How to Develop An IT Strategy - 13-Step Guide
Introduction to IT Strategy
It is safe to say that modern business expansion relies heavily, if not solely, on their technology utilization. In other words, companies significantly restrict their growth potential if they refuse to abandon manual management methods. This has many organizations implementing the latest technologies to streamline internal operations and catalyze their progress toward short-term goals.
However, implementing new technology in any department requires a detailed information technology (IT) strategy plan. With an IT business strategy plan, companies can document each initiative and solution they deploy to meet specific business objectives. The plan also monitors the impact of each effort so that businesses can make adjustments with emerging events.
What is an IT Strategy Plan?
An IT strategy plan is a document that outlines a business's IT department, from goals to initiatives. The IT plan consists of several sections, each focusing on specific objectives and respective efforts. By defining technology needs, businesses can determine which solutions can optimize their performance and progression toward goals.
Most modern companies have an IT team or department to manage their internal business processes and software. Without proper maintenance, business intelligence can deteriorate and negatively impact a company's performance, efficiency, and competitive advantage. This is why organizations that utilize business technology need an IT strategy roadmap that collaborates relevant information into a strategic plan.
An adequate IT strategy plan acts as a detailed schedule that addresses any holes within the IT department and strategies. This keeps all IT employees on track for every initiative and working toward the same goals. Otherwise, teams could work counterproductively without realizing it. Plans commonly outline the following information.
- IT response times
- Digital customer experience
- Expansion efforts
- Cost reduction
- Automation tools
- Sales trends
How to Develop an IT Strategy
Typically, businesses develop an IT strategy plan on a yearly basis, as the research and planning process is time-consuming. However, detailed plans can last a company up to five years, saving time, resources, and labor in the long-term. Therefore, organizations should strive to develop a flexible, detailed IT strategy plan.
1. Understand the Future Strategy
The first step to developing an IT strategy is understanding the impact the plan can have on the business itself. There are many technologies today that cater to specific company operations to improve efficiency and profitability. However, these solutions also have a significant impact on the business model and future strategies.
Therefore, owners must consult with their IT team to ensure potential technologies coincide with the work culture before implementation. To do this, management needs to consider the overall business goals by reviewing various efforts and determinants.
- Product and service portfolios
- Growth strategies
- Market trends
- Customer reach
For example, a business focusing on expanding its product range needs a robust inventory management system. If the IT department implements a solution with limited storage and capabilities, they can significantly restrict the company's growth. This hinders the organization's chance of meeting sales, customer reach, and expansion objectives.
2. Evaluate the Current IT State
Next, IT managers must evaluate their department's current state to determine its strengths, weaknesses, and improvement areas. The evaluation can be an in-depth analysis or a simple employee review, as long as it defines the department's maturity. However, every business has various areas that they want their IT department to focus on.
- Capabilities refer to the department's technology usage for each level of support, including customer, employee, and department.
- Process Maturity is the state of each IT operation, such as case management, software development, and issue response time.
- Portfolio Analysis is the evaluation of IT systems, applications, and platforms in each business sector. The assessment determines each tool's compatibility, maintenance cost, and scalability.
- Methodology refers to the company's IT best practices and policies that help them meet various goals.
- Structure is the IT operating model that enables employees to utilize technology to complete tasks.
- Skills refer to the employees' ability to navigate software and commitment to meeting company goals.
- Infrastructure refers to the underlying technology that either inhibits or promotes the business's software. For example, legacy systems have limited capabilities, whereas cloud-based solutions are virtually limitless.
- Security regarding IT refers to the protection of digital data against hacking, breaches, and malware that can jeopardize internal processes.
- Governance is the authority over internal operations to mitigate risks and catalyze progression toward goals.
3. Consider External Factors and Technology Trends
Although some businesses overlook external factors during IT assessments, they can have significant implications on strategies. By not considering outside elements, companies can miss out on emerging technologies that can enhance their performance. For example, many distributors are deploying robotics in their warehouses to streamline product picking and order fulfillment.
Organizations must also consider market trends and what their competitors are doing. If similar businesses are all working on supplier management, there may be an emerging customer demand change. Therefore, companies must continuously monitor their market to detect upcoming events that could potentially impact their performance. Otherwise, they could lose their competitive edge to establishments that forecast evolving patterns.
4. Envision the Future IT State
Based on the factors in step three, IT management should illustrate how the current market trends will shape their future. For example, if patterns show that businesses are adopting integrated solutions, the company will probably establish a robust infrastructure. This enables them to create a blueprint three to five years ahead to map out their plan of action.
