Anatomy of an IT strategic plan in the era of digital disruption https://www.cio.com/article/2437285/anatomy-of-an-it-strategic-plan.

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Anatomy of an IT strategic plan in the era of

digital disruption

Stephanie Overby

To effectively support today’s IT-informed business

strategies, CIOs must embrace new approaches to IT
strategic planning that are more business-driven, flexible,
and frequently revisited than in years past.

CIO | 28 October 2017 0:40 SGT

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IT’s role in the development and execution of business strategy has grown
significantly in the era of digital transformation. But as the rate of business and
technology change has accelerated, some of the past static, rigid, and disjointed
approaches to IT strategic planning fail to keep pace.

That’s not to say CIOs should skip IT strategic planning altogether — quite the
contrary. Developing and executing a business-aligned IT roadmap is more
important than ever. “Given the growing importance of technology in every

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business, technology organizations must have clear strategic direction and

priorities that are closely linked to the business strategy,” says Brad Strock, CIO of
PayPal.

Yet just 29 percent of IT leaders say their organizations are effective or very
effective at IT strategy and planning, according to Gartner’s 2017 CIO Survey.
Even fewer (23%) rated their organization as effective or very effective at business
strategy and planning. “The biggest challenge for IT leadership is whether or not
the CIO feels comfortable with business strategy and can lead and shape
discussion around that,” says Nigel Fenwick, vice president and principal analyst
at Forrester Research. “CIOs must have a strong understanding of the levers of
business in order to lead and drive revenue.”

[ Beware the 12 'best practices' IT should avoid at all costs while

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Experts and CIOs agree that effective IT strategy begins with an IT-informed
business strategy. CIOs must be intimately involved in the creation of those
documents and other artifacts that provide direction about what the enterprise
needs to do, why it needs to do it, and how it will accomplish that. Only then can
IT leaders build their own functional plans to support business strategy. “The plan
is about understanding where to make investments and what capabilities the
company will need — the people, partners, processes, and systems required — to
do that,” says Fenwick.

When done well, IT strategic planning can be a powerful tool, setting the company
up to realize key business goals and outcomes. But CIOs must be willing to
embrace new approaches to planning that are more business-driven, flexible, and
frequently revisited. Unfortunately, says Fenwick, strategic planning practices
tend to evolve slowly. But IT leaders today don’t have time to waste.

Following are some emerging best practices for developing an effective IT strategic
plan today.

Start with business strategy

IT strategic planning must be firmly rooted in the business strategic plan —
period. If the business strategy is to invest in digital transformation, for example,
IT must extrapolate what that means for existing architecture, operating
processes, skills, sourcing, governance, and culture. For IT veteran Laura Smith,
CIO of UnityPoint Health, the IT strategic plan for the 30,000-employee
healthcare system is focused on helping the organization make the shift to being
reimbursed based on quality rather than service volume. As a result, her plan
includes a roadmap to maximize reimbursement, transforming the culture of the
IT department to support the organization more effectively, and engaging
customers and other stakeholders more directly in large-scale technological
change.

The best IT plan is no longer simply a rundown of the financial investment

required or a list of technologies to implement. Rather, it is an assessment of the
changes demanded to achieve business goals. “While the financials are still
important, the starting point needs to be the business strategy,” says Strock of
Paypal. “[There has to be] a much more significant focus on the business and
customer dimensions of the plan.”

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The line between business strategy and technology strategy has disappeared, says
ServiceNow’s CTO Chris Bedi. “They are one and the same.” Fenwick goes so far as
to suggest there should be no IT strategy separate from the business strategy,
preferring to call the IT-specific component an operating plan.

Plan the planning process

At the outset, IT leaders should establish a plan to develop the plan. Gartner
advises creating a “clear and achievable” process for developing the strategic plan,
using any existing or previously used plan as a starting point.

Strategize swiftly
While IT strategic planning is important, spending too much time to develop it can
also be dangerous.

“I am a big believer in fast and mostly right versus slow and perfect,” says Bedi. “I
don't think there is a magic number of weeks it should take, but the key is that it is
well thought through, tied to business outcomes, and avoids incrementalism.”

Gartner advocates swift and focused strategic plan development in order to

prevent loss of focus, scope creep, or diminished currency and relevance.

Focus on the mid-term horizon

Long-term roadmaps still have their place, but they have largely fallen out of
favor, given today’s era of rapid technology and business shifts. While IT leaders
must ensure that their choices are flexible enough adapt to longer-term technology
change, the IT strategic plan should largely focus on the mid-term horizon,
typically 12 to 18 months ahead. It can also address, in less granularity, plans in
the two- to three-year range and five-plus years.

“The 5-plus-year bucket should force you to think about the future in broad terms
[rather than] incremental improvements,” says Strock. Whatever time period IT
leaders decide to cover, they should be sure to clarify the difference between the
more tactical operating portion of the plan, mid-term strategy, and long-term
goals.

Nail the key components

An effective IT plan will include information on the people, staffing, partnerships,
organizational changes, and governance required to achieve business outcomes. It
can also include an investment portfolio roadmap, timeframes, goals, and a
discussion of risks and other issues.

“A strategy that is not comprehensive, lacks clear goals, and is void of timeframes
isn't much of a strategy,” says Bedi, adding the caveat that IT leaders should not
delay IT strategic plan if they are struggling with one area of it. “One can always
iterate and fill a specific gap.”

Build in metrics for success

The best IT strategic plans include measures of success that will serve as mile
markers for progress over time. In today’s technology-driven marketplace,

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however, those metrics should focus less on the inputs or outputs IT may have
used as guideposts in the past and more on actual business outcomes. “Having
clear, outcome-based key performance indicators [KPIs] is essential,” says Strock.
“It is important to ensure tight integration with the business strategy.”

Those KPIs should be measured and reported at least monthly, although some
should be tracked more frequently. “Without defined measurable goals and
measurement against them, a strategy can quickly become a pretty set of charts
that get looked at once and filed away,” Bedi says. “I think measurement along the
way is critical to ensure one is tracking to plan and can course correct, if needed.”

Tie guiding principles into the corporate vision

Many IT leaders will include a set of guiding principles or other explanations that
guide IT’s decision making. Those guiding principles should tie into the overall
corporate vision, says Fenwick. Strock calls these guides strategic pillars and
foundations. But CIOs should avoid tired or trite explanations. “Too many times, I
have seen department mission statements that are so generic that they are
useless,” says Bedi. “If one is going to articulate a statement of purpose, try to
make it one that inspires action or provides needed clarity.”

Match planning frequency to the cadence of the

business
Most IT organizations will create a full IT strategic plan at least once a year, but
the fast-changing business environment demands that most update their
approaches more frequently. The best rule of thumb is to adjust the frequency of
IT planning to the cadence of the business. For most companies, quarterly updates
(at a minimum) will make the most sense. IT leaders in consumer-focused
businesses, for example, will want to make changes more frequently. “Every time
IT makes a new choice it can have an impact [on the plan],” says Fenwick. “You
have to reassess whether your assumptions remain valid. That’s something
historically not a lot of companies have done.”

Ultimately, there is much to be gained from putting the necessary effort into
creating a well-thought out IT strategic plan, even when it changes significantly on
review. “There is sometimes more value in the process of developing your final
strategy than the actual strategy [itself],” says Bedi. “It will force the IT — and
non-IT — leadership teams to think through the impacts of digitization on a longer
time horizon and answer some tough questions.”

Related IT strategy articles:

Stephanie Overby is a regular contributor to CIO.com and CIO magazine.

Copyright © 2017 IDG Communications, Inc.

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