Decode Corporate Stratgey

Decode the Real Corporate Strategy
Understand the business goals that drive IT strategy and initiatives
Info-Tech Research Group
Introduction
Almost 50% of IT leaders surveyed* are experiencing problems prioritizing IT initiatives & spending due to difficulties interpreting corporate strategy.
This Research Is Designed for CIOs: This Research Will Help You:
Who don't understand corporate strategy well

enough to inform the IT strategy.
Identify the symptoms of IT shops that need a

better understanding of their organizations corporate strategy in order to build 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).
Build a discovery process that ultimately

enables the insertion of technology into the context of the business.
Who cannot effectively demonstrate that the

work the IT department is doing supports the achievement of business objectives.
Position you with the business information

needed to build an IT strategy that supports the goals in the corporate strategy.
* N=142 Source: Info-Tech Research Group
Executive Summary
The Finding Over half of IT resources in, 70% of organizations, are working on projects that are not linked to corporate goals*. 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 in
jeopardy 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 to develop 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=142 Source: Info-Tech Research Group
Understanding corporate strategy is critical to business/IT alignment

Whats in this Section: Sections:
Understanding Business Strategy is Critical to Alignment Determine the Corporate Strategy
ITs lack of understanding
What success looks like

How to get there Why this is difficult to do
Identify Business Goals and Themes

Next Steps
IT-smart business leaders view IT as a competitive weapon and understand the importance of integrating business and IT strategy development, with almost half of them identifying IT needs when they develop business strategy (in comparison, only 10 percent of IT-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.
ITs lack of understanding of corporate strategy leads to misdirected IT funding and decision-making
To make your decisions, you need to know the objectives of the organization. If these are things you hear in your organization*
From Business Leaders:
We should fire the IT team and give their budget to my team. 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. Weve given up waiting for IT; well do it ourselves. IT just doesnt get it.
From IT Leaders:
The business needs to get its own house in order before it starts trying to fix ours. We wouldnt have these problems if they [the business] knew what they were doing over there. What we need is well-documented business processes. The business users kept changing their minds.
then you need a better understanding of the business strategy to become better aligned with the business.
*Source: CIO Magazine, How to Fix Ailing IT-Client Relationships By Damian Smith
High-level corporate strategies typically dont contain the specific business objectives needed for IT strategic planning
CIOs, in the dark when it comes to corporate strategy, struggle when business goals and IT plans are misaligned
When corporate strategy is not understood:
When corporate strategy is understood:
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.
IT initiatives and services dont support business

needs 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 management

requirements results in a deficit of relevant data, business intelligence, etc.
Relationships between business units and IT are

strained or limited and business leaders are frustrated with ITs inability to deliver the solutions needed to achieve business goals.
Full comprehension is achieved by dissecting the corporate strategy into the individual business strategies
To fully align IT strategy with corporate strategy, CIOs must discover and understand the individual business strategies.
Corporate Strategy: the high level strategy of the
organization 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? * Info-Tech Insight 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 to overcome these challenges.
Business strategy: refers to the aggregated

strategies 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 up into the aggregate for the organization.
Examination at the business-level is needed when the

overall corporate strategy: is too high-level isnt clear isnt well documented
*Source: Why Does Firm Performance Differ? Scott Gallagher
IT leaders who align their IT strategies to a well understood corporate strategy show higher rates of success
IT Alignment vs IT Success*
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.
N = 125, Source: info tech Research Group
*See Appendix I for criteria for IT Success and IT Alignment with Corporate Strategy
Understanding specific business goals ensures that IT solutions provide the expected business savings
Situation
e.g.
An online community does their taxes in a financial organizations computing environment. The corporate objective was reduce operating costs by 20%.
Risk 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. Action The CIO worked with the CFO to determine the Finance Department strategy 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.
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Identifying the individual business strategies enables collaborative relationships between IT and the business
Situation
e.g.
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.
Risk
Action 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. BENEFIT The result was: A collaborative relationship between IT and the business unit heads. Improved IT reputation. A lower cost solution.
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Neglecting to discover the specific business strategies results in unwise spending and misalignment of IT/business goals
Situation
e.g.
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.
Risk 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. Action 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. Based on just the high-level corporate strategy, the CIO over invested in a DR 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%).
Info-Tech Research Group 12
COST
Relying on the business to collaborate to provide the IT perspective is a prescription for IT/business misalignment
Situation
e.g.
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.
Risk
Action
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. Hospital staff dissatisfaction with IT caused by recurring loss of patient data. 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.
COST
CIOs who fully understand corporate strategy are able to align funding requests & projects to achieve maximum value
However, be careful of overspending on strategic initiatives to the detriment of ongoing services and operations.
CIOs with full understanding of corporate strategy can dedicate more resources to initiatives 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-today services and operations or service levels and quality will decline.
N = 125, Source: Info-Tech Research Group
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This report focuses on the discovery steps that position the CIO with the knowledge needed to develop IT plans
This report focuses only on the business strategy discovery process.
*
Discover Corporate Strategy
See OptimizeIT for guidance on creating an IT strategy.

