IT Strategy Articles

IT Strategy Articles

Its not IT, its your brand!

Organizations come up with pithy slogans, tag lines and spend millions advertising and promoting them. Ostensibly, this builds the “brand”. Arguably, brand is one of the most powerful concepts not just creating but also sustaining shareholder value. So, all this energy and dollars are well justified.

However, are you taken at your word or do your deeds speak more convincingly? My own experience as a customer and consulting with companies is that self professed virtues are important but action driven images are critical.

The issue in your customers’ mind is: Can you back up your claims?

This is where IT comes in. Let me explain.

Brand is critical to shareholder value
Brand is the essence of an organization. It cannot be touched or felt and in more ways than one, it is a perception. It does not speak yet it is that one thing that tells more about an organization than all the reams of paper taken up by press releases, brochures, employee manuals etc.

Why do people buy iPods for twice or thrice the price of a comparable MP3 player? Why did people automatically associate “Xeroxing” with “photocopying”? Why do people watch Steven Spielberg movies even when they know nothing about them in advance? Why is Mike Tyson still a huge draw? Why is Toyota going to be the largest car company in the world in 2007?

Brand takes time to build; short time to destroy – sometimes an instance. How many of you are going to watch Michael Richards’ (Seinfeld’s Kramer) stand up comedy show? He blew away a lifetime of value in that one outburst.

• According to J.D. Power and Associates surveys, American car companies are competing head to head with Japanese companies in quality but is that the car buyer’s perception?
• Can an airline come out of a crash? What happened to Pan Am?
• Would you like to have a brokerage indicted for fraud manage your investments?
• Would you like to put your money in a bank whose statements are inaccurate? How many inaccurate statements before you change banks?
• Would you like to buy your insurance policy company known for waste and mismanagement?
• Would you buy the stock of a company involved in options scam?

How bad can it get? Remember Anderson? This Big 6 accounting firm was indicted for participating in fraud against shareholders. The issue never went to trial. No guilt was ever proven. They were out of business on that indictment.

Brand is a promise – an implied one at that – of value.

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Putting IT Strategy in Context

In my travels over the past two decades, I have noticed the peculiar state of IT Strategy. Some worship at the altar of IT strategy as “it’s all in the strategy”, while others malign it as “the last thing we need is a strategy?"

While these are extremes and a majority of the views are somewhere in the middle, I do believe that the context for IT Strategy is not properly understood. Consequently, its development and implementation misses the mark.

The first step to an effective IT Strategy is to put it in context, i.e. understand its role and scope.

The Role of IT Strategy

IT Strategy sets the direction for an IT organization, just like business strategy sets direction for the enterprise. If this direction is correct then execution against it will result in the desired results, i.e. value creation. If this direction is not correct then the exact opposite will happen.

IT strategy does not say or do anything about the execution that follows in response to it. A good direction with flawed execution will still result in disaster. The blame, as it were, is not in the strategy but in the execution. Similarly, flawless execution in the wrong direction will not result in the desired outcome either.

IT Strategy enables the effectiveness of an IT Organization. IT Implementation defines its efficiency. Consequently, an IT Organization needs both, a good IT strategy and execution, for value creation.

Quite often, we miss this point, and debate the relative importance of IT strategy versus execution. One can understand, if the debate is on relative emphasis i.e. how much time and effort should an organization devote to each? However, pitting them against each other an “either or” equation is counterproductive.

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7 steps to align business with IT

No business will ever reach the goal of “business and IT alignment”. Let me explain.

The goal of perfect alignment is unachievable because of the dynamic nature of business. Every organization operates in an ecosystem and is affected by the forces at play in it. Economy, industry, competitors etc. are all players in this ecosystem who are continuously evolving. Similarly, knowledge and tools – such as information technology - are also continuously changing. To remain competitive i.e. maintain differentiation, every organization must adapt in response to the actions and activities of others in its ecosystem. Organizations that do not adapt lose their competitive edge over time and disappear.

Add to this the changes in an organization’s internal environment – structure, skills, finances, personnel, knowledge, core competency etc. – and now one has a potent mix of forces that demand change in response.

This continuous change is the cause of perpetual misalignment.

It takes time to understand the impact of the actions of others. It takes time to take action. While you are reacting, the world is not stationary – it is throwing more stuff your way. By the time you are done, you are out of alignment. To be precise, while you are taking action, you are out of alignment!

Till we have perfect predictive modeling and instant systems, no organization will ever be in perfect alignment. The best one can do is to move “toward” alignment i.e. moving in the right direction.

Do not let this discourage you from pursuing business and IT alignment! It is a worthy goal to pursue. Indeed, it is a critical one to pursue. You might never reach alignment but you can take steps to get ever closer.

This requires a process.

Often, we ignore the fact that business and IT alignment is a process. This process does not have a starting point nor does it have an end. It is a series of “learn and do” cycles that incrementally get towards alignment.

Learn how to create a strategic plan for IT >>

What is Wrong with IT Strategy?

By definition, every organization has an IT Strategy – some have it clearly articulated and the others are working to one without knowing it.

The question is: Is the IT Strategy producing results?

One can also ask the same question a different way: What must one do to make IT Strategy produce results? Or, perhaps, what is wrong with this IT Strategy?

The strength of an IT Strategy does not come from it being articulated. It lies along its entire lifecycle – from the vision to the underlying policies, framework, process design, including management and control mechanisms, and execution. Each of them must be carefully thought through and designed.

