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Strategic IT Planning and

Governance
Info-Tech’s Step-By-Step Consulting Methodology

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Strategic IT Planning and Governance

Copyright © 2004 by Info-Tech Research Group

All rights reserved.

No part of this book may be produced or transmitted in any form by any means – graphic,
electronic, or mechanical – without permission in writing from the publisher, except by a
reviewer who may quote brief passages in a review.

Printed in Canada
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First edition: January 2004


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Cataloguing in Publication Data


Info-Tech Research Group, 2004-

Strategic IT Planning and Governance


ISBN 0-9734751-0-2
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To order please contact:


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Info-Tech Research Group


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888-670-8889
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519-432-3550
customerservice@infotech.com
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Strategic IT Planning and Governance
Info-Tech’s Step-By-Step Consulting
Methodology
In the modern organization, Information Technology (IT) plays an increasingly important

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role in enabling all business processes. IT has become everybody’s business and the proper
management of IT across the enterprise can substantially boost competitiveness. This step-by-

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step methodology will help you create the mechanisms for making IT decisions at the strategic
level.

Here are some examples of the kinds of questions that this methodology will help you answer:

• How Do You Prioritize Big IT Projects? Large IT projects that impact the whole
organization can be very expensive. Not only do organizations have to decide whether

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or not to green-light an expensive project, sometimes they have to choose between

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several big ticket projects all vying for the same scarce resources. This methodology
provides a framework for these decisions.

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• What Should Be Outsourced? Often outsourcing is seen too narrowly as an internal
cost-cutting device, but outsourcing should enhance, rather than diminish, the

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effectiveness of enterprise information technology. Making outsourcing decisions in a

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strategic context will lead to smarter and more efficient IT.

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• What Are Your Organizational IT Standards? With most or all of your departments

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using IT for competitive advantage, platform standards cannot simply be a case of
what’s good for the IT department. Standards and procedures should be approved
through an organizational governance process.

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Info-Tech Research Group believes the top IT manager in the organization (whether he or she
is a Chief Information Officer, Information Systems Manager, or Information Technology

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Manager) should play a lead role in the development of a plan for the strategic use of
Information Technology.

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This guide is written from an IT management point of view. In eight concise stages, we show
how IT managers can launch and manage a strategic IT process within their organizations. We O
also provide dozens of ready-to-use tools and templates to help you build this capability.
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Strategic IT Planning and Governance

Contact Information
Should you encounter any difficulties with this guide, or with the accompanying CD-ROM,
please feel free to contact us at:

Info-Tech Research Group


602 Queens Avenue
London, ON
N6B 1Y8
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Tel: 519-432-3550
Fax: 519-432-2506
Toll-Free: 888-670-8889

Or visit us online a www.infotech.com


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Table Of Contents

Introduction.......................................................................................................... 9

Aligning IT With Business Goals.............................................................. 14


Scope, Competencies, Governance ........................................................ 15
The Importance of Governance ............................................................... 16

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The Agility Paradox.................................................................................. 17

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How This Methodology Works: ................................................................ 19

Stage 1> Plan the Plan ..................................................................................... 21

Step 1: Set Strategic Planning Goals. ..................................................... 22

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Step 2: Establish a Planning Group......................................................... 25

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Step 3: Hold a Kick-off Meeting ............................................................... 27

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Step 4: Create a Preliminary Report........................................................ 28

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Stage Summary ....................................................................................... 30

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Background > Making the Case for Strategic IT Planning............................. 31

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The Most Important Constituent: Senior Management ............................ 32

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The Importance of Communication.......................................................... 33

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More Notes on Agility............................................................................... 35
Co-opting the Power User ....................................................................... 36

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Stage 2> Document Your Business Strategy.................................................. 39

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Step 1: Describe the Company and Its Background................................ 42

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Step 2: Conduct an Industry Analysis...................................................... 43
Step 3: Document Vision, Mission, and Core Values .............................. 44 O
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Step 4: Define Core Business and Its Boundaries .................................. 45


Step 5: Create a Financial Picture ........................................................... 46
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Step 6: List Strategic Objectives.............................................................. 47


Stage Summary ....................................................................................... 48
Background > Analyzing Business Strategy .................................................. 49
A Company’s Value Chain ....................................................................... 49
The Supply Chain .................................................................................... 51

