decode corporate stratgey
TRANSCRIPT
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Decode the Real Corporate StrategyUnderstand the business goals that drive IT strategy and initiatives
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Almost 50% of IT leaders surveyed* are experiencing problems prioritizing ITinitiatives & spending due to difficulties interpreting corporate strategy.
Introduction
Who don't understand corporate strategy well
enough to inform the IT strategy.
Who are in organizations undergoing change
in the way they do business (e.g. new market
direction, expansion or contraction due to
mergers or acquisitions).
Who cannot effectively demonstrate that the
work the IT department is doing supports the
achievement of business objectives.
Identify the symptoms of IT shops that need a
better understanding of their organizations
corporate strategy in order to build the ITstrategy.
Build a discovery process that ultimately
enables the insertion of technology into the
context of the business.
Position you with the business information
needed to build an IT strategy that supports
the goals in the corporate strategy.
This Research Is Designed for CIOs: This Research Will Help You:
* N=142Source: Info-Tech Research Group
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Executive Summary
The Finding Over half of IT resources in, 70%of organizations, are working on projects that are not linked to corporategoals*. IT and business strategies are not linked and funded IT initiatives are not helping to achieve
corporate objectives. In times of economic uncertainty, it is vital to CIOs that every IT dollar be wisely
invested or the CIO risks being replaced.
In many organizations, the IT leader is not part of corporate strategic planning. CIOs find themselves injeopardy more often for what they dont know and arent doing than for the things they are doing. When
the corporate strategy is available, it seldom provides the detailed business information needed todevelop a sound IT strategy that enables corporate objectives. The result is misalignment between the
business objectives and what IT actually delivers.
The Solution Developing an IT strategy requires that CIOs devote time and energy to ask the right questions of the
right people in order to understand business drivers, strategies and goals.
Use advice in this research to: Create a consolidated view of the business organization, operation and customer directions. Confirm a common understanding between IT and the business. Begin the process of developing the IT strategy and plans.
* N=142Source: Info-Tech Research Group
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Whats in this Section: Sections:
Understanding corporate strategy is critical to
business/IT alignment
Understanding Business
Strategy is Critical to Alignment
Determine the CorporateStrategy
Identify Business Goals and
Themes
Next Steps
ITs lack of understanding
What success looks like How to get there
Why this is difficult to do
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IT-smartbusiness leaders view IT as a competitiveweapon and understand the importance of
integrating business and IT strategy development,with almost half of them identifying IT needs whenthey develop business strategy (in comparison, only
10 percent ofIT-dumb business leaders do so).
Source: Susan Cramm, How IT Smart Are Our Organizations?Having IT Your Way blog, survey taken AprilJune 2009,
with assistance from harvardbusiness.org.
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We should fire the IT team and give their
budget to my team.
The business needs to get its own house in
order before it starts trying to fix ours.
Not only was the new system late, it cost
twice as much as they said it would, and it
doesnt do half the things we need it to.
We wouldnt have these problems if they [the
business] knew what they were doing over
there.
Weve given up waiting for IT; well do it
ourselves.
What we need is well-documented business
processes.
IT just doesnt get it. The business users kept changing their minds.
ITs lack of understanding of corporate strategy leads tomisdirected IT funding and decision-making
From Business Leaders:
then you need a better understanding of the business strategy to
become better aligned with the business.
From IT Leaders:
*Source: CIO Magazine, How to Fix Ailing IT-Client RelationshipsBy Damian Smith
To make your decisions, you need to know the objectives of the organization.If these are things you hear in your organization*
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High-level corporate strategies typically dont contain thespecific business objectives needed for IT strategic planning
IT initiatives and services dont support businessneeds or line up with organizational objectives and
priorities. IT projects and deliverables cost more in time and
money for rework to meet actual business needs
Lack of understanding of managementrequirements results in a deficit of relevant data,
business intelligence, etc.
Relationships between business units and IT arestrained or limited and business leaders are
frustrated with ITs inability to deliver the solutionsneeded to achieve business goals.
CIOs, in the dark when it comes to corporate strategy, struggle whenbusiness goals and IT plans are misaligned
CIOs partner with business leaders to develop corporate
strategy.
The corporate strategy drives IT goals and objectives,which, in turn, drive IT projects.
Successful completion of IT initiatives that address specific
business strategies influence how the business results are
achieved.
When corporate strategy is not understood: When corporate strategy is understood:
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To fully align IT strategy with corporate strategy, CIOs must discover andunderstand the individual business strategies.
Full comprehension is achieved by dissecting the corporatestrategy into the individual business strategies
Corporate Strategy: the high level strategy of theorganization addressing the diversification of the
markets/industries the company competes in. The
corporate strategy answers the questions of "which
businesses should we be in?" and "how does being in
these businesses create synergy and/or add to the
competitive advantage of the whole corporation? *
Business strategy: refers to the aggregatedstrategies of single business firm or a strategic
business unit (SBU) in a diversified corporation.
Business strategy answers HOW does the firm
compete in a single market or industry? *
Determination of specific the business-level customer,operational and organizational directions will roll upinto the aggregate for the organization.
Examination at the business-level is needed when theoverall corporate strategy:
is too high-level isnt clear isnt well documented
Its not as easy as it sounds.