Vision, principles and policies set the direction for an IT Strategy. They are the first step to designing and defining an IT Strategy but, more importantly, they reflect the stakeholders’ beliefs. It is critical that the strategy evolve from these beliefs, otherwise execution will be “half hearted”. It is also absolutely essential to realize that “stakeholders” include both the designers and the executers of this strategy.

A framework provides structure to IT Strategy. It enables rapid, repeatable results by ensuring that we have a complete “picture” and made the key connections. Frameworks might not guarantee success, but they sure help sustain and repeat it. Sometime, they can also salvage a floundering effort by identifying root cause of failure. Without a framework success or failure are a black box. More often than not, success comes from tinkering with an initial failure. Frameworks are invaluable in this tinkering.

Sometimes we forget that IT Strategy is a process not a point in time event. Like any other process, IT Strategy process must also be designed and have an “owner”. It must also be integrated with other processes such as Budget, Portfolio Rationalization, Enterprise Architecture Planning and Systems Implementation. It must also be managed – monitored and controlled – using clearly defined metrics and mechanisms.

Execution makes all the difference between success and failure of an IT Strategy. An IT Strategy might look good on paper. However, implementation is where the rubber meets the road and for the first time we know, for sure, if things are working as planned. As much as strategy drives execution, the reverse is also equally true. A good IT Strategy is one that is built factoring in “practical” considerations or execution “constraints”. Also, on an ongoing basis, real data from execution must be used to “fine tune” strategy.

For the sake of brevity, we cannot delve into all that issues affecting IT Strategy. So let us look at 10 key reasons why IT Strategies fail to, well, sizzle:

Show me the alignment?

IT Strategy and alignment are such very nebulous terms that most people have difficulty defining them in a manner that is actionable. It is fine to say that an IT Strategy is going to align IT with business but it is another matter that most people cannot prove this alignment. Most CIOs cannot say for sure if their IT is aligned with business.
Show me the value?

Another area of concern is whether an IT Strategy will create verifiable and sustainable results. One of the reasons for business leaders’ dissatisfaction with IT in general, and IT Strategy in particular, is that one cannot verify results. We know that IT Alignment creates shareholder value. However, if one cannot verify alignment itself, they cannot expect to be taken seriously, when they claim, that it resulted in shareholder value creation.

What is the ROI of NPV?

It is hard to argue with Peter Drucker, when he says, “If you cannot measure it, you cannot manage it”. However, is measurement is not restricted to financial measures such as NPV. It is not synonymous with “dollar-denominated”.

IT is different. Its value cannot be measured only through NPV or other financial measures. Its measure does not have to be dollar denominated. There are other, better, means of measuring IT Value.

How does this decision impact IT Value?

An IT Strategy is not an end in itself. Organizations’ need to keep it updated. For example, unanticipated events require a response that might not have been considered in the original strategy. It is critical to understand how these decisions, in response to these events, affect the IT Strategy. Also, how do they impact value creation originally identified?

How does this business decision impact IT?

Stuff happens. In a business, it happens frequently and, more often than not, without warning. Speed and agility of response, differentiate businesses that succeed. Quickly, one would like to know the impact of a business event on its IT. Also, how can IT help respond to them – efficiently and effectively.

IT Strategy framework must, seamlessly, traverse the business and IT boundaries to quickly assess the impact of an event across the entire organization. It should allow for quick decision making in response to these events – by assessing the impact on of each decision on shareholder value.

One big leap or baby steps?

Success, often, is a multi step process, especially, in uncharted territory. Our response to an initial stumble, determines if it is a minor glitch or a decisive blow. A good framework, process with a feedback loop and metrics help in this endeavor.

IT Strategy’s success is no different. Our first foray might result in some problems. We should be able to know when we have faltered; if it is a glitch or a blunder; quickly assess the reason for our stumble. We must also be able to quickly devise a response.

Can I learn from my experience?

The classic definition of insanity is: repeating the same steps expecting different results.
Why do IT organizations behave insanely? Because most organizations do not spend the time to analyze, document, incorporate, disseminate or teach their “lessons learnt”. Best practices are not disseminated from one part of the organization to the other. Failures are hidden. New team members are not taught “what works” and “what doesn’t”. Processes are not modified to incorporate lessons learnt.

Your “next” IT Strategy is bound to deliver the same results and this one - nothing less; nothing more.

Is this a steering committee or a team?

Often, IT Strategy is delegated to a steering committee comprised of participants from different functions. Each participant brings excellent, relevant and complementary skills to the table.
However, this is a great idea that fails during execution.

A successful team must have clearly defined roles and responsibilities. Each member of the team must understand how the different pieces of the puzzle fit together. Each member must “deliver” something. Together, then, the team delivers results.

Steering committees result in the right people showing up for all the right meetings. However, they do not focus on role definition. They also fail to assign responsibility for deliverables. More often than not, these committees turn into debating societies where a lot of good stuff is discussed but very little, if anything, of value is ever delivered.

Who will lose their job if this fails?

Accountability is critical to the success of an IT Strategy. One can create a very “good” IT Strategy that either stays on the shelf or fails miserably when executed. Till success or failure is linked to executive compensation and/or career, such strategies and/or failures will continue to occur.

Are we in compliance?

IT standards are a critical enabler of IT Strategy because they help lower cost of operations. Organizations invest in standards teams that take great pains in defining standards. Often, IT Strategy process is not linked to a compliance process. Hence, projects that do not adhere to technical standards get implemented. Thus a great IT Strategy results in higher than desirable cost of operations.

This is by no means an exhaustive list. However, addressing these will take us many steps closer to the solution.