Forr 051103951500

BEST PRACTICES
June 8, 2006
Creating The Strategic Plan For

Today’s IT
by Alex Cullen
Helping Business Thrive On Technology Change

B E S T P R AC T I C E S
June 8, 2006
Creating The Strategic Plan For Today’s IT
Planning How To Run IT Like A Business
by Alex Cullen
with Bobby Cameron, Craig Symons, Laurie M. Orlov, and Lauren Sessions
EXECUT I V E S U M MA RY
IT’s strategic plan is an essential tool to run IT like a business. The strategic plan for today’s IT is
different from the strategic plans that IT may have developed five years ago. It is purpose-driven and a
complement to IT governance structures and processes. The structure and content are tailored to this
purpose, avoiding the sprawling documents that tried to cover every possible input and aspect of IT
strategy. And today’s plan must be a living plan, with regular review and updating, thereby providing
long-term direction while maintaining relevancy.
TABLE O F CO N T E N TS N OT E S & R E S O U R C E S
2 Yesterday’s IT Strategic Plan Isn’t Needed Forrester interviewed 31 user companies and
Anymore examined the strategy documents of five more,
5 Make Today’s Strategic Plan Context-Based including: DirectTV, FDIC, Northwest Airlines,
And Purpose-Driven Russell Investment Group, Sonoco Products, and
7 Structure IT’s Strategic Plan In Five Sections UnumProvident.
14 Avoiding Strategic Plan Shelfware Related Research Documents

RECOMMENDATIONS “The Three Archetypes Of IT”
16 The Business Plan For The Business Of IT March 22, 2006, Trends
WHAT IT MEANS “The Economics Of IT”
17 Your IT Archetype Focuses Your Strategy June 6, 2005, Best Practices
19 Supplemental Material “The IT Balanced Scorecard — Metrics That Count”
September 30, 2004, Best Practices
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2 Best Practices | Creating The Strategic Plan For Today’s IT
TARGET AUDIENCE
Enterprise architecture executive, chief information officer
YESTERDAY’S IT STRATEGIC PLAN ISN’T NEEDED ANYMORE

Successful IT organizations use an IT strategy to achieve specific results: to communicate
priorities across business and IT; to provide direction and context to governance structures, such
as IT investment committees, and to their portfolio management processes; and to ensure that
expectations set by a strategy are aligned with budgets and improvement plans. A strategic plan for
today’s IT should be very different from the IT plans generated five or 10 years ago (see Figure 1).
What’s changed?
· Project portfolio management as a governance discipline. Without a portfolio management

approach, the ability of IT to work with business to sift and prioritize demand for IT resources
was hampered — business would give IT a long list of changes, and IT attempted to work
everything on the list. Project portfolio management provides business and IT with the ability
to set priorities based upon the relative value of different requests.1
“Our project review board was reviewing project lists but lacked context. Now our CIO
is excited because we have business interest — he hopes to get more strategic use of IT
resources.” Chief architect, biotechnology firm
· The relationship manager as a defined role. Relationship managers provide a focal point for
communication, planning, and coordination between IT and its business customers.2 Without
this role, IT’s ability to have a dialogue on business plans and needs was constrained by a lack of
business understanding — resulting in a reactive stance to business requests.
“Relationship Managers are charged with developing the business unit IT plan in partnership
with the business, with representing the overall IT plan back to the business, and with
working to ensure synergy between these two levels of plans.” CIO, commercial mortgage
firm
· Enterprise architecture as a planning discipline. The EA group’s function in the past was
almost exclusively focused on technology selection and technology standards policing. While
this benefited technology decision-making, it had little impact on IT planning. EA’s focus is
broadening to include business applications and services, and it is increasingly taking an active
role in defining IT strategies.3
· SOX raising the profile of IT governance. IT may have been mission-critical to the business,
but IT governance — such as defined decision-making processes and documented plans — was
an afterthought. But Sarbanes-Oxley section 404 compliance combined with COBIT has raised
the visibility of IT governance and increased executive management and Board of Directors
involvement in setting IT directions and overseeing IT investments.4
June 8, 2006 © 2006, Forrester Research, Inc. Reproduction Prohibited

Best Practices | Creating The Strategic Plan For Today’s IT 3
Figure 1 Today’s IT Strategic Plan Is Different From Yesterday’s
Strategic planning — the old way Strategic planning for today’s IT