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Strategic IT Planning and Governance

Industry Lifecycles ................................................................................... 52


Porter’s Five Forces Model...................................................................... 54
Environmental Analysis (PEST)............................................................... 55
Identify Your Organization’s Core Competencies .................................... 55
Key Success Factors ............................................................................... 57
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Stage 3> Assess the Current IT Situation ....................................................... 59


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Step 1: Document Your IT Organizational Infrastructure ......................... 62


Step 2: Document Your Hardware and Software Infrastructure............... 63
Step 3: Audit Current IT Projects ............................................................. 64
Step 4: Understand the IT Environment .................................................. 66
Stage Summary ....................................................................................... 68
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Background > Mapping IT Assets.................................................................. 69


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Thoughts on Staffing Needs .................................................................... 69


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Skills Development .................................................................................. 70


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Business Benefits of Asset Management ................................................ 70


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Rolling Out an Asset Management Initiative............................................ 71


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Conducting a Hardware Asset Inventory ................................................. 73


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Conducting a Software Asset Inventory................................................... 75


Change Management .............................................................................. 76
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Asset Management Best Practices.......................................................... 78


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Understanding the IT Environment .......................................................... 79


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Stage 4: Propose a New IT Situation ............................................................... 81


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Step 1: Analyze IT Strengths and Weaknesses ...................................... 83


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Step 2: Brainstorm Technology Opportunities ......................................... 86


Step 3: Document Your Results............................................................... 88
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Stage Summary ....................................................................................... 90


Background > The Art of Brainstorming......................................................... 91
Brainstorm of One (Brainwriting) ............................................................. 92

Stage 5: Perform a Gap Analysis ..................................................................... 93

Step 1: Analyze Alignment Gaps. ............................................................ 95

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Step 2: Analyze Infrastructure Gaps........................................................ 96
Step 3: Summarize and Resolve Gaps.................................................... 97
Stage Summary ....................................................................................... 98

Stage 6: Propose a Strategic Vision and Governance Model ....................... 99

Step 1: Hold a Vision Meeting With Stakeholders ................................. 101

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Step 2: Establish a Strategic IT Vision................................................... 102

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Step 3: Propose a Governance Structure.............................................. 103
Stage Summary ..................................................................................... 104
Background > One Vision for All.................................................................. 105
Reigning In Rogue IT............................................................................. 106
Building Your Steering Committee......................................................... 109

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Stage 7: Build a Strategic Decision Making Framework ............................. 111

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Step 1: Set Strategic Goals and Measures ........................................... 113

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Step 2: Perform a Budget Analysis........................................................ 116

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Step 3: Identify Your Options ................................................................. 117

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Step 4: Prioritize Your Projects .............................................................. 120

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Stage Summary ..................................................................................... 124
Background > Types of Goals IT Should Set............................................... 125

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Financial ................................................................................................ 125

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Organizational Goals ............................................................................. 126

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Technology Operations.......................................................................... 128
Customer Service Goals........................................................................ 129
IT Governance Goals............................................................................. 130 ~
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Getting Buy-In for Your Goals................................................................ 131
Using Your Budget as a Management Tool ........................................... 132
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Dealing with Budget Cuts ...................................................................... 133

Stage 8: Publish, Promote, Maintain Your Strategy ..................................... 135

Step 1: Build Your Strategic Plan Materials ........................................... 137


Step 2: Present Your Plan to Senior Management ................................ 138

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Strategic IT Planning and Governance

Step 3: Communicate and Manage Change ......................................... 139


Stage Summary ..................................................................................... 141
Background> A Guide to Killer Boardroom Presentations ........................... 142
Guide to Developing a Communications Plan ....................................... 143
Design the Roll-Out Plan ....................................................................... 146
The Rollercoaster of Change................................................................. 147
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Adjusting Your Current Organizational Structure................................... 149


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Tips For Ongoing IT Strategic Governance ........................................... 150

Conclusion ....................................................................................................... 152


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Introduction

Introduction
Establishing a strategic planning process Why Strategic IT Planning?
and governance model for Information
Technology (IT) is critically important for In a late 2002 survey, Info-Tech Research Group
making sound IT investment decisions, asked IT managers how much Strategic IT
garnering support for IT projects, and Planning impacted the overall competitiveness of
their organizations. The majority confirmed that

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proving IT is a strategic asset of the
organization. Strategic planning is about strategic planning did have an impact on increasing

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building consensus, both on strategic goals competitiveness.
and on a framework for making strategic
decisions.