*See Appendix VI for full IT Strategic Development Process Diagram
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Determine the Corporate Strategy

Strategic planning is not a one time activity. ITs role in corporate strategic planning.

Next Steps
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Most corporate strategic plans have little to do with strategy; they are simply three-year or five-year rolling resource budgets and some sort of 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 specific customer, operations, and organization directions
Examine the specific business goals & strategies in each of these areas to develop the IT perspective on what they need to deliver.
Customer Direction: Improve customer retention, customer satisfaction, market research, and product strategy.
Operations Direction: Improve analytics, reporting, vendor management, supply chain, and production processes to meet or exceed customer expectations. Improve profitability, revenue and sales growth.
Organization Direction: Enable organizational and people growth, and change to meet new challenges. Improve learning and innovation.
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In organizations that do no strategic planning, begin discovery 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 before seeking 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 what Info-Tech predicts, and what 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, the organizations drivers provide the business context
Business context is imperative to understanding company direction when there is no documented corporate strategy.
Meet with the CEO, CFO and COO and use the Assess Enterprise Strategy
Guide (slide 23) to plan and document the information you need to gather to understand the corporate drivers and prepare you for the business discussions. Info-Tech Insight
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.
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.
DONT try to create the whole corporate strategy document. (Focus on drawing out the business themes that will drive the IT strategy).
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Some organizations do strategic planning but leave the CIO out of the process
Organizations that exclude the CIO from strategic planning:
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.
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When IT is not included in developing the corporate strategic plan: extract the drivers from the document
Analyze the documented corporate strategy to determine the corporate drivers that provide the basis for the business themes.
Using the Assess Enterprise Strategy Guide (slide 23) as
a 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. There may be other parties you need to consult. Large distributed enterprises often have a higher level of governance that generate additional strategic drivers. e.g.
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 the

answers. (Fill in the blanks through discussions with the relevant C-level executives).
The CIO in a major Ontario hospital is left out of the strategic planning process. In addition to the hospitals board, he needs to consult with the Local Health Integration Network (a governing body linking regional hospitals together) and the Ontario Provincial Government to validate the direction outlined in the corporate strategy.
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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Some organizations include the CIO as a full partner in the strategic planning process
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.
we are more efficient because we have an almost immediate understanding of what 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 when you know where it's coming from and what the intended goal is.
- Donna Williams, Pennsylvania One Call System Inc.
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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 the companys strategy is developed. These will anchor the IT strategy.
When you have a documented corporate strategy, with IT as
a 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 you
participate in the discussions. Ask the relevant questions while you have access to the key players.
The themes are mind-numbingly the same for most industries. Its trying to compress the time to market for new products. Its delivering consistent quality in the manufacturing of products or the delivery of services and this pervasive struggle to keep costs down without sacrificing quality. - Yogi Shulz, IT Consultant, Corvelle Consulting
DONT sit back and let the discussions happen around you.
(Take this opportunity to influence the company direction based on the business research youve done and your knowledge of IT capabilities. Remember, you should always be building ITs credibility and positive impact to the organization).
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Use the Assess Enterprise Strategy Guide to identify and document the high-level corporate goals
Assess Enterprise Strategy Guide
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 and provide 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.
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Identify Business Objectives

