Summertime – time to make a difference on IT strategic planning!

by Hans Gillior

The summer holiday period is soon upon us and it is time to recharge batteries worn by another stressful year. In the constant demand for increased IT productivity and change, the demand placed on the IT staff is increasing to dangerous levels. The last month before vacation is extra stressful with deliveries, reporting, and an occasional summer lunch or party to conclude the season. After that, we kick back with a sigh in a country house or pool chair with a well-deserved glass of wine or beer to celebrate a job well done.

I am amazed each year by the lack of IT strategic planning drive during this period. The balance between operational deliveries and strategic planning is a quite good indicator of how much business value the IT organization is creating. A healthy IT strategic planning, aligned with the rate of change in the industry, creates business value and corporate competitive advantage. The IT organization is then a valuable strategic partner to the business organization. In this perspective, the summer period (given a 12-month planning cycle) is in fact the most important period of the year to set the foundation for next year’s strategic direction and governance. It is a period when the analysis of the IT environment (external and internal through various models and tools) can be transformed into a review of the current IT strategy and governance structure for the coming year.

Key questions to ask:

• What trends and factors (externally/internally) influence our performance for next year?  Have we done our benchmarks?
• What are the ‘key success factors’ in the value chain for the coming period?
• What is our strategic position and scenarios going forward?
• Have the strategy, themes, and tactical principles changed?

Research shows that approximately 50% (Harvard Business Review, 2013) of IT organizations do not understand business challenges and how to support business success – and can therefore not be considered a valuable strategic partner. It is easy to conclude that the IT strategic planning process is not working in these cases. A hypothesis is that these companies do not use the summer period in a balanced way – with too much focus on operational deliveries and neglect that necessary summer strategy work. The strategic foundation for the next is lost due to a miss-alignment to the business needs.

The consequence of this behavior with too high focus on operational deliveries is difficulties to set the right strategic direction and governance principles. The effects are IT investments are lacking business value, performance metrics are set too late (up to 6 months into the year) and limited change is achieved to address the digitalization trend in all industries. How to be successful given these pre-requisites? This behavior creates a vicious circle in the IT governance track that in the end has effects on the business revenues and customer satisfaction. IT is hardly the strategic partner that business is seeking in the value chain. There are then political discussion and blame games between IT and business on why IT is not delivering business value. Sound familiar?

But if 50% of the IT organizations do not do a “perfect” IT strategic planning, then it cannot be that bad? Can it? Well, in today’s disruptive business environment, IT cannot afford to be misaligned to the business strategy and support corporate competitive advantage. Misalignment will cause the company to be even more vulnerable to IT-intensive digitalization trends (biggest threat to business models in the coming years according to Gartner) and hence lose market shares and potential profits. Running the IT strategic planning process is no longer seen as “ambitious”, it is a hygiene factor essential for the survival of the current IT organization.

Recommendations:

1. What is the frequency of your planning cycle (6 – 18 months)? The recommendation is to define the planning cycle as a first step to understand how the planning calendar works. It depends on the Rate of Change of the industry.
2. Consider how far you have come in the plans for IT this year (given a 12 months planning cycle). If you have not started, prioritize the work at once!
3. More effort in analyzing and concluding on environmental knowledge for an excellent strategic discussion, then on an overload of data and information.
4. Think about the focus of the different hierarchy levels in your IT organization. The focus will change from strategic (strategic initiatives) to operational (business delivery) focus. How to manage?
5. Keep it simple. It is better to do a “good enough” IT strategy with an iterative strategic planning structure than the other way around. What is “Good enough” in your organization?

It is now the summer period and the most important period of the year to make a business difference. Time to create strategic alignment and a foundation for Business IT value creation. Business is demanding a more professional approach to strategic planning to ensure the support of the IT organization in enhancing competitive advantage and future revenues and market shares. Those IT organizations with a too-heavy focus on operational delivery approach (and limited strategic planning) during the summer period are in the risk zone of being phased out and replaced by a more performance-driven approach to IT.