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IT strategy is like a map combined with an itinerary listing the most important destinations and the way they are to be reached. And more precisely, it describes the assumptions for the use of IT solutions in a way that would effectively support achieving the company's business objectives.Effectively, that is according to the users' expectations and without excessive delays and unexpected costs.
How do the best ones do it? Just have a look at some industry contests, such as the American Premier 100 IT Leaders or Polish IT Leader organized by Computerworld. They provide inspiring examples of well-implemented IT strategies. Winners in the USA included heads of IT at LinkedIn, AirBnB and Booz Allen Hamilton1 . The IT Leader 2014 title was awarded to PZU, Hempel Paints Poland and Operator Logistyczny Paliw Płynnych, among others2 . Even though the winners are different-sized companies representing various industries, they have one thing in common: really good relations between IT and business that bring value to their organizations.
What are the rules of creating a good IT strategy? IT leaders usually mention a few basic ones and we are presenting them below.
IT strategy must be in line with the company's business strategy. The strategy document explains how IT solutions help to achieve the plans of the entire company, along with defining the model of interaction between all departments. It cannot be too detailed or too focused on technology. Strategy needs to be written in such a way that not only IT specialists, but also any member of the board or head of any department can read and understand it easily. That is why, apart from elements that refer to technological solutions, i.e. an analysis of systems architecture and how it can be aligned to the company's business tactics or plans regarding management and IT development, such document should also include information about IT budget and vendor management.
According to various analyses, the so-called maintenance remains to be the dominant item of IT budgets. In an AlixPartners and CFO Research study, it was rated at 63%, while Forrester Research estimated its contribution at 72%. Rita Gunther McGrath, a Professor at Columbia Business School, claims that maintenance can take up as much as 80 and 90% of the budget. Those recurring, standard and time-consuming processes and activities have no contribution to incremental development, but ensure company's day to day operation. The remaining part of the budget (that is definitely too small) is spent on investments and innovations that help to develop new products, open new markets and reach new clients. One of the trends in modern IT management is the optimization of the maintenance part that allows to free more funds and resources for business needs, e.g. by using colocation services in the vendor's data center.
An experienced Polish director of IT reiterates that the collaboration of IT with the rest of the company should be like dancing tango and constantly changing leads. In practice, it means that even the best IT department and the most transparent vendor must work closely with people who will use the systems later on.
IT strategy, just like every IT project, should be based on a good understanding of needs and expectations of the recipients of the systems. However, while in IT projects the identification of business systems users is simply one of the stages, in the area of strategy development and implementation, it is a recurring process performed both with the use of formal methods (surveys, meetings) and the informal ones (participating in team-building meetings or delegating IT specialists for temporary work with business).
Some managers tend to shelve strategies once they are prepared. This can be particularly easily justified in the case of an IT strategy. The IT market changes so rapidly that after just a few months, a part of the technological assumptions may become outdated. That is why IT strategy should be regularly reviewed and adjusted to the company's current needs and priorities. It also needs to be supplemented with a set of KPIs defining the expected results both in the form of figures (such as the anticipated downtime of major applications), as well as descriptive measurements, depicting the expected effects of using IT wherever defining them in figures would be too complicated (for example for integrating the systems within a supply chain).
A precise calculation of the current usage of infrastructure resources (systems and equipment) in terms of costs or business results - or in a wider perspective: ROI on IT solutions - is the best proof of IT effectiveness and a strong argument when discussing the strategy with the business part. By showing the scale of savings or increase in revenues, the perception of IT can be shifted from an area that only generates costs to a value creator for the whole organization.
IT is a highly parameterized field. While working on a strategy document, it is all too easy to yield to the temptation of drawing up the goals and actions as a list of tasks, the performance of which is defined numerically. Unfortunately, in this way only the actions already performed are reflected. We are also losing the competitive advantage that can undoubtedly be achieved by using IT solutions well aligned with the needs.
Even the most brilliant IT strategy is nothing but a wish list, unless it is expressed in more precise terms. That is why all strategic assumptions need to be immediately followed by specific action plans for every key area, defining the way business goals are to be achieved as well as the mode of collaboration between IT and business, IT department service levels and collaboration policy with IT vendors. As much as a strategy should encompass a few years' horizon, action plans need to focus on activities to be performed within one or two years.
Effective IT management in a company requires integrating works with all key business departments. That can be achieved only by applying a holistic understanding of the IT solution users and even, to some extent, adopting their point of view on IT. IT vendors might be helpful in recognizing those expectations, as they face such challenges on a daily basis.
1http://www.computerworld.com/category/premier100/ (accessed on 17.06.2015)
2http://www.computerworld.pl/news/398952/Liderzy.Informatyki.nagrodzeni.za.dojrzalosc.html (accessed on 17.06.2015)