Individual business units have
their own goals that are not
always perfectly reconciled in
the corporate strategy.Or, the process for
communicating their goals to
IT is flawed. This makes the
discovery process for IT even
more difficult.
Read on to find out how toovercome these challenges.
Info-Tech Insight
*Source: Why Does Firm Performance Differ?Scott Gallagher
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IT leaders who align their IT strategies to a well understoodcorporate strategy show higher rates of success
IT Alignment vs IT Success*
N = 125, Source: info tech Research Group
*SeeAppendix I for criteria for IT Success and
IT Alignment with Corporate Strategy
IT leaders who lack full understanding of the business
goals and objectives are not aligned with the business,and therefore, are not positioned to positively influence
how the business achieves results.
The CIO wont be invited to participate in the corporate
planning process. IT initiatives they undertake are less
likely to be those that will best help the business
achieve its strategic goals and objectives.
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Understanding specific business goals ensures that ITsolutions provide the expected business savings
Situation
Risk
Action
An online community does their taxes in a financial organizations computing
environment. The corporate objective was reduce operating costs by 20%.
Short sighted cost cutting across the board in the online security
environment would have exposed the private information of thousands of
people to unauthorized access, damaging the reputation of the organization,
and resulting in class action lawsuits totaling in the millions of dollars.
The CIO worked with the CFO to determine the Finance Departmentstrategy and directed ITs cost cutting initiatives to those areas that would
reduce costs and still preserve data integrity.
BENEFIT
The organization eliminated the financial risk of:o Litigation and settlements/fines in the millions.o Reputational damage that would negatively affect revenues from
sales of the Web-based financial services.
e.g.
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Identifying the individual business strategies enablescollaborative relationships between IT and the business
Situation
Risk
Action
The CIO in a municipal government was not part of the corporate strategic
planning process. With objectives like reduce operating costs by 20%, the
high level corporate strategy was too general for her to work with.
Each department developed their own cost cutting initiatives that required
technology solutions. These projects would have negatively impacted the
initiatives of other teams, competed for resources, or introduced redundant
or duplicate solutions.
BENEFIT
The result was:
A collaborative relationship between IT and the business unit heads. Improved IT reputation. A lower cost solution.
The CIO interviewed each department head to identify common themes in
their process redesigns that could be supported with a single solution.
IT plans were based on the specific cost reduction goals of each
department.
e.g.
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e.g.
Neglecting to discover the specific business strategies resultsin unwise spending and misalignment of IT/business goals
Situation
Risk
Action
An auto parts suppliers high level corporate strategy states that they want to
increase e-mail sales and billing transactions by 30% over the next 3 years.
The potential for:
Overspending from over engineering an e-mail continuity solution.
Loss of revenue from under-engineering the e-mail continuity solution.
Loss of reputation due to system unavailability.
COST
Based on just the high-level corporate strategy, the CIO over invested in aDR strategy providing near zero downtime at premium cost of up to$9000/month.
The preferred solution would have been aligned with the actual value and
impact of an outage on the business, at significantly lower cost (30%).
The CIO did not delve into the specific customer service strategy with the
VP, missing the information that a short outage of the e-mail system for up to
an hour, while frustrating, would not have a significant impact on revenues or
customer perception.
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Relying on the business to collaborate to provide the ITperspective is a prescription for IT/business misalignment
Situation
Risk
Action
The various departments in a health center do not collaborate with each
other or IT when developing their goals and objectives based on corporate
strategic direction for documenting and tracking patient care information.
Loss of patient data.
Misalignment between IT and the business.
Loss of IT reputation due to inadequate systems and data management.
COST
Hospital staffdissatisfaction with IT caused by recurring loss of patientdata.
Low IT employee morale caused by increase in support calls. Senior management frustration with the CIO for increased expense from
implementing and supporting multiple systems with the same functionality.
The CIO did not interview the different department heads to discover their
specific goals for patient records.
He waited until they submitted their individual initiatives, and planned the IT
strategy for multiple solutions with no integration of function or data.
e.g.
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However, be careful of overspending on strategic initiatives to the detrimentof ongoing services and operations.
CIOs who fully understand corporate strategy are able to alignfunding requests & projects to achieve maximum value
N = 125, Source: Info-Tech Research Group
CIOs with full understanding
of corporate strategy can
dedicate more resources toinitiatives that deliver higher
business return per IT dollar
spent. Watch out for points
of diminishing return. Dont
allow increased strategic
allocation of investment or
resources to impact day-to-day services and operations
or service levels and quality
will decline.
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See OptimizeIT for guidance
on creating an IT strategy.
This report focuses on the discovery steps that position theCIO with the knowledge needed to develop IT plans
DiscoverCorporate
Strategy
This report focuses only on the business strategy discovery process.
*SeeAppendix VI for full IT Strategic Development Process Diagram
*
http://www.infotech.com/optimizeit/why/it-strategyhttp://www.infotech.com/optimizeit/why/it-strategy -
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Whats in this Section: Sections:
Determine the Corporate Strategy
Understanding Business
Strategy is Critical to Alignment
Determine the CorporateStrategy
Identify Business Goals and
Themes
Next Steps
Strategic planning is not a one time activity.
ITs role in corporate strategic planning.
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Most corporate strategic plans have little to dowith strategy; they are simply three-year or
five-year rolling resource budgets and some sortof market share projection.