Purpose •Identify and communicate all plans for IT • Provide input to business and IT
investments and improvements over governance and management processes
multiyear timeframe • Tailored to business and IT context
•Tend toward infrastructure investments • Not confined to infrastructure
investments
Contents “Everything” — business trends and drivers, Specific drivers, assumptions, and plans
IT assessments, IT principles, multiyear relevant to context and purpose
project lists with descriptions,
improvement programs
Audience All-encompassing plan for Specific plans targeted to specific
senior IT management, business exec audiences, from the Board of Directors
management, IT staff to the IT organization itself
Planning Infrequently, as a major clean sheet Regular revalidation and refreshment

cycle activity: “when the last one is out of date” planned within an annual cycle
Impact • Rapidly declines after first budget cycle Provides continuous input to IT operating
• Not measured plans, governance, and portfolio
management
39515 Source: Forrester Research, Inc.
A Strategic Plan Documents IT’s Intentions — Focusing IT And Business Thinking

Being successful as a business requires a solid model for how to meet customers’ needs and how to
prepare for future opportunities. Strategic plan development drives the thinking on this model —
the documented plan communicates this thinking (see Figure 2). For IT, the effort to develop a
strategic plan helps by:
· Setting business expectations and improving understanding. IT will be challenged to meet

the business’ expectations for new systems or cost reductions if it can’t set the expectations of
what is possible by when. And business groups will always be frustrated if they don’t understand
IT’s constraints.
“As a result of strategy development, we’re more in sync with the business and they better
understand IT capacity. Business views strategy as one of the streams they do — IT views
strategy as encompassing everything we do.” Chief architect, major commercial bank
· Establishing credibility with executive management. With IT both a significant operating

expense as well as one of the largest categories of capital expense, CxOs and often the board
of directors look for evidence of both investment alignment with corporate priorities and
adequate governance and controls to ensure expenditures are spent prudently. They need to see
a big-picture view of IT — not just spend on projects for the business, and not just budget for
operations, but visibility to an asset that can be applied to enterprise priorities.
© 2006, Forrester Research, Inc. Reproduction Prohibited June 8, 2006

Figure 2 What Business And IT Need From A Strategic Plan
Your business customers need the plan to:

• Demonstrate understanding — of their business and their goals and constraints
• Set their expectations — what they can (reasonably) expect from the IT function
• Clarify the rules IT operates under — governance, prioritization, allocation of resources
• Build their confidence — build a track record of IT doing what it says it will do
Executive management needs the plan to:
• Show alignment with corporate priorities
• Communicate rationale behind IT budget and longer-term investment needs
• Describe governance controls
IT needs the plan to:

• Clarify expectations — what does it have to do to be successful
• Provide “room to maneuver” — how to balance new and conflicting demands on IT, without damaging
its ability to deliver
• Justify investments in itself — applications and technology portfolio, and IT skills and processes
“The Board has become very involved in IT plan development. The Board’s focus: ensuring
IT investments are made in the areas the Board sees as essential to the firm’s success.” CIO,
diversified insurance carrier
· Bringing coherence across the IT organization. Managers across the IT organization are
making daily decisions on projects, product purchases, or staff training and development. These
decisions can build on each other — or they can be at cross-purposes, wasting resources and
degrading capability. And too often, IT reacts to the last and loudest request in, making that the
first request to go out.
“IT absolutely has to have a strategy to provide a platform to support business agility. IT
also needs strategy to manage itself.” VP business planning, apparel manufacturer
“We’re trying to implement a more logical process than the squeaky wheel.” Director of IT
strategy, healthcare insurance provider
IT Cannot Run Like A Business Without A Plan

Businesses sometimes run without documented strategies or business plans as a factor of company
culture — when executive management believes that the strategy is obvious or that rapid business
change precludes developing or following a documented plan. But in large firms with more complex

structures, such as multiple business lines, the costs of undocumented or vague plans become
manifest in lack of coordination and fragmented execution. Similarly, as IT becomes more complex
and the business dependence grows, the cost of not having a plan is also high because:
· Lack of a documented plan puts IT at risk of failure. An IT organization may appear to be

