IT Strategy Management is the process which defines and administers the IT organization’s strategy for its services and the administration of these services. A service strategy for the IT organization has its starting point in the business’s strategy, but must also contain much more than simply a number of objectives which support the business’s objectives.
Many IT organizations are understaffed and subject to cut-backs. Then it becomes even more important that the work that is performed and the investments that are made are right in relation to the objectives that are set. The smaller an IT organization is, the more important it is to take strategic decisions on what should not be done.
In other words, a service strategy should not just contain objectives and activities, but also how and with which resources these objectives should be met.
” The essence of strategy is choosing what not to do”
Purpose of IT Strategy Management
The purpose of a strategy is to show how the IT organization will support the business in the work of achieving the set objectives, indicating which services are delivered so that the objectives are achieved, and also how the services are produced in the most effective way.
IT Strategy Management is a responsibility for the management within the IT organization (the IT Steering Group). The strategy enables it to set the objectives for the organization, to specify how the organization should achieve these objectives and prioritize the investment funds that exist. An organization’s strategy is not limited to a single document. The overall strategy also comprises strategies broken down into each organizational unit, process and function within IT.
Strategy Management comprises:
- Analyzing external and internal circumstances in order to identify opportunities beneficial to the IT organization
- Identifying (potential) obstacles which make it difficult for the business to achieve the objectives or which impede the delivery of services to the business
- Finding a solution for how these obstacles can be removed or reduced
- Establishing and continually revising the IT organization’s perspective in terms of vision and mission
- Identifying and establishing the IT organization’s position in relation to the business and suppliers
- Producing and maintaining strategy documents and ensuring that the latest version is available for all stakeholders
- Ensuring that the strategic plans have been translated into tactical and operational plans in the IT organization
- Managing changes in the service strategy and related documents
Value for the business
An IT organization’s strategy defines its objectives, describes how the organization should achieve its objectives and clarifies how to ascertain when the objectives have been achieved. Without a strategy, the organization can only respond reactively to enquiries from different stakeholders in the business. There is little chance of assessing how these requests affect the business as a whole. The risk in such situations is that the IT organization responds to enquiries from the individual(s) who shout loudest, instead of putting its energy into the activities that are of most benefit to the business.
A well-defined strategy ensures that the IT organization’s resources are used to achieve the business’s objectives and that investments are made within the development areas that have been identified.
Strategy Management ensures that all stakeholders can be involved in influencing the focus of IT and the objectives for the IT organization. The process also ensures that resources and investments are properly managed with the aim of achieving the objectives in the strategy.
Activities in connection with strategic analysis
No organization is isolated, but rather defined according to how it is affected by constantly changing surroundings. The aim of the strategic analysis is to determine the IT organization’s current situation and which changes will probably affect it within the foreseeable future.
The strategic analysis comprises internal factors (the IT organization) and external factors (the business and suppliers) with the aim of defining a number of objectives which are subsequently used to produce the ultimate strategy.
Analysis of internal factors
In producing the IT strategy, it is good to start by analyzing what is happening within the IT organization. This is done through analyzing strengths and weaknesses within the following areas:
Current services – Which services are supplied to the business and what value do they provide? Are there any services that are unique and cannot be purchased from outside? Which parts of the business are most/least satisfied and why?
Financial analysis – What are the costs associated with the IT delivery? Are there any IT services which stand out in terms of costs? Can the business recoup the cost for the IT services through efficiencies?
Staff and skills – What skills are there and what is the capacity in the IT organization? Which key skills are there, and where are they located? Are there contracted staff with key skills? How well do training, recruitment and skills planning correspond with the expertise that is required to manage the IT services that are delivered?
IT operation – Analyze the efficiency and quality in the production of IT services. Are there many incidents? Are there any services which stand out compared with others? What is the status of the IT environment? Are there duplicates or old technology that need to be upgraded?
Relationship with the business – What is the relationship with the business like? Are there regular meetings and how does the IT organization fulfil its role in the business’s strategy?
Resources – Which resources are available to the IT organization and how are they utilized? Is there excess capacity or is anything missing?
Ongoing projects – Which ongoing projects are there which might affect internal weaknesses or strengths in the IT organization?
Analysis of external factors
While the internal analysis is focused on strengths and weaknesses, the external analysis is focused on opportunities and threats. The objective of the strategy is to determine which opportunities the IT organization should investigate further and which threats must be acted on.
Industry and market analysis – What do similar IT organizations do in the same industry? What is their organization like, and which strategies do they use?
The business – What does the business do? Which challenges does it have and what strategy does the business have? Which IT services does the business use and will the needs change within the foreseeable future?
Suppliers – Which suppliers do we have? What are their challenges in the future, how will they affect the IT organization?
Partners – Which current or potential partners do we have. What strengths do they have from which the IT organization can derive benefit? Is there anything in our existing IT environment that a partner could produce more efficiently?
Legal requirements – What legal requirements are there which affect how the IT organization works? How well does the IT organization currently comply with these requirements and what does the future look like?
Political circumstances – Are there political circumstances which might affect how the IT organization works within the foreseeable future?
Technological developments – What trends are there within the technological development, and how will these affect the IT organization’s conditions?
Analysis of opportunities
Based on information compiled in the internal and external analysis, identification and analysis is made of the need for new services or opportunities to streamline production of existing services.
Examples of opportunities might be outsourcing a part of the production process to a supplier or starting to deliver a completely new type of IT service to the business. It can also be starting to sell IT services to external customers or bringing previously outsourced production back in-house.
Identify success factors
For each opportunity there are key factors that are crucial for success or failure. These strategic key factors are governed by the business’s requirements, market trends, legal requirements, suppliers, standards and technology.