What information do I need
How do I get it
Who do I talk to What do I ask

Next Steps
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When asked about their strategy, many leaders sheepishly try to pass off a list of annual objectives or key initiatives and hope that the discussion ends there. When asked to articulate what the future will look like two, three, or five years down the road, many a leader responds with words to the effect, I know what it is, but I just 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 business executives to determine the dominant business themes
Establish a clear set of business goals & themes, which includes dimensions of technology, process, and people/skill requirements.
Meet with the department heads (CxOs and VPs) to identify and understand their business goals and themes. Understand the Drivers Trends in industry, competition and risks. Economic outlook, business climate, performance metrics, and
Example: Business goals & themes
future targets. Major initiatives and challenges.
Identify Business Goals
Customer strategy (growth, new channels, product features) Operation Strategy (cycle time, processes, equipment, information) Organization Strategy (people, structure, processes, contraction,
expansion).
Clarify Key Themes
As they relate to cost, value differentiation, flexibility, agility, growth,

and human resources.
*See Appendix VII for customizable table
Source: Info-Tech Research Group International March 2011
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Go into the discussions with the purpose of discovering how business plans will affect ITs current strategy
Prepare for the meeting:
Schedule a meeting with each senior business
manager to interview them about their specific goals.
When planning the discussion, think about the different

businesses and their time horizon when it comes to planning. Some companies, such as retailers, think along the 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.
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 if needed). DONT ask questions with yes/no answers. (Ask open-ended questions that get their thought processes flowing). DONT use a survey. (Have face-to-face discussions that allow you to get clarification or go in different directions). DONT ask about minor enhancements, upgrades, or improvements to existing systems (These are considered part of ITs business as usual operations and not part of strategy discussions). The CIO takes an account manager or their boss along to the senior management interviews he went to one department and they videotaped the meeting. He played the video back to IT staff, commenting as it went through.
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 notes

while you direct the conversation.
e.g.
Source: Helen Hill-Schoenherr, IT/Business Planning City of Ottawa
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During the discussions, consider the impact of business goals on IT people, processes, and technology plans
The aim of the executive discussion is to drive out the IT implications of the business goals. During the discussions, consider the impacts on:
IT People Staff training and development
IT Process IT service levels
Technology Data-center location and size
IT staff allocations IT organization structure (size, distribution)

Required skills/competencies Upsizing/downsizing Outsourcing Roles and responsibilities
Policies (e.g. acceptable use) Risk and compliance

Budget Frameworks/methodologies Governance IT operations
Technology architecture Disaster recovery

Applications portfolio Technology usage Storage Availability, reliability, capacity
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In a large organization, the CIO can delegate the task of discovering the business goals
Mid/Large Enterprise*
You (i.e. CIO in a large or enterprise organization) may
need help due to the size and complexity of the organization, otherwise, collecting the volume of information will be like drinking from a fire-hose.
Small Enterprise*
In smaller or less complex organizations you (i.e. CIO
or head of IT) should conduct the interviews personally.
Senior management needs the assurance that the CIO