successful for a time operating without a plan, but it is always at risk that quick responses will
create a damaging legacy of short-term workarounds. Worse, as IT reacts to one set of needs,
other groups in the enterprise will have no visibility as to what’s up next on IT’s to-do list. IT
can’t succeed if it is solely focused on the impossible task of keeping up with a fire hose of new
projects, enhancements, and service requests.
“Our IT strategy had mirrored the lack of business strategy — we’ve tried to run it as a
collaboration model, not planning model. But as we doubled in size, we realized we need to
do more long range planning to support continued growth.” CIO, airline
· If you don’t know where you’re going, stakeholders don’t either. Without a plan, IT’s
stakeholders can’t know where their needs fit within IT capacity. More importantly, stakeholders
are more likely to see what IT delivers as disconnected actions with no coherence and
no relationship to their priorities, such as investing in new phone systems when business
management places greater importance on supply chain improvements.
· IT must explicitly acknowledge its business surroundings. Technology is interwoven into all
of a firm’s activities, from integrating M&As to regulatory compliance to paying a salesman’s
commission — and so the firm’s growth trajectory, cost and market pressures, and attitudes
toward risk and technology are inescapable backdrops to IT actions. Without acknowledging
these surroundings, IT’s activities can be disconnected from the firm’s plans. For example, when
international growth is a driver, yet IT has no plans to change from a US-orientation.
MAKE TODAY’S STRATEGIC PLAN CONTEXT-BASED AND PURPOSE-DRIVEN

In the best firms, IT should be part of the business’ strategy — but the systems, services, and
technology IT is responsible for are too complex to be planned solely within the context of the
business’ plans. And each IT organization is unique in terms of its relationship with business,
planning, and governance maturity and internal processes and practices.5 To manage its unique
opportunities and constraints, IT needs a documented strategic plan that is tailored to its own goals,
maturity, and requirements — acknowledging context and using context to drive the purpose of the
plan.
Context Ensures The Plan’s Relevance

Starting with an awareness of both the business context and the IT context means that the strategic
plan will be relevant to the firm as it is today. Without this understanding of context, an otherwise

fine strategic plan is destined to an early fate as shelfware — and ultimately does more damage to
IT’s credibility than if there were no plan at all (see Figure 3). Factors to consider include:
· The business climate and firm’s culture. How is the firm changing? How fast is it growing, and
where is it growing? What is the relative importance of supporting growth versus controlling
cost? How important does business management view technology to the firm’s plans? Does the
firm have a planning culture, or does it eschew long-term planning? This context will drive the
firm’s pull for IT services and its willingness to support an IT strategic plan.
· IT’s capability and maturity. What are the IT organization’s strengths and weaknesses? Are IT
processes for service management, project management, or IT governance working effectively?
How confident is the business in IT’s capability? These factors may indicate strengths that the IT
strategy should leverage or impediments that must be overcome as part of, or a prerequisite to,
strategy success.
· The state of the technical environment. Are desktops up to current standards? Are key
business applications held together with chewing gum and bailing wire? These are factors that
will either drive the purpose of the strategy — or constrain what IT can accomplish.
Purpose Provides Focus To Planning Efforts — And Clarity to Plan Audiences

While the context informs the strategic decisions IT must make, an IT planning effort that tries to
respond to every factor of the context runs the risk of requiring substantially more time and effort
to create and of developing a large, unwieldy plan that is harder to understand, let alone implement.
Planning efforts need focus and bounds — which means the CIO and senior IT management need
to define the catalyst that drives the plan — its purpose. Using the context to identify the plan’s
purpose, ask yourself: What are the highest-priority challenges or changes needed — both business
and IT? For example, is it to improve the business value of IT? Or to define how IT will support
strategic business change? Or to plan how IT will improve its own efficiency and reduce costs? Once
the decision is made on the purpose of the plan, then the contents and the actions to develop the
content become much clearer (see Figure 4).

Figure 3 What’s Your Context?
Context Example Possible implications

Business Business growth Firm is growing 20% per year, Invest for scale
driven by sales of low-end
products
M&A Strategy is to acquire small firms Rapidly absorb frequent
where products can be sold acquisitions
through existing channels
Increasing competitive Firm is facing new market Focus investment on market
pressures entrants who are causing prices differentiators
to decline
IT IT quality Business sponsors feel that Improve project management,
application releases are too software development, and QA
infrequent and too buggy processes
IT efficiency Business partners perceive that Drive down cost of IT services
IT is high cost relative to value and create cost transparency
delivered
Technology foundation Core business applications are Incorporate application
on legacy technologies and remediation in project portfolio
getting harder to support and plans
Figure 4 Context Drives The Purpose Of Your Plan
Context Potential plan purposes
Business growth Develop and communicate investments

needed to support growth strategy
Implement planning and governance

Competitive pressures to align IT with highest-value business
activities
IT efficiency Institute process improvement and

service management programs
STRUCTURE IT’S STRATEGIC PLAN IN FIVE SECTIONS

There are five major sections to IT’s plan, which are common whatever its purpose, but the inputs to
each of these sections and the subsections will be different depending on context and purpose (see
Figure 5).

