Information Technology plays a dramatic role in global business, producing disruptions that upend industries and alter the manner in which business is conducted. However, the process of developing an effective IT strategy for business can be quite complicated involving in-depth analysis and input from various business areas to ensure a holistic view of the organization is captured.
According to a recent online global study by McKinsey Digital, a large percentage of companies realize minimal success in their efforts to digitize their business models and technology management. Interestingly, this aspect of IT strategy vs business strategy is evident even in the most cutting-edge industries.
The need for an agile IT strategy in business is clear, and yet it eludes many organizations. Below we’ve made a comprehensive guide on how to formulate and implement an effective IT strategy that facilitates your business goals and your business success.
Your business operating model encompasses the way different pieces of your business fit together. Its main purpose is to ensure that everyone in the organization focuses on the value the business seeks to create. You can articulate how your business will uniquely deliver this value only when your business model is clear across the board.
As such, both IT and business leaders have to be on the same page on how the business operates as a whole before any strategies can be formulated. In many cases, business leaders and IT leaders tend to have varying visions on what the organization should look like. Isolated IT and business functions lead to misaligned and often times conflicting strategies.
As a business manager, you must be willing to not only understand the business, but also the implications of IT to the business. This way you can encourage IT to translate their concepts and ideas into your business language. A great practice would be to schedule brief weekly or bi-weekly IT strategy and business alignment meetings to create strategic plans and assess your strategy. On an ongoing basis you must ensure that the business strategy is aligned with the IT strategy.
One of the differences between organizations that successfully align business with IT, and those that fail; is the role of leadership in making decisions concerning IT. As a business leader, you must be directly involved in decision-making where major IT initiatives are concerned.
Senior business managers have to meet regularly with IT managers to discuss strategies that encompass both functions. It is much easier for employees to get behind a business IT strategy when the executive leadership team is involved as well.
Getting the right people involved also includes getting external IT and business experts involved in your strategy. It is inadvisable to only use in-house talent for business-IT alignment. External parties bring several key aspects to the table, including better expertise, a different perspective, objectivity, access to more resources, and creative approaches for cost reductions.
An IT Consulting company experienced in developing IT strategies can bring forward frameworks and methodologies built on best practices so that your IT Strategy is aligned and covers all the necessary pieces to be successful.
Not so long ago, IT-related initiatives used to be knee jerk, unclear and lacking in a meaningful direction. Today, an effective business IT plan must include carefully formulated objectives aimed at developing various business capabilities such as product/service innovation, product/service delivery, collaboration across the department, and customer care. You should ensure that these objectives are divided into smaller, inter-related IT and business initiatives which cover different functional areas.
Formulate the objectives such that they can be adapted, accelerated, reconfigured, or cancelled depending on the overall business direction. Having well-defined and realistic objectives will provide both IT and business managers with a unified focus and direction. This will challenge them to think and move beyond current operations to meet the set objectives.
Examples of clear business IT-related objectives would be to “use IT resources to make the company a great place to work” or “improve the customer experience and increase engagement through digital solutions.” When you tailor business and IT initiatives around such concise objectives, it is easier for leaders to track and steer crucial strategic goals over the deployment period of the plan.
Among the challenges of implementing an effective IT strategy for your business are the different ways that you can apply technology. As such, determining how to allocate your IT budget is key to your business IT strategy.
In this regard, there are a few main components you must consider. The first is how to drive down fixed costs (doing more with less). The second consideration is how to allocate resources towards IT investment opportunities that further your business strategy.
Driving down fixed costs can include initiatives such as outsourcing some or all of your IT, using Application Services Providers (ASPs), shared services, and grid computing. When it comes to IT investment opportunities, there are several types that support and further business strategy. They include:
Each type of IT investment detailed above provides a different kind of business-IT value. As such, your strategy must reflect an appropriate balance in all the dimensions of IT investment and technology strategy.
Setting success metrics is central to business and IT alignment as it establishes common goals and binds all parties to the strategy itself. Success metrics provide quantifiable methods for visualizing performance measures and its direction as well as key responsibilities and actions that need to be taken.
Success metrics will make management and staff strategically aware and able to respond quickly, with a clear understanding of how their actions/inactions affect the achievement of the business-IT alignment strategy.
This covers high-level decisions like whether you decide whether you are going to be cloud-first, cloud native, or on premise.
Whether you will source work internally or partner with an IT firm, these are some of the IT principles you should decide on before you land on your IT strategy:
Overall, effective IT strategy and business strategy formulation and implementation are an integral part of any organization in the long term. While there is no definitive business IT strategy, the aforementioned best practices are some of the crucial success factors for where IT infrastructure and business strategy meet. As a business leader, learning to implement them well ensures the business is well-placed to tackle the dynamic business environment.