It is important to remember that progress towards this state is not always linear. Sometimes companies take incremental steps and incorporate alterations along the way, which requires flexibility and re-imagining. Organizations that are unable or unwilling to remain this flexible may become frustrated if their final state is not at the desired level.
Therefore, companies should try their best to gain a holistic perspective of their future state by-
- Generating feedback from employees
- Designing from the future backward
- Not dwelling on limitations
- Fostering creativity
- Thinking unconventionally
- Innovating technology
- Keeping an open mind
5. Perform a Gap Analysis
A gap analysis is an evaluation of a business's current state versus its desired state. This determines the length the company must travel in order to achieve its objectives. An adequate analysis should assess the following.
- Business intelligence
- Governance practices
- Emerging technology
By ensuring the gap analysis is multidimensional, the IT department can shift the focus from a feature level to a conceptual level. This way, management can leverage their analysis results for future strategies.
6. Assess Scenarios
With the gap analysis, companies can create the best and worst-case scenarios to determine the cost, resources, and labor requirements. If companies lack the resources to improve the worst case, they may need to budget for solutions and additional labor. By looking at cases objectively, managers can create impactful tactics to optimize each scenario by discovering alternative methods.
7. Create an IT Blueprint
Based on the gap and scenario analyses, the IT team can develop a strategic blueprint that maps their plan. This team is responsible for establishing the essential pillars that will express the company's mission. Each effective strategy typically has approximately five pillars, which mark what the plan is aiming to achieve. However, companies should try to keep the pillar count below 10 as it then becomes challenging to allocate individual focus.
Pillars tend to vary between companies and can be qualitative or quantitative. The most common pillars revolve around-
- Changes in the mission statement
- Implementing new technology
- The future IT operating model
- Adopting new tools and methodologies
- Reworking IT processes
- Defining the structure, staffing, and other requirements
- Supplier management
- Governance practices
8. Define the IT Target Operating Model
A target operating model (TOM) is a map that outlines the key components a business uses to reach its target. TOM is merely a subset of the entire IT model but is critical for defining how the IT department's value. It explains how the IT department runs its own operations within the walls of the company. Understanding how the two business strategies interact is imperative to the success of the holistic operating model.
9. Analyze the IT Initiatives
At this phase, the IT department must be ready to execute its strategies. Managers should prioritize initiatives based on their-
By organizing tactics based on their requirements, companies can ensure each effort optimizes its sequential strategy. In other words, the execution of each plan will make way for the next initiative. However, each strategy should have a unique, measurable, and direct contribution to the final objective. To determine each initiative's value, managers can create an initiative on a page (IOP), which deconstructs each strategy by outlining-
- Initiative description
- Goals and objectives
- Critical components
- Operational expenses
- Impact areas
- Estimated timeline
- Risk management, benefits, dependencies, assumptions
- Key performance indicators (KPIs)
10. Define the Implementation Map
Next, managers need to create an implementation map that lays how the IT department will execute each strategy. This plan is more of an organizational method that compiles initiatives rather than a step-by-step plan. The roadmap will total all strategies to determine the overall-
11. Inform Stakeholders
Finally, it is time to compile all of the maps, outlines, and strategies and pitch them to the stakeholders for final approvals. Depending on the size of the business, stakeholders may consist of the owner or a large board of executives. Either way, these people are the decision-makers that have the final say on launching an initiative.
The implementation team should focus on presenting the strategy in a comprehensive way. Oftentimes, executives will offer feedback before giving their final approval. Therefore, managers need to remain open-minded to criticism and advice on their model.
12. Define Performance Metrics
Businesses don't want to invest all of their time, resources, and energy into developing a strategy if it isn't measurable. Otherwise, companies can't determine if their plans are impactful or meeting desired targets. With KPIs, managers can continuously monitor the performance of their strategies over time.
KPIs quantify various performance activities so businesses can optimize their methods. This enables them to make adjustments if KPIs aren't up to their standards. For example, retailers can monitor sales KPIs to define their top and bottom salespeople and their contributions to final profits. Based on these measurements, managers can establish benchmarks for employees to hit in order to meet monthly or quarterly targets.
13. Monitor the Strategy Effectiveness
Lastly, businesses must remember to continuously monitor the impact of their strategies after implementation. In addition to regular check-ins, the IT department should run annual audits to scrutinize each and every initiative. This extra step is especially important for plans that span over multiple years, as minor issues can snowball.
Every business should consider developing an IT strategy to create an inclusive plan that documents initiatives toward common goals. This management practice ensures everyone, from executives to new employees, understands their role in working toward goals.