Figure 5 Strategic Plan Outline
Exec Summary Business Goals IT Assessment

FIRM
IT Strategic Plan
2007-2010
Table of Contents
Executive Summary 1
Purpose
Plan highlights
Audience
Business Goals and Requirements 3
Strategy
IT Assessment 8
IT Strategy 10
Implementation
Plan Implementation 19
Executive Summary
While the executive summary may be approached as an afterthought, it sets the tone for the
audience and should not be treated haphazardly. Key content items:
· Purpose of the plan. A strategic plan can suit a variety of purposes — and the purpose of the
plan should be stated clearly upfront. For example, if IT is seeking to better align its priorities
with business plans, this intent should be clearly indicated in the executive summary.
· Plan highlights. This is the summary of the major business and IT issues the plan is addressing
and the major strategy elements.
· Audience. Describe who your expected audience is — and what sections they will be most
interested in. Business management may be most interested in ensuring its needs are identified
accurately, whereas IT staff will be more interested in the details of the road maps.

Business Goals And Requirements

The foundation of the strategic plan is the description of the business goals and requirements that
the plan is addressing. Business goals and needs can be captured a variety of ways and analyzed a
variety of ways — but this should be driven by the purpose of the plan (see Figure 6). If your plan’s
purpose is:
· Supporting business strategy. If the plan’s purpose is to support business strategy, then the
goals and requirements would include the business strategy and plans, business drivers, and
expected changes to business processes.
· Improving business value from IT. If the plan’s purpose is to improve the business value of IT,
then the goals and requirements documented in the strategic plan include the business’ value
chain, operating or go-to-market model, and potentially any SWOT analysis the business has
performed
Figure 6 Business Goals And Requirements

BUSINESS GOALS AND REQUIREMENTS
• Corporate and business goals
• Business strategy
• Value Chain, operating or go-to-market model
• Business drivers (SWOT, critical success factors,

or other analysis)
• Business expectations of IT or satisfaction with IT

Strategy
Implementation

· Improving IT efficiency. If the plan’s purpose is to improve IT efficiency, then the relevant
business requirements are perceptions and expectations of IT services and corporate-level
constraints on IT budgets or investments, such as limiting IT to a percentage of revenue or cost
per user.
IT Assessment
The IT assessment describes the gap between what’s necessary to meet business goals and
requirements and current IT capabilities. First describe IT in terms of the solution to address the
needs of the business — the “To Be” state. Then assess where IT is today and the gap with where it
needs to be. Why describe the “To Be” state first? Because this puts more energy into clearly defining
the solution, and the current state assessment is focused on the comparison with this solution — not
on everything about IT, or only what some individuals think is interesting (see Figure 7). If your
plan’s purpose is:
Figure 7 IT Assessment

IT ASSESSMENT
• Solution to business goals and needs – IT “to be” state

• Business application or services portfolio
• IT-business collaboration model
• IT operating model and skills
• Other . . .
• IT current state and gap vis-a-vis “to be” state

• Applications and information
• Governance
• Planning and program management
• Business relationships
Strategy
• Other . . .
• IT drivers and constraints

Implementation
• External environment trends – technology, suppliers,

others as relevant

· Supporting business strategy. The IT assessment for a plan to support business strategy should
describe the IT capabilities to support this strategy and the comparison to current capabilities.
· Improving business value from IT. If the plan’s purpose is increasing the business value of IT,
then the IT assessment should describe the service offerings and processes to provide increased
value, the current offerings and processes, and the gap.
· Improving IT efficiency. If the plan’s purpose is to increase the efficiency of IT, then the
assessment should describe what efficient IT would look like and compare this with current
practices to document the gap.
IT Strategy
The strategy describes the “how” of how IT will close the gap between where it needs to be
and where it is today — the actions that will be taken or the road maps IT is planning to follow.
Depending upon the purpose of IT’s strategic plan, the strategy may be made up of operating
principles and guidelines to ensure decision-making consistency, of road maps for applications and
services or technology investments, or it may consist of IT programs to improve its performance
and business satisfaction (see Figure 8).
· Principles bring strategic guidance to IT decisions. Decisions are being made across IT and
with business — and no strategy can specify the answer to every decision. Principles fill the
gap, both by influencing the tactical decisions below the level of strategy and by providing
guidance that is relevant across a greater timeframe. Many firms make principles the center of
their strategy — dispensing with road maps and replacing them with decision consistency (see
Figure 9).
· Road maps show the time dimension of the strategy. If the strategic plan is specific about
changes to the application portfolio and infrastructure, then road maps will be the best way
to communicate the changes, the results of the changes, and the investments necessary. There
is more than one type of road map that may be needed: an application portfolio road map
showing new applications being brought online and older ones being retired or an investment
road map showing the spend on major changes, linked to what the major changes are providing
(see Figure 10).
· Program plans clarify IT’s own planned improvements. IT’s own transformation may be
the core of the strategic plan. This might include skills development, process improvement,
governance changes, or the creation of an innovation team. IT’s program plan describes these
initiatives, the results to be achieved, the cost, and their interdependencies. The audience
for this program plan is not just IT — business customers will find these changes and the
relationship to their needs very useful.