Source: Dan P. Lovallo and Lenny T. Mendonca,Strategys Strategist: An Interview with Richard Rumelt,
McKinsey Quarterly, November 2007.
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Understand corporate strategy by clarifying the specificcustomer, operations, and organization directions
Examine the specific business goals & strategies in each of these areas todevelop the IT perspective on what they need to deliver.
Customer Direction: Improve customer
retention, customer
satisfaction, market
research, and product
strategy.
Organization Direction: Enable organizational
and people growth, and
change to meet new
challenges.
Improve learning and
innovation.
Operations Direction: Improve analytics,
reporting, vendor
management, supply
chain, and production
processes to meet or
exceed customer
expectations.
Improve profitability,
revenue and sales
growth.
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In organizations that do no strategic planning, begindiscovery by determining the organizational drivers
Organizations with no published strategic plan: These organizations are fighting fires, reacting to urgent day to day problems and feel
they have no time to spend planning for the long term.
There is a lack of awareness of how a clear strategy can help the organization to get out
of firefighting mode and shift into a more sustainable mode of proactively improving the
customer experience and achieve superior business results.
Where the company does not have a documented business strategy, do not expect to
create one unilaterally. That is not your responsibility.
Your discovery process starts first with identifying the overall corporate goals beforeseeking out the individual business goals needed to plan for the business sponsored
initiatives that IT will need to develop. Read on to find out how to do this.
I then take a look at the industry whatInfo-Tech predicts, andwhat the world thinks is happening. We take those two inputs, sit
down with the management team, and do a group therapy session.
-Helen Hill-Schoenherr,- IT/Business Planning, City of Ottawa
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When no documented strategic plan exists, theorganizations drivers provide the business context
Business context is imperative to understanding companydirection when there is no documented corporate strategy.
Meet with the CEO, CFO and COO and use the Assess Enterprise StrategyGuide(slide 23) to plan and document the information you need to gather tounderstand the corporate drivers and prepare you for the business discussions.
Probe for drivers that affect the company direction and ask for the following:
CEO : Recent and planned corporate activity and challenges (contractions,
expansions).
Corporate vision and core values.
Political, economic, social, and technical trends that affect the organization.
COO: Industry drivers (industry shifts, channel changes, geographic shifts).
Core business and business unit boundaries.
CFO: Financial information.
DONT try to create the whole corporate strategy document. (Focus on drawingout the business themes that will drive the IT strategy).
The goal of the questioning is twofold.First, to gather information. Second to
build the respect and trust needed to
move initiatives forward.
Dont be afraid to ask direct questions
in a way that surfaces solutions to the
issues that come to light.
The goal is to seek understanding in
order to translate the business
objectives into IT goals.
Info-Tech Insight
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These organizations recognize the need for strategic planning, but have relegated IT to
the role of order taker, who is expected to come up with solutions to the problems the
business has defined.
When the IT leader is viewed as a custodian, responsible for just keeping the lights on
they are often excluded from the strategic planning process.
This may be due to a history of the CIO being unable or unwilling to engage with the
business at their level, or to a new CIO who doesnt know the ropes yet.
Start by studying the corporate plan to identify the high level goals.
The corporate plan may have enough business specific detail to provide this information,
but more often, the IT leader, after initial review of the high level vision and strategic
goals, will need to go directly to the CEO and the business heads to identify their specific
objectives and themes.
Some organizations do strategic planning but leave theCIO out of the process
Organizations that exclude the CIO from strategic planning:
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There may be other parties you need to consult.Large distributed enterprises often have a higherlevel of governance that generate additionalstrategic drivers.
The CIO in a major Ontario hospital is leftout of the strategic planning process.
In addition to the hospitals board, he
needs to consult with the Local HealthIntegration Network (a governing bodylinking regional hospitals together) andthe Ontario Provincial Government tovalidate the direction outlined in the
corporate strategy.
When IT is not included in developing the corporatestrategic plan: extract the drivers from the document
Analyze the documented corporate strategy to determine thecorporate drivers that provide the basis for the business themes.
Using the Assess Enterprise Strategy Guide(slide 23)asa map through the corporate strategy document, extract
the relevant organizational information needed to
establish a reference point for the individual discussion
with the business leaders. Circle back with the CEO to ensure that you have
captured the intended vision. Remember, the majority
viewpoint isnt always the right one.
DONT assume the documented strategy has all theanswers. (Fill in the blanks through discussions with therelevant C-level executives).
e.g.
You may also need to go to a higher authority. Widely distributed and global organizations may have
overriding governing bodies that also need to be consulted. Identify those higher centers of authority and
book short meetings with key stakeholders to validate how your understanding of the corporate strategy
aligns with the goals of the broader organization.
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Organizations that include the CIO as a partner in strategic planning: These organizations view IT and the CIO as partners in developing and executing the
corporate strategy.
The CIO has a history of being able to reliably deliver on IT commitments and proactively
identify innovative solutions that will enable business strategy.
The IT leader who is included in the strategic planning process from the beginning is
generally able to determine and often influence the high level corporate objectives and
specific business themes.
Capture the individual business objectives and themes as they are discussed during the
development of the corporate strategic goals.
Some organizations include the CIO as a full partner inthe strategic planning process
we are more efficient because we have an almost immediate understanding ofwhat the business needs. We have a 360 degree view of the business strategy.
There's no education that needs to happen. There's less challenge to things whenyou know where it's coming from and what the intended goal is.
