approach: Utilize research reports to understand business and technology trends impacting the organization's market.

Adaptive Best Practices

  • Flexibility: Ensure the strategy is adaptable to organizational shifts, technological advances, and market conditions.
  • Agile Approach: Design IT strategies to be agile, especially in response to unforeseen events.
  • Periodic Review and Assessment: Before crafting a new strategy, review the current one and assess how well the organization meets its objectives.
  • Annual Reassessment: Revisit the IT strategy at least once a year to ensure relevance.

Communication and Execution

  • Clear and Jargon-Free Language: Make the IT strategy comprehensible to a wider audience by minimizing technical jargon.
  • Align with Executive Expectations: Understand and meet executive expectations, fostering a supportive relationship between enterprise and IT.
  • Implementation Focus: Prioritize strategy creation and execution and regularly check alignment between tactical plans and the strategic vision.

Explorative Best Practices

  • Examine Different Solutions: After partnering with management, consider the best technological processes and solutions to meet enterprise needs.
  • Framework Utilization: Use frameworks like SWOT Analysis or OGTM to align IT initiatives with stakeholder expectations and compare departmental plans for consolidated solutions.

Post-Implementation Best Practices

  • Analyze and Revise: Leverage analytics to make data-driven improvements. Evaluate outcomes of IT programs against predefined benchmarks to facilitate continuous improvement.

Introducing New Technology

  • Plan Detailed Communication: When introducing new technology, IT and HR departments should clearly address how it benefits the organization and ensures smooth adoption by the workforce.

These best practices, when followed diligently, will help IT departments to understand and deliver on strategic goals, drive innovation, and add competitive value to the organization.

Challenges of IT Strategy [9]

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 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, networks, 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


Further Reading