Figure 8 Strategy

STRATEGY
• IT principles
• Road maps
• Application and service
• Technology
• Investment and return
• IT performance improvement plans
• IT governance changes
• New IT programs (e.g. innovation, other)
• Organization changes
Strategy
• Other (sourcing, etc.)
• Alternatives discussion
Implementation
· IT governance changes support road maps. When the strategic plan lays out road maps
for application evolution or technology investments, IT governance must take on the task
of synchronizing business and IT proposed projects against these road maps. If existing
governance processes do not perform this check, such as if they focused on projects’ business
cases, then the governance model must be changed. Describe it in the strategy, so as to link the
change to the road map strategy.
· New IT programs address new goals. Many IT organizations are finding their goals are
changing — for example, in prior years, the goal was cost containment, but now there is greater
pull from the business for help with innovation. Describe the innovation program and link it to
the business goals and requirements that are driving it.

· Alternatives “not taken” add credibility. A strategy entails decisions — and an effective
strategy benefits from IT and business staff understanding why the strategy is the best solution
to business needs. The strategic plan should document the “why” and also gain credibility from
the discussion of “why not.” For example, a strategic direction for selective outsourcing across
multiple vendors should also explain why a wholesale single vendor outsourcing approach is not
being adopted. But don’t clutter the strategy document with this discussion, and keep it in its
own section.
Figure 9 Principles Guide IT Decisions
Principle Implications
We will improve integration and reduce • Vendor management will develop strategic
support costs by favoring application solutions relationships with preferred vendors, and
from a small number of preferred vendors. facilitate regular strategy updates from them.
• If a business need cannot be met by current or
planned offerings, then the PMO will determine
whether to utilize unique solutions from
best-of-breed vendors or conduct small, targeted
development efforts.
Business-sponsored projects will be prioritized • Project proposals will include sufficient

based upon alignment with corporate and documentation to evaluate alignment.
divisional strategies, investment return, and • Enterprise architecture will develop road maps
project risk. that are aligned with defined strategies.
IT will continuously reduce the cost of services • Selective outsourcing will be used for
that provide no differentiating value to the infrastructure services and noncore business
business. applications.
• IT will track costs and cost drivers on a per-service
basis.

Figure 10 Road Maps Add The Time Dimension
Road map What it communicates

Business capability Shows improvements to business
capabilities, such as unified customer
access, with relevant IT initiatives
Application portfolio Shows changes in the portfolio over

time — new strategic apps being
implemented, and unneeded apps
removed
Application Shows the changes to an application
or closely integrated set of applications,
such as platform upgrades or business
functionality changes
Technology Shows the evolution of the technology
portfolio for an architecture domain,
such as the planned road map for
database platforms
Investment Shows investments over time as they
relate to different technology
initiatives
Plan Implementation
Once a plan is complete and signed off, it has to be put into action. This section should describe how
this will happen — who will be responsible for different initiatives, how oversight will be provided,
and how results will be monitored. For example, firms that use a Balanced Scorecard might update
their scorecard measures to specifically reflect elements of their strategic plan (see Figure 11).6
“We want to avoid shelfware. We have initiative owners with specific plans, monthly status
meetings with the CIO, and quarterly review and planning meetings.” VP IT strategy and
architecture, health insurance carrier
AVOIDING STRATEGIC PLAN SHELFWARE

Even a well-focused strategic plan runs the risk of becoming “shelfware” — unused and with no
impact on IT-business collaboration and IT performance. Practices to avoid this fate:
· Make participation as broad as you can afford. While there is always a risk of having too many
people involved with the strategic planning process — discussion gets extended and decisions
take longer — the more people who are involved means the more people who have a stake in
the resulting plan. Take particular pains to get participation by key audiences and stakeholders,
such as business management or line IT leadership. Keeping the participation level may not
be easy —so make the planning process as efficient as possible and the follow-through as
convincing as possible.7