- Donna Williams,Pennsylvania One Call System Inc.
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The themes are mind-numbingly the same formost industries. Its trying to compress the time
to market for new products. Its deliveringconsistent quality in the manufacturing of
products or the delivery of services and thispervasive struggle to keep costs down without
sacrificing quality.
- Yogi Shulz, IT Consultant,Corvelle Consulting
When IT is included as a partner in strategic planning:identify the business goals as the plan is developed
Summarize the key themes & drivers that are raised as thecompanys strategy is developed. These will anchor the IT strategy.
When you have a documented corporate strategy, with IT asa partner at the table, the discovery process is as simple as
noting the critical priorities where IT has a significant role to
play.
Use Info-Techs Assess Enterprise Strategy Guide(slide 23)to document the relevant information as the strategy is being
developed.
Bring this guide to the meetings and fill in the blanks as youparticipate in the discussions. Ask the relevant questions
while you have access to the key players.
DONT sit back and let the discussions happen around you.(Take this opportunity to influence the company directionbased on the business research youve done and your
knowledge of IT capabilities. Remember, you should always
be building ITs credibility and positive impact to theorganization).
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Use theAssess Enterprise Strategy Guide to identify anddocument the high-level corporate goals
In order to prepare for the executive interviews, its critical
to understand the overall strategy of the enterprise in which
IT is operating.
This guide will help you to determine and document the
enterprises business strategy whether or not a written a
strategy document exists.
It will provide a starting point for developing the interview
questions for the business executives.
To use this tool, interview the C-level executives in the
organization to answer the questions in the guide and fill in
the blanks in the guide.
The aim is to build a structured profile of the enterprise andprovide the CIO with a consistent understanding of where
the enterprise is going.
By focusing your vision of the enterprise, you will be better
able to focus on the technologies and IT strategies that will
help it succeed.
Assess Enterprise Strategy Guide
http://www.infotech.com/research/it-assess-enterprise-strategy-guidehttp://www.infotech.com/research/it-assess-enterprise-strategy-guidehttp://www.infotech.com/research/it-assess-enterprise-strategy-guide -
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Whats in this Section: Sections:
Identify Business Objectives
Understanding Business
Strategy is Critical to Alignment
Determine the CorporateStrategy
Identify Business Goals and
Themes
Next Steps
What information do I need
How do I get it
Who do I talk to
What do I ask
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When asked about their strategy, many leaderssheepishly try to pass off a list of annual
objectives or key initiatives and hope that thediscussion ends there. When asked to articulate
what the future will look like two, three, or fiveyears down the road, many a leader responds
with words to the effect, I know what it is, but Ijust cant quite put it into words.
Source: You Need to Focus on Tactics,and IT Needs Strategic Alignment -
How to Derive an IT-Enabled Business Strategy,Harvard Business Press
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Once youve got corporate drivers, meet with businessexecutives to determine the dominant business themes
Establish a clear set of business goals & themes, which includesdimensions of technology, process, and people/skill requirements.
Meet with the department heads (CxOs and VPs) to
identify and understand their business goals and themes.
Trends in industry, competition and risks.
Economic outlook, business climate, performance metrics, andfuture targets.
Major initiatives and challenges.
Customer strategy (growth, new channels, product features) Operation Strategy (cycle time, processes, equipment, information)
Organization Strategy (people, structure, processes, contraction,expansion).
As they relate to cost, value differentiation, flexibility, agility, growth,and human resources.
Example: Business goals & themes
Understand the Drivers
Identify Business Goals
Clarify Key Themes
Source: Info-Tech Research Group International March 2011*See Appendix VII for customizable table
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The CIO takes an account manager or their bossalong to the senior management interviews hewent to one department and they videotaped themeeting. He played the video back to IT staff,commenting as it went through.
Source: Helen Hill-Schoenherr,IT/Business Planning
City of Ottawa
DONT schedule their time for more than half an hour.(Like you, these are busy individuals, who dont have
a lot of time to spare. Request additional meetings ifneeded).
DONT ask questions with yes/no answers. (Askopen-ended questions that get their thoughtprocesses flowing).
DONT use a survey. (Have face-to-face discussionsthat allow you to get clarification or go in different
directions).
DONT ask about minor enhancements, upgrades, orimprovements to existing systems (These are
considered part of ITs business as usualoperations and not part of strategy discussions).
Go into the discussions with the purpose of discoveringhow business plans will affect ITs current strategy
Schedule a meeting with each senior businessmanager to interview them about their specific goals.
When planning the discussion, think about the differentbusinesses and their time horizon when it comes to
planning.
Some companies, such as retailers, think alongthe lines of seasons they plan buying,
marketing, and other activities one or two
seasons in advance.
Other companies, such as mining and natural
resource enterprises, plan over a much longer
term, perhaps five years or more.
As you ask questions, keep in mind the following: What does the strategy mean to IT?
What elements do I need to look out for?
What IT objectives will this drive?
Bring a senior member of your team to take noteswhile you direct the conversation.
Prepare for the meeting:
e.g.
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In a large organization, the CIO can delegate the task ofdiscovering the business goals
In smaller or less complex organizations you (i.e. CIOor head of IT) should conduct the interviews personally.
Senior management needs the assurance that the CIOis driving this activity.
