Decode corporate stratgey

7/30/2019 Decode corporate stratgey

1/67

Info-Tech Research Group 1

Decode the Real Corporate StrategyUnderstand the business goals that drive IT strategy and initiatives


2/67


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


3/67


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


4/67


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


5/67


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.


6/67


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*


7/67Info-Tech Research Group 7

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:



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



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.



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.



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.



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.



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.



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.



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




Determine the Corporate Strategy





Themes

Next Steps

Strategic planning is not a one time activity.

ITs role in corporate strategic planning.



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.



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.


19/67


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


20/67


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


21/67


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:


22/67


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.


23/67


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.


24/67


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).


25/67


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


26/67



Identify Business Objectives





Themes

Next Steps

What information do I need

How do I get it

Who do I talk to

What do I ask


27/67


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


28/67


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


29/67


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.


30/67


31/67


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).


32/67


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


33/67


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
http://www.infotech.com/research/it-executive-interview-guidehttp://www.infotech.com/research/it-executive-interview-guidehttp://www.infotech.com/research/it-executive-interview-guide


34/67


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


35/67


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?


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?


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


36/67


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


37/67


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


38/67


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


39/67


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.


40/67


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).


41/67


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


42/67


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


43/67


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


44/67


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.


45/67


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


46/67



Next Steps





Themes

Next Steps

Consolidate the findings

How to use the results

Recommendations summary


47/67


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


48/67


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


49/67


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


50/67


51/67


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


52/67


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:


53/67


54/67


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


55/67


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.


56/67


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


57/67


Appendix IVTop Level Graphs


58/67


Appendix IV(contd)


59/67


Appendix IV(contd)


60/67


Appendix IV(contd)


61/67


Appendix IV(contd)


62/67


Appendix IV(contd)


63/67


Appendix IV(contd)


64/67


Appendix IV(contd)


65/67


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


66/67


Appendix VI

d


67/67

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

Decode corporate stratgey

Documents

Transcript of Decode corporate stratgey