Figure 11 Implementation

IMPLEMENTATION
• Overall plan governance
• Accountability by road map and/or initiative
• Plan metrics and scorecards
• Plan review and updating
Strategy
Implementation
“One thing that made past strategic planning effective was business involvement — but
the hard thing is keeping businesses involved. Their view: ‘strategic planning is used to
justify budget’ — but the IT view is that it is not a one-time process.” VP IT strategy and
architecture, health insurance carrier
· Clearly connect the strategic plan to IT governance processes. The strategic plan must
provide direction to IT governance processes, such as project selection and portfolio
management, or business unit level project planning. For example, portfolio management
processes should use an application road map to evaluate the fit of business project proposals —
and potentially offer suggestions on rescoping them to align better with the road map.
· Market the strategy. Broad participation will help develop momentum behind the strategic
plan — but it is not enough. IT and business staff need to know about the strategy and see how

it is being placed into action. Develop a communications program for the strategy rollout and
make sure to answer the question: “What does this mean to me?”8
“It’s good to have all of the plan in one place — business people & IT people can read the
same material. This promotes common understanding.” Chief architect, global logistics
firm
· Keep the strategic plan a living plan. Make review and refresh of the plan a regular activity.
Take advantage of the fact that review and update of a plan takes less effort than the initial
development — and it keeps the plan relevant to business and IT even as they change.
“We annually update strategy, twice a year we update business architecture, and yearly we
update business blueprints. The steering committee approves and they are then used as
input to proposal review to validate scope and solution.” VP IT strategy and planning,
health insurance carrier
“Multiyear plans that are updated are easier than one-year plans that have to be restarted
from scratch.” Chief architect, diversified commercial and consumer bank
R E C O M M E N D AT I O N S
THE BUSINESS PLAN FOR THE BUSINESS OF IT

A common goal of CIOs is to “run IT like a business” as a means to improve IT’s contribution to
their firms. The unique demands and constraints that IT faces, coupled with its own legacies of
applications, technology, skills, and practices, make this goal challenging. Developing a strategic
plan aligns expectations and investments with IT’s capacity to execute — this becomes IT’s plan
to run like a business. But a strategic plan that produces results has to be targeted to these results.
The strategic planning effort is not “one size fits all” — it must be tailored to the opportunities
available for IT. You must:
· Define your goal for your strategic plan. Without a clear set of goals for a strategic plan,
the result easily becomes a sprawling document from which audiences will struggle to get
the most salient points. The result can be the perception of irrelevance. Instead, focus your
planning effort on a few goals, such as increasing business alignment, improving demand
management, or transforming the IT operating model.
· Focus your plan approach around this goal. A clear set of goals drives both the inputs to
the plan and the structure and contents of the plan — making the process more efficient
and less time-consuming. Include business SWOT analysis if your goal requires a clear
understanding of business challenges, but leave it out if your goal is to improve IT’s service
delivery performance. Similarly, include IT skills assessment if your goal is to improve the

alignment of IT capacity with business demand, but leave it out if it is not significant to the
goal you are trying to achieve. When you document IT principles, focus on the ones that
directly link to the results you are seeking.
· Track the results. The best-laid plan is of little value unless it produces results — and the
only way to ensure it is producing results, or address reasons why it is not, is to track the
results. If the strategic plan provides input to your project portfolio management process,
define the metrics that show whether your project goals are being achieved. Take a process
improvement perspective: Define the desired results, track them, and if the actuals diverge
from the expected, analyze why and institute corrective actions.
· Institutionalize planning discipline. If the practice is to develop a strategic plan only “every
three years” or “only when needed,” then you will face the dual challenges of “starting from
scratch” each time and developing a plan that stays relevant and action-producing even as
the business and IT landscape changes. A better practice is to institutionalize it as an annual
process with quarterly checkpoints, and use this increased frequency to tune your planning
methodologies as well as make midcourse corrections.
W H AT I T M E A N S
YOUR IT ARCHETYPE FOCUSES YOUR STRATEGY