The goal of this methodology is to


provide you with an effective process
for goal setting and decision making in

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IT that aligns with the business goals of

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your organization. This methodology has
three components that will help guide you

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through this process:

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1. This step-by-step guide

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takes you through the stages Here are some of the consequences of not having an

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of establishing an IT Steering established IT strategy:

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Committee and building a Strategic
IT Plan. The guide also includes ü Increased risk of project failure due to

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helpful background articles. a lack of understanding of, or support
to, your organization’s overall business
2. A collection of tools and

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strategies.
templates that you will use for

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information gathering and analysis
throughout the Strategic IT ü Reactive, rather than proactive,

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Planning process. These tools are technology decisions, leading to
available as both individual files, few opportunities to make your IT
department a competitive weapon.
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ü Inconsistent systems purchases and
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3. A report template upon which additional costs incurred as a result of
you can build your Strategic IT unplanned purchases.
Plan document. This will be a
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living document subject to annual


ü Limited participation of IT in the
review and updating.
organization’s strategic planning process
Specifically, the Methodology breaks into because of a lack of understanding of
eight stages. By following the steps in each business strategy and IT’s role in the
organization’s future.
of the stages listed below, you will build
an IT strategy, which aligns well with your
organization’s business strategy and lays the foundation for on-going strategic decision-making.

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Strategic IT Planning and Governance

Stage 1> Plan the Plan


Strategic planning is not just a task, it is a process. The better planned the process, the better the
results. A strategic planning process is also a crucial communications vehicle between IT and the
rest of the organization. An open and inclusive process will lead to a better plan and increased
understanding by all.

• Step 1: Set Strategic Planning Goals. Start by answering the question, “What is
Strategic?” when it comes to IT projects, processes, and investments. Work up a list of
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objectives for the strategic IT planning project.


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• Step 2: Establish a Planning Group. List all the major IT stakeholders in the
enterprise. Select for your planning team a group that can work productively on building
the plan and then on championing the results across the organization. A truly open and
effective process begins with a well-rounded working group.

• Step 3: Hold A Kick-Off Meeting. Review the steps of this methodology with the
steering committee and set a preliminary time frame. Your timetable should establish
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momentum and a sense of urgency. Be aggressive but realistic with your deadlines.
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• Step 4: Create a Preliminary Report. Make sure you have the full support and
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cooperation of senior management before you proceed. Put together a preliminary


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project description report. Include the overall goals, the steps that will be taken, the time
frame, and any other preliminary cost estimates you have. Present this report to senior
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managers and get their sign-off.


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Stage 2> Document Your Business Strategy


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You can’t hope to align your IT strategy with the business strategy of the organization if you
can’t first demonstrate a clear understanding of that strategy. In this stage you will analyze your
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organization; background, mission and core values. The culmination of your analysis should be a
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succinct set of well-defined corporate objectives.


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• Step 1: Describe the Company and Its Background. Analyze how your organization
got to where it is today. Look at your history in terms of dates and growth milestones,
but also in terms of past challenges that have been overcome. Put together a reasonably
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detailed description of your organization. Can you describe your organization’s overall
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purpose?
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• Step 2: Conduct an Industry Analysis. An analysis of the industries in which your


organization operates will provide a deeper context to your current strategic mission
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and key objectives. Use these analysis tools, as well as the theory contained in the
background section, to better understand your industry.

• Step 3: Document Vision, Mission, and Core Values. Document your organization’s
mission and vision statements and list your core values. Your organization mission
statement should answer three equally important questions: Why do we exist? Whom do
we serve? What do we produce?

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Introduction

• Step 4: Define Core Business and Its Boundaries. Examine your organization’s
core competencies. What makes you special and different? Once you have defined your
core business, determine what customers, channels, and competitors are within those
boundaries.