If, for example, the IT organization delivers services to a bank or to the pharmaceuticals industry, there are a number of regulations that must be followed. If it delivers to transaction-intensive operations such as the stock exchange or an e-retailing business, major investments are required in server capacity. However, it doesn’t always need to involve large and expensive things, a strategic success factor can also be a unique specialist skill that is required to deliver a particular service.
Strategic success factors have the following character:
- They can be defined in the form of skills or resources
- They have been shown to be success factors for leading suppliers
- They are defined by the market rather than by a supplier
- They are the starting point for competition with other suppliers
- They change over time
- They usually require major investments and time to develop.
Put simply, the question is asked; What do the leaders in delivering services do within a particular area, and how do they do it?
Define strategic objectives
The objectives that are defined through the strategic analysis are the objectives that the IT organization is expected to achieve through pursuing the strategy. When the objectives are determined, the IT organization needs to define how the objectives will be achieved, that is the actual strategy.
Clear objectives help the organization to be consistent in its decisions and prevent conflicts. They set priorities and function as signposts in the IT organization.
A few things to consider:
- Do not have too many objectives
- Use primary and secondary objectives
- Define clear objectives that can be measured and followed up
- Avoid ambiguities and judgements
Activities in connection with production of strategy
When the strategic analysis is completed and the objectives are defined, the actual strategy can be established.
Determine perspective – The perspective for the IT organization indicates the direction, values and purpose, as well as, on an overall level, how it is proposed to get there. This is usually expressed in a vision and a mission, where the vision is what the IT organization aims to achieve and the mission describes the IT organization’s aim.
Form a position – The strategic position defines how the IT organization plans to distinguish itself from other suppliers in the market. It might, for example, be in developing unique operational skills or delivering more cheaply than external alternatives. The position is also defined internally, where the IT organization should be clearly defined in relation to the business.
Produce a plan – a strategic plan identifies how the IT organization should achieve its objectives, its vision and its position. The time frame for a strategic plan is normally long-term, but varies from one organization to another. The simplest way is to adapt the planning horizon according to the business’s strategic plan.
Adopt patterns of action – Patterns concern how an organization works, internally and together with others. The formal organizational structure is a part of the course of action, but here also includes how different parts of the organization work together, how decisions are taken, how errors which arise are managed, and how activities are moved from one part of the organization to another.
ITIL® is an example of a process framework for courses of action within an IT organization. It is available for everybody and can be used by any IT organization. This book also describes a course of action for IT operations.
However, what distinguishes an effective organization from others is the capacity, based on what is said in the books, to create an individual course of action based on the reality that exists, that is accepted by the whole organization at all levels and which contributes to creating a culture in the IT organization.
Once a strategy has been determined, it has to be realized. How the strategy should be implemented in the IT organization is described in a number of detailed tactical plans. A tactical plan describes which mode of procedure and which methods should be used to fulfil the strategic plan. If the strategy answers the question ”where are we going?” then the tactic answers the question ”how are we going to get there?”.
The tactical plans are produced and administered by managerial roles at tactical level (business relationship manager, service owner, process owner, infrastructure architect, delivery manager, IT operations manager and also function manager).
Revise processes and functions – There is no IT organization that can implement a strategy without effectively managing its resources. Order and method in activities, procedures and processes are a necessity if the organization is to fulfil the value in. the services in its everyday work.
Distribute resources – An IT organization does not have unlimited resources. If the tactical plans are to succeed, it requires existing resources to be distributed among the activities and projects that are to be implemented.
Critical success factors – the strategic success factors identified in the analysis must be in place for the strategy to succeed. If that requirement is not met, a project should be initiated to establish them. Even though the success factors have already been fulfilled by the IT organization, they might need to be optimized in order to achieve maximum effect.
Prioritize – Each activity, new service or new project costs money. Despite a strategic decision, it is often, money which impedes an IT organization from achieving all the objectives in a strategy. The prioritization within each tactical plan should be based on the business’s perspective.
Register improvements – Even though these are important activities originating in strategic decisions, the activities which will derive from these plans are registered in the ticket management system as improvement proposals. There they are prioritized and coordinated together with all other activities that are to be performed.
All documentation produced in IT Strategy Management should be located in the business management system and made available for all staff within the IT organization and the business.
The following documentation should be located within the framework of Strategy Management:
- Strategic analysis
- Service Strategy containing:
- Vision and mission
- Course of action
- Tactical plans
Relationships with other processes and functions
IT Strategy Management has links to many other processes. The most common are listed here:
One of the following can start the entire process or parts of it:
- Annual revision of the strategy
- New opportunity for a service
- Major changes of internal or external factors
- Mergers or acquisitions
The following inputs are needed for the process:
- The business’s plans and strategy documents
- Reports on technical trends, market trends and analyses
- Supplier strategies and product plans
- Relevant legal regulations
- Interviews with the business and strategic partners
- The service portfolio
- Service reports
The following outputs are generated by the process:
- Strategic objectives and plans
- Tactical plans
- Mission and vision
- Strategic requirements for new services
The following challenges need particular attention in connection with introduction of IT Strategy Management:
- Strategy activities taking place at too low a level in the organization and without any interest from the business’s management
- Lack of information or too much information
- Lack of support from stakeholders
- Lack of document management and information dissemination when implementing the strategy
When an IT organization produces a strategy for the first time, it can be good to limit its scope. It is easy to want a bit too much and collect too much information, which makes it difficult to process and time-consuming during the analysis phase. There is a risk of the activity being delayed and going nowhere in the long-term.
The objective of a strategy is that it should be clear so that all staff can understand it and use its content in their everyday work. A small and simple strategy document is nevertheless better than nothing at all.