is driving this activity.
Delegate some of the interviews to your senior

managers.
Do the interviews with the most senior players

yourself.
DONT send your team in cold. (Prepare them for conducting the interviews by providing them with this report and tools and ensure they have a level of competency and individual alignment with the IT leaders culture).
DONT delegate this task to your team. (You need the face time with senior management to build/maintain good relationships and your own credibility).
*See Appendix III for demographic breakdown of organization size
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A CIO relies on a dedicated strategy planning team to gain understanding of the business strategies
Some of the goals are vague, we cant tell whether theyre looking for a technology solution or just a new truck.
Industry: Government Segment: City of Ottawa Source: Helen Hill-Schoenherr, IT/Business Planning
Situation 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: o The high-level 4 year corporate directives from council. o The annual updates to those directives. o The individual business strategies of the directors for each LOB.
Actions 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.
Lessons Learned 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.
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Use Info-Techs Executive Interview Guide to delve into business executives specific business goals & themes
Executive Interview Guide
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 individual business executive. Record the answers for each executive in a separate copy of the template.
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Talk to the CEO first, and get the big picture for organization-wide initiatives
Who to ask: CEO CFO VP HR
Info-Tech Insight
IT Implications Distribution of data centers Network architecture How the IT organization is structured Skill sets and competencies
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?
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Ask the CEO questions about organizational direction: geographic, company structure, and IT-centric themes
Organizational Direction Questions
Geographic Direction Are you considering expansion into new geographic areas? Company Structure Are there any plans for outsourcing? IT Centric What is your perceived role of IT in the organization?
Are there any plans to stop doing business in existing geographic areas?
Are there any changes to organizational structure anticipated (e.g. centralizing or decentralizing IT responsibility and distribution of resources)?
What is your expectation of the relationship between IT and the business units in the organization?
Are there any plans for expansion of the organization (mergers, acquisitions)?
Are there any plans for contraction of the organization (decommissioning, reduction of products, services offered)?
Is ownership of any systems being re-allocated (e.g. payroll moving from HR to Controller)?
Are changes to major policies being anticipated (privacy, virtual office, security, etc)?
What is your overall perception of IT effectiveness?
Is the organization looking at any changes to the structure of IT (e.g. centralizing or decentralizing IT responsibility and distribution of resources)?
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Operations direction focuses on operational excellence: delivery of quality products/services at optimal costs
Who to ask: COO and direct reports (VPs of Purchasing, Warehouse, Manufacturing, Engineering)
IT Implications How the organizations data is stored, accessed and managed Automating business processes Integration with external systems and processes Reduction in IT services
It is the myriad of daily actions of operations, when considered in their totality, that constitute the organizations long-term strategic direction.
Source: Operations, Strategy and Operations Strategy
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Focus operational direction questions on how things get done: producing goods/services for customers
Operational Direction Questions
Current Process Whats not working in terms of the current analytics, cycle time, productivity, quality, supply chain? For Specific Processes What improvements are you considering to existing defect reduction, labor productivity, cycle time and tracking processes? Where are you considering new areas for process improvement e.g. automation? Required Improvements What improvements are required to the existing analytics? What new ones need to be introduced? What ,if any, is the degree of process outsourcing being planned?
What are the extensions or augmentations we need for operational systems including business intelligence? What are the key operational components that are important today, and are currently not supported by automation?
What are the significant changes to supply chain and sales channels or anticipated changes in how you sell or deliver your product?
What are the anticipated changes to standards and regulations that must be adhered to? What is the one thing that you would want changed from an operations perspective?
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The customer direction is concerned with improving the customer experience and revenue generation
Who to ask: VP Marketing, VP Sales, VP Customer Service, VP Product Management IT Implications Application management lifecycle Application portfolio changes Apps development and maintenance Skill sets and competencies
e.g.
A major product upgrade would have been delayed by months because the product and IT managers had different assumptions about what was to be delivered and when. By asking the right questions, the CIO was able to come up with a plan that satisfied both, and quickly produced incremental revenue for the product.
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Ask about the current delivery of services/products, changes to the current state, and brand new directions
Customer Direction Questions
Current Delivery What are the deficiencies in the current delivery of products or services? What are the revolutionary trends in the industry (e.g. online banking for financial services, health care reform for hospitals)? What complaints are you hearing (external)? Anticipated Changes What major changes do you anticipate for the current products and services (and why)? What are the natural extensions of those services (e.g. introducing dog licensing to a municipalitys online licensing services)? What new transactions are you considering? New Directions What are the new directions the organization is contemplating in terms new markets, pricing, sales processes etc? Whats being considered for expansion of customer self serve?
Whats not working?
What changes are anticipated in the area of support for internal customer service (e.g. outsourcing, downsizing, expansion)?
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 things without actually telling you things.
In large organizations, focus more time on probing customer direction. But dont exclude other strategies
Med/Large Enterprise*
The larger your organization, the more time you should spend probing for initiatives that will improve the customer experience.
Small Enterprise*
In smaller organizations you should spend equal amounts of time on all three strategies (i.e. operational, customer, and organizational).
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.
N = 125, Source: InfoTech Research Group
* See Appendix III for organization size demographics
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Conduct IT strategic planning on the same schedule as corporate strategic planning cycles to ensure alignment
When business & IT planning cycles are out of sync, the result is poor business/IT alignment. This is where you want to be. By doing IT
How often should strategic planning be done?
Align IT strategic planning cycles on the same schedule as your organizations business planning cycles.
DONT do IT planning more frequently than the 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 plan that 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 for misaligned projects). strategic planning in step with the business cycle, the CIO ensures the IT strategy is aligned with the goals and objectives of the organization.
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 successful as IT spends time and money re-working projects to play catch-up to the business.
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.
*See Appendix I for criteria for IT Success
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An IT Manager builds a tighter relationship with the business to manage funding uncertainty
When we determine our strategy, we do it with the understanding that things are going to change the people I work with have learned not to hold onto anything too tightly because it could disappear.
Industry: Government Segment: Community Action Agency of New Haven Incorporated (CAANH) Source: Al Grimm, IT Manager Situation 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. Actions 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. Lessons Learned
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.
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Get engaged all year long with the resources & people who will teach you the business of your organization
Strategic planning is not a once-a-year activity, the CIOs work starts long before the planning process begins.
Between planning cycles do this:
Effective strategic planning requires IT executives to leave their offices and engage business management in a dialog about the top five issues that are creating heartburn. - Yogi Shulz, IT Strategy Consultant, Corvelle Consulting
Read industry journals and the business section of key

publications to understand the context of what is going on in your industry. Look for relevant business drivers and pressures. For example:
Pharmaceutical - regulatory approval process
Government public policy