You (i.e. CIO in a large or enterprise organization) mayneed help due to the size and complexity of the
organization, otherwise, collecting the volume of
information will be like drinking from a fire-hose.
Delegate some of the interviews to your seniormanagers.
Do the interviews with the most senior playersyourself.
Mid/Large Enterprise* Small Enterprise*
DONT send your team in cold. (Prepare them forconducting the interviews by providing them with this
report and tools and ensure they have a level ofcompetency and individual alignment with the IT
leaders culture).
*See Appendix III for demographic
breakdown of organization size
DONT delegate this task to your team. (You need the
face time with senior management to build/maintain
good relationships and your own credibility).
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Some of the goals are vague, we cant tell whether theyrelooking for a technology solution or just a new truck.
A CIO relies on a dedicated strategy planning team togain understanding of the business strategies
Industry:Segment:
Source:
Government
City of Ottawa
Helen Hill-Schoenherr, IT/Business Planning
The City of Ottawa has 23
council members, 32 lines of
business (LOB) and over 14,000
employees.
The CIO developed the IT
strategy based on:
oThe high-level 4 year
corporate directives from
council.
oThe annual updates to
those directives.
oThe individual business
strategies of the directors
for each LOB.
Situation
The CIO established a 3 person
IT/Business Planning team to
bridge across all LOBs.
Each LOB had a single business
partner to consolidate the plans
for the LOB stakeholders and
deliver to the planning team.
Planning team consolidated the
plans from all the LOBs, directing
conflicts or issues back to the
business partner or to the council
for resolution.
CIO used the consolidated plan
to develop IT strategy.
Actions
In a large complex organization,
the overall corporate strategy is
too high-level for the CIO to use
to develop the IT strategic plan.
Understanding the strategies for
many lines of business is like
drinking from a fire hose. The
CIO will drown with the effort.
The CIO needs a dedicated
resource/team responsible for
bringing together all the strategic
plans, resolving issues, and
creating the consolidated
business view.
Lessons Learned
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Use Info-TechsExecutive Interview Guide to delve intobusiness executives specific business goals & themes
The questions in this template provide a starting point and
a guide designed to stimulate thought and discussion with
the business executive.
Use the questions to lead the conversation into the areas
of the business that comprise the business goals and
strategy.
Meet with each individual executive to summarize the goals
and themes for their area.
Use the customizable interview template document as a
guide for the questions to be asked of each individualbusiness executive.
Record the answers for each executive in a separate copy
of the template.
Executive Interview Guide
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Talk to the CEO first, and get the big picture fororganization-wide initiatives
Focus on questions
about organizational
practices, processes,
and structures. Ask:
Why are things
done this way?
Are there better
ways to do it?
Is there another
way of looking at
things?
Info-Tech Insight CEO
CFO
VP HR
Who to ask:
Distribution of data
centers
Network architecture
How the IT organization is
structured
Skill sets and
competencies
IT Implications
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Are you considering expansion
into new geographic areas?
Are there any plans for
outsourcing?
What is your perceived role of
IT in the organization?
Are there any plans to stopdoing business in existing
geographic areas?
Are there any changes toorganizational structure
anticipated (e.g. centralizing or
decentralizing IT responsibility
and distribution of resources)?
What is your expectation of therelationship between IT and the
business units in the
organization?
Are there any plans for
expansion of the organization
(mergers, acquisitions)?
Is ownership of any systems
being re-allocated (e.g. payroll
moving from HR to Controller)?
What is your overall perception
of IT effectiveness?
Are there any plans for
contraction of the organization
(decommissioning, reduction of
products, services offered)?
Are changes to major policies
being anticipated (privacy,
virtual office, security, etc)?
Is the organization looking at
any changes to the structure of
IT (e.g. centralizing or
decentralizing IT responsibility
and distribution of resources)?
Geographic Direction
Ask the CEO questions about organizational direction:geographic, company structure, and IT-centric themes
Organizational Direction Questions
Company Structure IT Centric
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Operations direction focuses on operational excellence:delivery of quality products/services at optimal costs
COO and direct reports (VPs of
Purchasing, Warehouse,
Manufacturing, Engineering)
Who to ask:
How the organizations
data is stored, accessed
and managed
Automating business
processes
Integration with external
systems and processes
Reduction in IT services
IT Implications
It isthe myriad of daily
actions ofoperations, when
considered in their
totality, thatconstitute theorganizations
long-term strategicdirection.
Source: Operations,
Strategy and OperationsStrategy
http://www.cengage.co.uk/barnes/students/sample_ch/ch2.pdfhttp://www.cengage.co.uk/barnes/students/sample_ch/ch2.pdfhttp://www.cengage.co.uk/barnes/students/sample_ch/ch2.pdfhttp://www.cengage.co.uk/barnes/students/sample_ch/ch2.pdfhttp://www.cengage.co.uk/barnes/students/sample_ch/ch2.pdfhttp://www.cengage.co.uk/barnes/students/sample_ch/ch2.pdf -
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Whats not working in terms of
the current analytics, cycle
time, productivity, quality,
supply chain?
What improvements are you
considering to existing defect
reduction, labor productivity,
cycle time and tracking
processes?
What improvements are
required to the existing
analytics?
What new ones need to be
introduced?
What are the extensions or
augmentations we need for
operational systems including
business intelligence?
Where are you considering
new areas for process
improvement e.g. automation?
