MARKET DYNAMICS: FROM IT STRATEGY TO ENTERPRISE STRATEGY

Strategy-CorporateStrategyIn my recent conversations with the CIOs and Heads of IT for  various large organizations it became very clear that no one wants to be a laggard. Each CIO is thinking of future and how the IT can shape and define future of an Enterprise. This is an attempt to shed some light on this very vast topic. There are references from HBR articles and some acclaimed books on strategy in this post.

In the information age, the competent and dynamic use of information technology is a requirement that all enterprises must meet in order to succeed. IT underpins every operation within an enterprise, and in fact it is hard to speak of operations and IT as separate entities any more. They are so intertwined and most business operations are so utterly dependent on information technology that it is usually pointless to think of them separately.

Therefore any valid business strategy rests on assumptions that the enterprise already has or can soon acquire the information systems it needs to achieve performance levels called for by the strategy. Strategies calling for operating capabilities and performance levels that cannot be attained are strategies doomed to fail.

Enterprise Strategy Meets IT Strategy

All enterprises have a set of goals either explicitly stated in a formal business plan or implicitly stated in the culture and conversations within the senior management team. The CIO needs to know these business goals. Better informed and a clear head CIO is in a better position to strategize.

Once the CIO discovers the enterprise’s goals, the next step is to define an IT strategy or strategies to accomplish these goals. Remember, a strategy is simply a way of using the means or capabilities available to a business to achieve its goals. Often, a business executes its strategy by building or enhancing systems to do the things called for by the strategy.

Strategic IT Questions—Do you know the beginning of a Circle?

Good strategy starts with asking the right questions. Strategy is the result you get from answering the questions you ask. Strategy that comes from answers to the wrong questions is useless strategy even if the answers themselves are correct. This is what is meant when people say generals often have great strategies to fight the last war instead of to fight the war they are in (Buddy you have stale information and you are no more relevant).

All of us have a tendency to ask questions that are no longer all that relevant (Ever heard of relevance and survival correlation?).

We ask questions pertaining to the details of a situation that is now passed. We tend to ask these questions because we already know the answers. We learned them from our past experience. The trick is to learn from our experience and yet remember that the future will be different in some important respects from our experience in the past.

Here are some questions to ponder as you think about your IT strategy:

  • What can IT do to enable my enterprise to accomplish its goals?
  • What business initiatives are planned over what time period?
  • What operating capabilities does the enterprise need to successfully carry out these initiatives?
  • What is the conceptual design of the IT systems infrastructure that will enable the enterprise to possess the operating capabilities it needs?
  • How can the existing IT infrastructure best be leveraged to meet enterprise needs?

Defining the IT Strategy (Can you learn how to make an earth pot?)

To define your IT strategy, begin by listing a set of desired performance criteria that IT should meet in order to enable the enterprise to accomplish its goals

Refer: Balanced Scorecard: Measures That Drive Performance (HBR Classic)

Define the desired performance criteria that you expect IT to meet from these four different perspectives:

  1. Financial Perspective—What financial measures do we want IT to achieve?
  2. Customer Perspective—What do external and internal customers want from IT?
  3. Business Perspective—What business processes must we excel at to accomplish the company’s goals?
  4. Learning Perspective—How do we continue to learn and improve our ability to accomplish our goals?

If you can position IT to deliver capabilities that meet these criteria, the IT organization has accomplished its mission.

Remember, a system is always people, process, and technology—not just technology. Define and design the process first, and then put the people and technology into place to support it. At the same time, keep in mind the capabilities of the people and technology available, and design a process that is realistic given those capabilities.

One last point to remember about strategic IT projects is this, the executive sponsors on the business side need to remain actively involved with the project in an oversight and advisory role throughout the project’s life cycle else the success and the timelines both are affected.

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