Health care health care reform Retail - consumer-mind share Info-Tech Insight In order to ensure IT planning is aligned with the business, CIOs should invest approximately 30% of their time understanding the business of their organization.
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 is

being done in the business trenches.
Document everything youve learned and keep it current.

Avoid activities that isolate you from the strategy of the organization. Business strategy IS the CIOs business
Go beyond the day-to-day IT operations and make yourself, and the IT department, relevant to the achievement of business strategy.
Dont do these things:
Dont spend most of your time on operational minutiae within the IT area (You have a team to do this).
Dont wait for business leaders to come to you with issues or problems in their areas that require IT involvement to resolve (Proactively seek out your peers and find out whats troubling them). Dont focus your personal development entirely on technical skills and innovations (Learn instead about industry trends and how they impact your organization). Dont limit your contact with your senior management peers to discussions of a technical nature (Talk to them about whats keeping them up at night). Dont view your own IT department as a custodial service that just keeps the lights on. (Foster a culture of innovation in IT to find ways to generate added value). Dont hide ITs light under a bushel (Actively promote the success of past IT initiatives in business terms). 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.
44
Its not always easy. Other CIOs have used these tactics to avoid problems when determining business strategies
To avoid this
Business leader cant articulate strategy or doesnt have one.
Do this
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.
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. 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. Validate the business strategies periodically with the business between planning cycles, (at least yearly), or quarterly if organization change is more rapid than that.
Business unit strategies compete with each other or do not align with corporate strategy.
Business lacks understanding of what technology can bring to the table.
Business strategy becomes outdated due to organizations rate of change.
45
Next Steps
Consolidate the findings How to use the results Recommendations summary

Next Steps
46
My CEO says, "Unless we all know, we don't all know. So until we all know, none of us really knows what we should be doing.
- Al Grimm, IT Manager Community Action Agency of New Haven Incorporated
47
Identify the high level IT imperatives and map to the business 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.
Identify IT Imperatives
Determine the IT action needed to ensure they will help the achievement of strategic goals.
Consider alternatives to ensure the best solution.
Validate IT Operational Model

Consider where additional (or fewer) resources are needed and how those should be sourced to achieve the business goals.
Identify policies, process, and methodologies that need to be revamped or introduced.

Review vendor strategy.
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.
Evaluate Technology and Security
Identify the major applications/data/hardware systems that will be changed. Document the impact to existing business continuity/disaster recovery plans. Identify the changes to security policies and structures.
DONT do this on your own (Use your team of experts to help you drive out the IT imperatives).
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Use the IT Imperatives Workbook to help you map the IT imperatives to the business goals & themes
IT Imperatives Workbook
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.
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Validate the IT perspective with the business to confirm a common view

How to present it and why Validate with the Business
Example: Mapping to High Level IT Initiatives
Present the high level mapping of IT imperatives, business goals & themes back to the C-level and VP executives to close the loop and confirm:
o Your understanding of what youve learned. o What you will need to build into the IT strategy. Business Themes
Info-Tech Insight You run the risk of playing back what they already know, but management needs to comprehend what you need to do, and when, from a high-level IT perspective to help them achieve their goals.
Business Goals
IT Imperatives
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Recommendations Summary
Do this
Determine your role in corporate strategic planning.
Dont do this
Dont settle for not being involved. (Work year round to build ITs impact and influence with the business). Dont rely entirely on the high level strategy. (Youll need the business perspective on how they will deliver). Dont ask IT questions. (Frame the discussion around changes in the way they do their business). Dont spend a lot of time. (Keep the discussion high level and to one or two 30 minute sessions per interviewee).
Interview the executive team to understand the high level corporate strategy. Meet with senior management to draw out the specific business goals and themes. Conduct the meetings and interviews with the objective of drawing out the IT implications.
Determine the IT imperatives that align with the business goals and themes.
Present the consolidated IT perspective back to senior management for confirmation. Use Info-Techs research, tools, and call our analysts to help you discover the real corporate strategy.
Dont do this alone. (Work with your team of experts).
Dont worry about repeating what they already know. (Management needs to understand the IT perspective). Dont assume full understanding will come without doing the work. (You need to understand the business strategy in order to achieve IT/business alignment).
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An understanding of corporate strategy leads to smart IT funding decisions and IT/business alignment
Now, if you hear these things in your organization
From Business Leaders:
We should increase the IT budget. The IT department is key to helping me achieve my strategic goals. IT presents innovative solutions to my business problems. IT has a good grasp of where the business is going.
From IT Leaders:
I [the CIO] am an equal partner in the development of the corporate strategy. They [the business] understand that changes to their strategy affect the work IT does. I have a good understanding of what the business does. I understand how the work I do helps the achievement of the organizations objectives.
then you have an excellent grasp of the business strategy you need to make IT decisions and plans
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Appendix I
IT Alignment with Corporate Strategy Criteria
Strategy execution is not monitored or tracked
Corporate strategy is not formally documented