What ,if any, is the degree of
process outsourcing being
planned?
What are the key operational
components that are importanttoday, and are currently not
supported by automation?
What are the significant
changes to supply chain andsales channels or anticipated
changes in how you sell or
deliver your product?
What are the anticipated
changes to standards andregulations that must be
adhered to?
What is the one thing that you
would want changed from an
operations perspective?
Current Process
Focus operational direction questions on how things getdone: producing goods/services for customers
Operational Direction Questions
For Specific Processes Required Improvements
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The customer direction is concerned with improving thecustomer experience and revenue generation
A major productupgrade would havebeen delayed bymonths because theproduct and ITmanagers haddifferent assumptionsabout what was to bedelivered and when.
By asking the rightquestions, the CIOwas able to come up
with a plan thatsatisfied both, andquickly producedincremental revenuefor the product.
e.g.
VP Marketing,
VP Sales,
VP Customer Service,
VP Product Management
Who to ask:
Application management
lifecycle
Application portfolio
changes
Apps development and
maintenance
Skill sets and
competencies
IT Implications
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What are the deficiencies in the
current delivery of products or
services?
What major changes do you
anticipate for the current
products and services (and
why)?
What are the new directions the
organization is contemplating in
terms new markets, pricing,
sales processes etc?
What are the revolutionarytrends in the industry (e.g.
online banking for financial
services, health care reform for
hospitals)?
What are the natural extensionsof those services (e.g.
introducing dog licensing to a
municipalitys online licensing
services)?
Whats being considered forexpansion of customer self
serve?
What complaints are you
hearing (external)?
Whats not working?
What new transactions are you
considering?
What changes are anticipated
in the area of support for
internal customer service (e.g.
outsourcing, downsizing,expansion)?
Current Delivery
Ask about the current delivery of services/products,changes to the current state, and brand new directions
Customer Direction Questions
Anticipated Changes New Directions
In some cases, management may not want to - or be able to - share for fear of leakage in competitive or
sensitive situations (like an anticipated merger). You may not get access to the real competitive plans, so you
need to be prepared to shift accordingly; dont get annoyed, this is reality. You can try to capture any degree
of certainty with the things they are telling you about as well as cues that you will need to be VERY agile in
the medium or short term. Sometimes you have to read between the lines when they can tell you thingswithout actually telling you things.
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In large organizations, focus more time on probingcustomer direction. But dont exclude other strategies
N = 125, Source: Info-
Tech Research Group
* SeeAppendix III for organization
size demographics
In well-aligned organizations, customer
service strategy gets proportionally more
attention in larger organizations for two
reasons:
1. Small companies can shift customer
direction more readily, and as a result,
do less long term planning.2. Instead of trying to hold their place in
the pack, large organizations are more
likely to look for ways to differentiate
their customer offerings.
Med/Large Enterprise* Small Enterprise*
The larger your organization, the more time you should
spend probing for initiatives that will improve the
customer experience.
In smaller organizations you should spend equal
amounts of time on all three strategies
(i.e. operational, customer, and organizational).
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This is where you want to be. By doing IT
strategic planning in step with the business cycle,
the CIO ensures the IT strategy is aligned with the
goals and objectives of the organization.
Conduct IT strategic planning on the same schedule ascorporate strategic planning cycles to ensure alignment
When business & IT planning cycles are out of sync, the result is poorbusiness/IT alignment.
How often should strategic planning be done?
Align IT strategic planning cycles on thesame schedule as your organizations
business planning cycles.
DONT do IT planning more frequently thanthe business. (Organizations that conduct IT
planning more frequently than the business
show moderate success, but it is largely a
wasted effort since it is the business planthat drives the IT strategy and, except for
minor adjustments, the IT strategy shouldnt
change that often).
DONT plan IT strategy less frequently than
the business does. (Youll be unable to
anticipate the business needs, and it will
cost the organization money formisaligned projects).
When IT needs to alter their plans more frequently than
the business in order to stay aligned, then the process
they are using to determine business goals in the first
place is flawed.
By contrast, if IT planning is
done less frequently than
business planning, IT
becomes out of sync with
business plans and the
organization becomes
markedly less successfulas IT spends time and
money re-working projects
to play catch-up to the
business.
*SeeAppendix I for criteria for IT Success
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An IT Manager builds a tighter relationship with thebusiness to manage funding uncertainty
The CAANH Strategy requires
input from a community needs
assessment, focus groups,
community, business owners
politicians, and other social
service agency staff to develop a
three-year and a one-year
strategic plan. The IT manager is an equal
partner in the planning process.
The uncertainty of being almost
entirely grant funded means that
programs are cancelled or
become more important, causing
strategies to change.
Situation
The IT Manager meets at least
10 times a year with the business
and reps from the community to
establish the current objectives
and priorities and ensure the IT
response is agile and flexible.
Understanding the dynamic
business drivers allows
experimentation for innovative
solutions in anticipation of their
future needs.
E.g. text contact pilot improved
fulfillment by 22%, enough to
build it into the business strategy.
Actions
In smaller organizations
undergoing rapid rates of change,
determine the strategy with a
view that things can change.
Stay closely connected with the
business to remain responsive to
their new objectives. Follow the issues that arise in
your industry to ensure
understanding of the external
drivers that will affect the
business strategies.