• Step 5: Create a Financial Picture. Gather up-to-date financial information of your


organization. Financial information is one of the few ways you can make a real ‘apples
to apples’ comparison of your organization to the rest of the industry.

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• Step 6: List Strategic Objectives. Summarize your analysis in a succinct and forceful
set of business objectives. These are the specific strategic objectives that you hope our

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IT strategy will align with.

Stage 3> Assess the Current IT Situation


Take a hard look at your current IT situation. Completing this section will help you identify the
IT areas where the enterprise should focus investment. Before plans can be made about the

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future of the IT organization, the current state must be understood. You can’t manage what you

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don’t know you have.

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• Step 1: Document Your IT Organizational Infrastructure. Prepare an organizational

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chart of your IT department. This should include functional areas like network support,
programmers, and business analysts.

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• Step 2: Document Your Hardware and Software Infrastructure. Identify and
document your physical infrastructure. Without a firm understanding of your existing

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technology assets, you are essentially operating in the dark and strategic planning will be

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a futile effort.

• Step 3: Audit Current IT Projects. Understanding the current workload and spending

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patterns is essential to planning for the future. Defining the projects currently being

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worked on by the IT department will help you understand whether IT is aligned with the
overall goals of your business.

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• Step 4: Understand the IT Environment. Analyze the trends in your industry and the
actions of your competitors. Look at industry trends and create competitor profiles.

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Stage 4> Propose a New IT Situation
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World-class IT departments are forward-looking and proactive. Creating an IT plan that only
addresses your organization’s current needs has limited value in the long run. This stage will help
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you envision the future of IT in your organization.

• Step 1: Analyze IT Strengths and Weaknesses. Review your current IT situation


asking tough questions about performance, alignment, and goal setting. Compare your
current governance practice (if you have any) to an industry maturity model. Conduct an
analysis of current strengths, weaknesses, opportunities and threats (SWOT).

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Strategic IT Planning and Governance

• Step 2: Brainstorm Technology Opportunities. Hold a brainstorming meeting (or


meetings) involving your strategic planning group as well as IT staff, senior managers,
line managers, power users, and special applications users. Formulate a set of key
questions to get the mental wheels turning.

• Step 3: Document Your Results. Document your final recommendations for the
future as approved by your planning group. Use diagrams and charts as much as possible
and remember to continually relate your recommendations to the business goals of the
enterprise.
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Stage 5> Perform a Gap Analysis


Compare your current IT situation to the proposed situation you developed in the previous
stage. By taking a detailed account of what you will need in the future and then matching it
against your current infrastructure, you will be able to create a roadmap for the future.

• Step 1: Analyze Alignment Gaps. Review the results of “Stage 2: Document Your
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Business Strategy” and “Stage 3: Assess the Current IT Situation” in the context of the
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four quadrant strategic alignment model.


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• Step 2: Analyze Infrastructure Gaps. Assess the IT requirements of the projects and
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areas of investment you identified in “Stage 4: Propose a New IT Situation”. Look at


where current IT systems and skills sets do and do not fulfill those requirements.
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• Step 3: Summarize and Resolve Gaps. Put together a summary of the gaps identified
in both Step 1 and Step 2 and chart the implications for your IT strategy of addressing
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those gaps.
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Stage 6> Propose a Strategic Vision and Governance Model


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With a firm grasp of your organization’s business objectives and the ways that IT can enable
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them, now is a good time to establish a top level vision and mission for your IT department.
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• Step 1: Hold a Vision Meeting With Stakeholders. Describe what needs to be done
to achieve the future IT situation documented in Stage 4. Your IT core values represent
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the standard axioms by which IT is applied across the organization. Similar to the core
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values you documented for your organization, as a whole, strategic IT core values are the
set of beliefs or philosophies that guide strategic IT decisions.
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• Step 2: Establish a Strategic IT Vision. Use the guidelines for the organization vision
statement in Stage 2 when preparing the vision statement for corporate IT.
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• Step 3: Propose a Governance Structure. The strategic IT vision applies to all


strategic level IT decisions across the organization. The IT Steering Committee is a
cross functional committee for the on-going application of strategic priorities to all IT
projects. Propose a charter for this group that draws a line from vision and objectives to
specific actions.