Corporate strategy is not adequately communicated to management Corporate strategy is too high level Individual IT and business unit strategies are not consolidated into an overall corporate strategy IT/Business unit management dont have time to delve into more detail Corporate strategy is not adequately communicated to staff
Corporate strategy is revised too often

Corporate strategy is not revised often enough
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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 achieve
short-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 and
controlled 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 the
context 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
Organization Type
# of IT Staff
# of Employees
Small Medium
Large Enterprise
1 - 10 11 50
51 100 101 and up
1 1,000 1,000 5,000

5,001 10,000 10,001 and up
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Appendix IV Top Level Graphs
57
Appendix IV (contd)
58
Appendix IV (contd)
59
Appendix IV (contd)
60
Appendix IV (contd)
61
Appendix IV (contd)
62
Appendix IV (contd)
63
Appendix IV (contd)
64
Appendix V
Sources
Susan Cramm, How IT Smart Are Our Organizations?, Having IT Your Way blog, survey taken AprilJune 2009, with
assistance 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).
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Appendix VI
66
Appendix VII
Business Goals
Grow existing business
Key Themes
Alternative sales channels Expand to new markets Current market penetration
Create a consolidated customer view
Advertising
Customer profile and history

Privacy
Improve back-office operational efficiency
Automation Standardization 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 Employee communication


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Decode the Real Corporate Strategy

Understand the business goals that drive IT strategy and initiatives

Info-Tech Research Group

Who don't understand corporate strategy well

Identify the symptoms of IT shops that need a

Who are in organizations undergoing change

Build a discovery process that ultimately

Who cannot effectively demonstrate that the

Position you with the business information

* N=142 Source: Info-Tech Research Group

Info-Tech Research Group

Use advice in this research to:

Info-Tech Research Group

Understanding corporate strategy is critical to business/IT alignment

ITs lack of understanding

What success looks like

Identify Business Goals and Themes

Info-Tech Research Group

Info-Tech Research Group

IT initiatives and services dont support business

IT projects and deliverables cost more in time and

Lack of understanding of management

Relationships between business units and IT are

Info-Tech Research Group

Business strategy: refers to the aggregated

Determination of specific the business-level customer,

Examination at the business-level is needed when the

*Source: Why Does Firm Performance Differ? Scott Gallagher

Info-Tech Research Group

N = 125, Source: info tech Research Group

Info-Tech Research Group

Info-Tech Research Group

Info-Tech Research Group

N = 125, Source: Info-Tech Research Group

Info-Tech Research Group

See OptimizeIT for guidance on creating an IT strategy.

Info-Tech Research Group

Determine the Corporate Strategy

Identify Business Goals and Themes

Info-Tech Research Group

Info-Tech Research Group

Info-Tech Research Group

Info-Tech Research Group

Info-Tech Research Group

Info-Tech Research Group

Circle back with the CEO to ensure that you have

DONT assume the documented strategy has all the

Info-Tech Research Group

Info-Tech Research Group

Use Info-Techs Assess Enterprise Strategy Guide (slide 23)

Info-Tech Research Group

Info-Tech Research Group

Identify Business Objectives

What information do I need

Identify Business Goals and Themes

Info-Tech Research Group

Info-Tech Research Group

future targets. Major initiatives and challenges.

Identify Business Goals

Clarify Key Themes

As they relate to cost, value differentiation, flexibility, agility, growth,

Info-Tech Research Group