IT organizations typically represent one of three major types: Solid Utilities that emphasize
operational excellence, Trusted Suppliers that focus on project execution effectiveness, and
Partner Players who emphasize strategic relationships with business counterparts.9 The archetype
an IT organization fits within is driven more by business expectation than IT desire. But even if an
IT organization is tending toward a certain type, it needs the discipline to excel in this type — and
the strategic plan is a necessary element of institutionalizing this discipline.
· Solid Utilities: Your plan should describe how you deliver cost-effective services. Solid
utilities must provide the level of service the business needs, at a cost aligned with the
business’ willingness to pay. A strategic plan for this IT type will describe how this service-
level alignment with business needs will occur, addressing items such as cost transparency,
satisfaction level measurement, and operational efficiency.
· Trusted Suppliers: Document steps to improve business “trust.” Use your strategic plan
to set business expectations on priorities and capacity. Make sure there is a link between
your plan and your structures for IT governance and portfolio planning, and connect the
investments in IT technology and skills to improvements in IT delivery performance.
· Partner Player: Focus on the principles used to guide joint decision-making. As a partner
player, you are aligning with the dynamics of business change. Road maps for applications
and infrastructure improvements are important to this relationship only to the extent that

they address how you will increase proficiency at changing at the speed of business. More
important than road maps to this relationship is developing the IT principles that help
business partners and IT collaborate on business planning.
· Plan your archetype evolution. Many IT organizations desire to transition from one type,
such as a utility, to another type, such as being the business’ partner. This isn’t possible unless
the business is ready for a new relationship — but your plan can guide how you will prepare
it for a new relationship: building supplier credibility or increasing collaboration within
solution definition and delivery.

SUPPLEMENTAL MATERIAL
Companies Interviewed For This Document
Aetna Marriott
American Heart Association Media General
Applera Corporation MoneyGram
AutoNation Northern Trust
Blue Cross Blue Shield Association Northwest Airlines
CIBC Norton Healthcare
The Clarks Companies N.A. PSE&G
Comerica Bank Russell Investment Group
DirectTV Schenker AG
E.ON UK ServiceMaster
FDIC Shaw Cablesystems
Highmark Sonoco Products
JetBlue UnumProvident
Kimball International Plus additional firms that declined to be
identified
Laurentian Bank of Canada
ENDNOTES
1
IT portfolio management is a key part of the overall IT governance process and consists of the
consolidation of IT’s plans to support the business in meeting its strategic goals. The portfolio consists of
current investments, current initiatives, and externally mandated initiatives, allowing trade-offs to be made
across these plans. See the September 29, 2004, Best Practices “Defining IT Portfolio Management” and see
the September 30, 2005, Best Practices “Optimizing the IT Portfolio for Maximum Business Value.”
2
Forrester has identified relationship management as a strategic IT function and essential for the
communication between IT and the business on plans, needs, and issues. See the August 13, 2004, Best
Practices “Relationship Managers Extend The CIO’s Power And Awareness.”
3
A September 2005 survey shows a maturing of the enterprise architecture function in those firms that have
established an EA group. These EA groups are reporting to the strategic levels of the IT organization: the
CTO, VP or director of planning and strategy, or the CIO. EA groups have been given broad responsibility
and are engaged with other IT processes and IT projects. The structure of the EA group reflects a greater
involvement with the rest of IT. See the October 27, 2005, Quick Take “The Maturing Of The EA Function.”

4
Boards of directors, executive management, and IT management all have a vested interest in IT governance
— their common goal is to maximize the business value derived from IT investments while managing risk.
The starting point for an IT governance framework should be COBIT, because it is the most comprehensive
IT governance framework available today. COBIT is designed for three constituencies: management, users,
and auditors. See the January 6, 2006, Trends “COBIT Versus Other Frameworks: A Road Map To
Comprehensive IT Governance.”
5
Forrester has identified business factors that are the most significant drivers of IT spending. These include
technology’s role in products and services, business volatility, competitive pressure, and geographic scope.
Forrester has also identified IT factors that have a substantial impact on IT execution, such as IT’s maturity
as a business operation, how IT relates to its business stakeholders, and technology’s link to the firm’s
business strategy. See the June 6, 2005, Best Practices “The Economics Of IT.”
6
David Norton and Robert Kaplan’s Balanced Scorecard methodology has been adapted for IT organizations
as an IT strategic measurement and management system. See the October 15, 2004, Best Practices “The
Balanced Scorecard: An IT Perspective” and see the September 30, 2005, Best Practices “The IT Balanced
Scorecard – Metrics That Count.”
7
Forrester surveyed 922 North American IT and business decision-makers regarding their approach to IT
governance. We asked about the participation of business and IT in establishing the firm’s IT strategy. Fifty-
two percent of respondents indicated that business and IT collaborate equally in setting direction, while
27% stated that corporate IT is the primary contributor to strategy, and 17% said that business units set the
IT strategy. See the September 30, 2005, Trends “Firms Have Less Centralized IT In 2005.”
8
IT must move to a campaign-based approach to communicating IT’s value, creating and communicating
IT’s mission and brand, and guiding the adoption and use of new technologies. See the August 23, 2005,
Best Practices “The Marketing Of IT.”
9
CIOs must understand that there is no one type of IT organization right for all enterprises and all industries.
Instead, there are three clear archetypes for successful IT organizations: Solid Utilities, Trusted Suppliers,
and Partner Players. Understanding which is which helps articulate IT strategy, dictate trade-offs, and help
IT achieve its goal of running more like a business. Top management expectations dictate which type is
right — but overall IT maturity constrains or enables performance within each archetype. See the March 22,
2006, Trends “The Three Archetypes Of IT.”