Lessons Learned
When we determine our strategy, we do it with theunderstanding that things are going to change the
people I work with have learned not to hold ontoanything too tightly because it could disappear.
Industry:Segment:
Source:
Government
Community Action Agency of New Haven Incorporated (CAANH)
Al Grimm, IT Manager
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Get engaged all year long with the resources & peoplewho will teach you the business of your organization
Read industry journals and the business section of keypublications to understand the context of what is going on in
your industry. Look for relevant business drivers andpressures. For example:
Pharmaceutical - regulatory approval process Government public policy Health care health care reform Retail - consumer-mind share
Read and digest the internal business CxOs and VPs
management reports asking clarifying questions. Listen to and participate in the ongoing business industry
dialog, internally with senior management and externally (e.g.departmental town halls, social media, trade shows,
conferences).
Periodically shadow your service teams to see what isbeing done in the business trenches.
Document everything youve learned and keep it current.
Between planning cycles do this:
Strategic planning is not a once-a-year activity, the CIOs work starts longbefore the planning process begins.
Effective strategic planning requires ITexecutives to leave their offices and engagebusiness management in a dialog about thetop five issues that are creating heartburn.
- Yogi Shulz, IT Strategy Consultant, CorvelleConsulting
In order to ensure IT planning is aligned withthe business, CIOs should invest
approximately 30% of their time
understanding the business of their
organization.
Info-Tech Insight
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Avoid activities that isolate you from the strategy of theorganization. Business strategy IS the CIOs business
Dont spend most of your time on operational minutiae
within the IT area (You have ateamto do this).
Dont wait for business leaders to come to you with issuesor problems in their areas that require IT involvement to
resolve (Proactivelyseek out your peers and find outwhats troubling them).
Dont focus your personal development entirely on
technical skills and innovations (Learn instead aboutindustrytrends and how theyimpactyour organization).
Dont limit your contact with your senior management
peers to discussions of a technical nature (Talk to themabout whats keepingthemup at night).
Dont view your own IT department as a custodial service
that just keeps the lights on. (Foster a culture ofinnovationin IT to find ways to generate added value).
Dont hide ITs light under a bushel (Actively promote thesuccess of past IT initiatives inbusinessterms).
Dont do these things:
Go beyond the day-to-day IT operations and make yourself, and the ITdepartment, relevant to the achievement of business strategy.
Info-Tech Insight
When the perception of IT is that
they are part of the infrastructure
and plumbing, senior
management doesnt ask how
do they help me achieve my
strategy? If they pay any
attention at all, its to try to drive
down IT costs and keep IT off
the agenda.
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To avoid this Do this
Business leader cant articulate strategy or doesnt have
one.
Take management through the list of questions in the
interview guide. Provide examples of issues and themes
researched through the industry and peer organizations.
Business resists ITs sudden interest in strategy.
Dont spring this on them suddenly.Set the stage for ITs
involvement in strategic discussions by: 1) ensuring that
ITs own house is in order, 2) engaging executives in
regular discussions about their business plans and issues
throughout the year.
Business unit strategies compete with each other or do
not align with corporate strategy.
Facilitate the discussions between the business units and
strategic planning committee. Provide all background
information you have collected. The business must
decide. Dont plan an IT initiative until the business
decides what they want. NOTE: if they want to proceed
with non-strategic initiatives, you must do so.
Business lacks understanding of what technology canbring to the table.
Promote education and awareness of technology trends at
the senior level (e.g. social networking, Web computing).Bring industry examples of business advances supported
by technology to management meetings.
Business strategy becomes outdated due to
organizations rate of change.
Validate the business strategies periodically with the
business between planning cycles, (at least yearly), or
quarterly if organization change is more rapid than that.
Its not always easy. Other CIOs have used these tacticsto avoid problems when determining business strategies
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Whats in this Section: Sections:
Next Steps
Understanding Business
Strategy is Critical to Alignment
Determine the CorporateStrategy
Identify Business Goals and
Themes
Next Steps
Consolidate the findings
How to use the results
Recommendations summary
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My CEO says, "Unless we all know, wedon't all know.
So until we all know, none of us reallyknows what we should be doing.
- Al Grimm, IT ManagerCommunity Action Agency
of New Haven Incorporated
d f h h h l l d h
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Determine the IT action needed to ensure they will help theachievement of strategic goals.
Consider alternatives to ensure the best solution.
Consider where additional (or fewer) resources are neededand how those should be sourced to achieve the business
goals.
Identify policies, process, and methodologies that need to berevamped or introduced.
Review vendor strategy.
Identify the major applications/data/hardware systems thatwill be changed.
Document the impact to existing business continuity/disasterrecovery plans.
Identify the changes to security policies and structures.
Identify IT Imperatives
Identify the high level IT imperatives and map to thebusiness goals & themes to provide a composite view
After identifying the business goals & themes, develop the high level IT
imperatives based on the IT implications of the business strategy.
Validate IT Operational Model
Evaluate Technology and Security
Source: Info-Tech Research Group International March 2011
Take the IT
management team
through the results of
your interviews and
working documents,then bring them into
workshops focusing
on their various
areas of expertise to
drive out the IT
imperatives.
DONT do this on your own (Use your
team ofexperts to help you drive out theIT imperatives).
h i kb k h l h
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Use theIT Imperatives Workbook to help you map theIT imperatives to the business goals & themes
IT is a critical service function that is directly called upon to
participate in the realization of many of the enterprises
strategic goals.