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Introduction

Stage 7> Build a Strategic Decision Making Framework


Translate your strategy into some tactical and operational goals. Now that you have identified
the gap between where you are and where you want to be, the next step involves making some
recommendations and determining a course of action.

• Step 1: Set Strategic Goals and Measures. Begin the process of turning your strategy
into action by setting some clear goals for the IT department. This takes the work you
did in the previous stage – Set Your IT Strategy – and turns it into some actionable

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objectives for the upcoming year.

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• Step 2: Perform a Budget Analysis. Goal setting and measurement are only two
steps of the cycle. The last step is budgeting future performance levels. After you have
gathered some actual information, budgeting next year’s information becomes much
easier.

• Step 3: Identify Your Options. Begin identifying your options by taking a very high
level approach. Using your gap analysis from Section 6, group together functions that

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you think can be fulfilled by a type of application.

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• Step 4: Prioritize Your Projects. Use a three-tier approach to prioritizing your projects.

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Our Project Ranking Framework is designed to provide you with a robust prioritization

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process that ensures that your department’s projects are aligned with the objectives of
the business. These include:

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1. Info-Tech Project Matrix

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2. Info-Tech Priority Index

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3. Info-Tech ROI Calculator

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Stage 8> Publish, Promote, and Maintain Your Strategy

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The main deliverable of this process is a Strategic IT Plan that provides a specific vision
and goals for IT in your organization, a rational for prioritization of current IT projects, and a
mechanism and governance model for making sound strategic priority decisions about IT into

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the future.
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• Step 1: Build Your Strategic Plan Documentation. Use the Strategic IT Plan
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template to bring together all of the elements you have created in this process into one
concise plan that can be recommended to senior management.
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• Step 2: Present Your Plan to Senior Management. Present the plan to Senior
Management and require its official approval.

• Step 3: Communicate and Manage Change. If your planning process has been open
and broadly based, the completed plan should not be a surprise to anybody. However,
it is still important to develop a communications plan to ensure that all stakeholders are
fully aware of the plan’s contents and implications.

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Strategic IT Planning and Governance

Aligning IT With Business Goals


Any resource expended in an activity that
Strategic Planning and does not advance either the strategic goals
Alignment of the organization, or the functional
requirements of other units in their
Info-Tech Research Group’s strategic planning survey quest to meet key business goals, is a
found that the vast majority of organizations that did wasted resource. Pursuing alignment is an
strategic planning saw an improvement in business/IT
exercise in efficiency.
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alignment.
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IT/Business strategy alignment has


been talked about in business studies
for 20 years. In a 1993 IBM Business
Journal Article, J.C. Henderson and N.
Venkatraman proposed a theoretical
model for Strategic Alignment. A number
of management researchers have further
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refined the model and applied it to a range


of industries.
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The IT/Business Alignment Model


contains four main interrelated domains. Each of these areas contains three interrelated sub-
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domains. Graphically, the IT/Business alignment model looks like this:


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Each of the four quadrants of the business alignment model must integrate with the other
quadrants. Vertical integration is called strategic fit; horizontal integration is called functional
integration. So, for example, your information technology infrastructure needs to be accountable
to both the overall strategic goals of IT (strategic fit) while also being able to help individual
business units realize their individual strategic goals (functional integration).

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Introduction

Scope, Competencies, Governance


An information technology strategic planning process needs to focus primarily on the
Information Technology Strategy quadrant of the alignment model. The Information
Technology Strategy quadrant includes:

• Technology Scope: The key technologies that support the current business scope

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as well as the technologies that

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enable new opportunities. Plan
Strategy and Infrastructure
Concurrently

• Systemic Competencies: Vital


characteristics and strengths
of information technology

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that provide advantages to the
organization.

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• Governance: How authority and responsibility for decisions is shared between IT and

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business partners. How project priorities are established.

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Your strategic IT plan also needs to integrate well with

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Business Strategy and Technology Infrastructure. In an Plan Strategy and

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ideal situation, you will have concurrent plans in place Infrastructure

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or under development for both Business Plans and Concurrently
Technology Infrastructure. Business strategy also focuses

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on scope, governance, and core competencies as these It is strongly recommended that
apply to the whole enterprise. Infrastructure planning your infrastructure planning

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should focus on the following: initiative be undertaken
concurrently with your strategic

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• Structure: Priorities, policies and choices that planning.