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BEST PRACTICES

Creating The Strategic Plan For

Helping Business Thrive On Technology Change

14 Avoiding Strategic Plan Shelfware Related Research Documents

YESTERDAY’S IT STRATEGIC PLAN ISN’T NEEDED ANYMORE

· Project portfolio management as a governance discipline. Without a portfolio management

June 8, 2006 © 2006, Forrester Research, Inc. Reproduction Prohibited

Figure 1 Today’s IT Strategic Plan Is Diﬀerent From Yesterday’s

Strategic planning — the old way Strategic planning for today’s IT

Planning Infrequently, as a major clean sheet Regular revalidation and refreshment

39515 Source: Forrester Research, Inc.

A Strategic Plan Documents IT’s Intentions — Focusing IT And Business Thinking

· Setting business expectations and improving understanding. IT will be challenged to meet

· Establishing credibility with executive management. With IT both a signiﬁcant operating

© 2006, Forrester Research, Inc. Reproduction Prohibited June 8, 2006

Figure 2 What Business And IT Need From A Strategic Plan

Your business customers need the plan to:

IT needs the plan to:

39515 Source: Forrester Research, Inc.

IT Cannot Run Like A Business Without A Plan

June 8, 2006 © 2006, Forrester Research, Inc. Reproduction Prohibited

· Lack of a documented plan puts IT at risk of failure. An IT organization may appear to be

MAKE TODAY’S STRATEGIC PLAN CONTEXT-BASED AND PURPOSE-DRIVEN

Context Ensures The Plan’s Relevance

© 2006, Forrester Research, Inc. Reproduction Prohibited June 8, 2006

Purpose Provides Focus To Planning Eﬀorts — And Clarity to Plan Audiences

June 8, 2006 © 2006, Forrester Research, Inc. Reproduction Prohibited

Figure 3 What’s Your Context?

Context Example Possible implications

39515 Source: Forrester Research, Inc.

Figure 4 Context Drives The Purpose Of Your Plan

Context Potential plan purposes

Business growth Develop and communicate investments

Implement planning and governance

IT eﬃciency Institute process improvement and

39515 Source: Forrester Research, Inc.

STRUCTURE IT’S STRATEGIC PLAN IN FIVE SECTIONS

© 2006, Forrester Research, Inc. Reproduction Prohibited June 8, 2006

Figure 5 Strategic Plan Outline

Exec Summary Business Goals IT Assessment

Business Goals and Requirements 3

39515 Source: Forrester Research, Inc.

June 8, 2006 © 2006, Forrester Research, Inc. Reproduction Prohibited

Business Goals And Requirements

Figure 6 Business Goals And Requirements

Exec Summary Business Goals IT Assessment

• Corporate and business goals

• Value Chain, operating or go-to-market model

• Business drivers (SWOT, critical success factors,

• Business expectations of IT or satisfaction with IT

39515 Source: Forrester Research, Inc.

© 2006, Forrester Research, Inc. Reproduction Prohibited June 8, 2006

Exec Summary Business Goals IT Assessment

• Solution to business goals and needs – IT “to be” state

• IT current state and gap vis-a-vis “to be” state

• IT drivers and constraints

• External environment trends – technology, suppliers,

39515 Source: Forrester Research, Inc.

June 8, 2006 © 2006, Forrester Research, Inc. Reproduction Prohibited

© 2006, Forrester Research, Inc. Reproduction Prohibited June 8, 2006

Exec Summary Business Goals IT Assessment

39515 Source: Forrester Research, Inc.