It is critical for the CIO develop a clear understanding of
what IT must do (imperatives) in order to contribute to the
success of the enterprises strategic plans.
IT Imperatives articulate what IT must do to support the
enterprises business strategies.
The IT imperatives are derived from the IT implications of
business goals and themes.
IT Imperatives Workbook
http://www.infotech.com/research/it-it-imperatives-workbookhttp://www.infotech.com/research/it-it-imperatives-workbookhttp://www.infotech.com/research/it-it-imperatives-workbook -
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Do this Dont do this
Determine your role in corporate strategic planning. Dont settle for not being involved. (Work year round to
build ITs impact and influence with the business).
Interview the executive team to understand the high level
corporate strategy.
Dontrely entirely on the high level strategy. (Youll need
the business perspective on how they will deliver).
Meet with senior management to draw out the specific
business goals and themes.
Dont ask IT questions. (Frame the discussion around
changes in the way they do their business).
Conduct the meetings and interviews with the objective
of drawing out the IT implications.
Dont spend a lot of time. (Keep the discussion highlevel and to one or two 30 minute sessions per
interviewee).
Determine the IT imperatives that align with the business
goals and themes.
Dont do this alone. (Work with yourteam of experts).
Present the consolidated IT perspective back to senior
management for confirmation.
Dont worry about repeating what they already know.
(Management needs to understand the ITperspective).
Use Info-Techs research, tools, and call our analysts to
help you discover the real corporate strategy.
Dont assume full understanding will come without doing
the work. (You need to understand the businessstrategy in order to achieve IT/business alignment).
Recommendations Summary
A d di f l d
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We should increase the IT budget. I [the CIO] am an equal partner in the
development of the corporate strategy.
The IT department is key to helping meachieve my strategic goals.
They [the business] understand that changes totheir strategy affect the work IT does.
IT presents innovative solutions to my
business problems.
I have a good understanding of what the
business does.
IT has a good grasp of where the business is
going.
I understand how the work I do helps the
achievement of the organizations objectives.
An understanding of corporate strategy leads to smartIT funding decisions and IT/business alignment
From Business Leaders:
Now, if you hear these things in your organization
then you have an excellent grasp of the business strategy you
need to make IT decisions and plans
From IT Leaders:
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Appendix I (contd)
IT Success Criteria
Funding for IT initiatives is readily available IT initiatives are rarely cancelled IT leader (or IT representation) is usually invited to business unit planning sessions Business leader satisfaction with IT is high Employee satisfaction with IT is high Technology investments usually achieve desired business benefits
IT proactively recommends solutions that deliver value to the business IT department meets business needs for technology IT department meets business needs for support IT department meets business needs for services
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Appendix II
IT Maturity Definitions
Firefighter:A largely reactive IT environment with a focus on resolving vital or recurring technology issues to achieveshort-term gains. This environment often involves employee overtime, temporary fixes, and frequent shifts in project
priorities, as well as misallocated time and effort.
Housekeeper: The IT department proactively focuses its efforts on operational activities in order to maintain a stable andcontrolled business environment. Project Management standards are closely followed and processes are repeatable.
Cautious investing and careful budget planning facilitate reliability and predictability.
Innovator: The IT environment focuses creatively on achieving business benefits through novel methods (within thecontext of the business) and strategic IT investments. The IT department is willing to take risks and try out untested
methods to improve existing IT and business processes in the long-term.
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Appendix III
Organization Size Demographics
OrganizationType
# of IT Staff # of Employees
Small 1 - 10 1 1,000
Medium 11 50 1,000 5,000
Large 51 100 5,001 10,000
Enterprise 101 and up 10,001 and up
Appendi IV
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Appendix IVTop Level Graphs
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Appendix IV(contd)
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Appendix IV(contd)
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Appendix IV(contd)
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Appendix IV(contd)
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Appendix IV(contd)
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Appendix IV(contd)
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Appendix IV(contd)
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Appendix V
Sources
Susan Cramm, How IT Smart Are Our Organizations?, Having IT Your Way blog, survey taken AprilJune 2009, withassistance from harvardbusiness.org.
Dan P. Lovallo and Lenny T. Mendonca, Strategys Strategist: An Interview with Richard Rumelt,, McKinsey Quarterly,November 2007.
You Need to Focus on Tactics and IT Needs Strategic Alignment - How to Derive an IT-Enabled Business Strategy,Harvard Business Press.
Aligning Technology with Strategy, Harvard Business Review.
Operations, Strategy and Operations Strategy(http://www.cengage.co.uk/barnes/students/sample_ch/ch2.pdf).
http://www.cengage.co.uk/barnes/students/sample_ch/ch2.pdfhttp://www.cengage.co.uk/barnes/students/sample_ch/ch2.pdf -
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Appendix VI
d
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Appendix VII
Business Goals Key Themes
Grow existing business Alternative sales channels
Expand to new markets
Current market penetration
Create a consolidated
customer view
Advertising
Customer profile and history
Privacy
Improve back-officeoperational efficiency
AutomationStandardization
Controls
New product development Innovation
International products
Alternative payment channels
Reduce production time Build vs buy
Internal partnerships
External partnerships
Improve employee
engagement
Flexiplace working
Training and development
E l i ti