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bring together applications, software, networks,
hardware and data management into a cohesive Think of it as a conversation
platform. between the steering committee,
which is setting strategic priorities
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• Processes: The procedures for managing IT and represents the whole enterprise,
and the IT department that O
infrastructure as well as practices for developing
must articulate the infrastructure
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and maintaining applications. requirements and the specific


projects that will realize strategic
• Skills: Human resources practices and issues goals.
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specific to building an effective IT department.


Further information/discussion of
If a well-articulated business plan and a technology the alignment model can be found
infrastructure plan are in place or under development, in the background section for Stage
work on the Strategic IT Plan will be that much easier. 1: Plan the Plan.
However, in the event they are not, this methodology
contains tools for roughing in some working definitions of your business and infrastructure
strategies. In essence, your efforts will drive development in these important areas.

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Strategic IT Planning and Governance

The Importance of Governance

The term “IT Governance” refers to formal high level processes and structures for IT strategic
planning, prioritization, decision making and performance measurement. By having these formal
processes and structures – such as IT strategy and steering groups – the organization can better:

• Align IT strategy with the business strategy


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• Transform high level strategic goals into actual IT projects.


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• Establish procedures for prioritizing IT projects that are understood and supported by
all senior managers.

By “high level” we mean that these processes and structures extend beyond managing the IT
department to address strategic IT issues across the entire enterprise. As they impact the entire
organization they demand wider involvement and particularly the participation and support of
senior management.
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In “An Holistic Approach to IT Governance”, Harvard Business School Professor Charles


Popper notes that formal decision making “helps to ensure that critical decisions are fully
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committed to by all groups in the enterprise.” Processes to do this have three main principles:
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1. Senior managers will need to accept formal responsibility for strategic decisions
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regarding information technology, through an existing management committee or, if


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necessary, through a dedicated IT steering committee.


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2. Agreed-on processes need to be developed to identify the decisions to be made;


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to collect, analyze, and disseminate the data needed for informed decisions, and to make
and communicate the decisions.
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3. Senior managers need to be involved on a regular basis. The business world at


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the turn of the millennium is too dynamic for a strategy to be implemented by remote
control.
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While being as flexible as possible, it is still important to establish agreed upon processes and
structures for strategic planning, prioritization, decision making and performance measurement.
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Introduction

Methodology Overview Spreadsheet


This spreadsheet, located on the CD-ROM, will help you assess the amount of work that needs
to be done to complete this methodology. Completing the stages of this methodology leads to
the establishment of a strategic IT planning and governance practice as well as a written strategic
plan. Every step should be completed as part of this process; however, you may have already
completed much of this work as part of other projects. In these cases you can check off the
steps as done and significantly reduce the estimated hours it will take to complete your objectives.

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The Agility Paradox
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the greater the need for strategic direction. This is the agility paradox. You can take the first
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steps towards greater agility by developing a more flexible strategic planning process for your
organization.
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Planning, Not the Plan


Start with the following proposition: It’s not about the plan. You can work toward the goal of
making planning more agile by shifting your strategic focus from simply creating a plan to
implementing an iterative, real-time process of alignment and execution.

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Strategic IT Planning and Governance

Instead of thinking of your strategic plan as a reactive, stagnant annual document, think of
it as a proactive, evolving entity that is in a state of perpetual change based on changes to the
business environment. Developing such an agile strategic planning process will foster constant
learning, give you the ability to adapt in real-time, and ultimately create opportunities for on-
going competitive advantage.

Shortcomings of Traditional Strategic Planning


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Often referred to as “dog-and-pony shows,” the traditional models for preparing an annual
strategic planning document are too slow, too rigid, and too reactionary. A McKinsey report
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involving 80 companies characterized the annual strategic process as, “ritualized, politicized, and
of little value.”

• Traditional models focus more on the bottom line and on making quarterly numbers
than on innovation and real-time response to the market.

• They depend on predictable future outcomes, linear forecasting, and the extrapolation
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of historical data, thus failing to anticipate change.


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• Traditional plans are often out-of-date before they are even fully conceived, and planners
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are forced to wait until the next planning cycle to react. By this point, windows of
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competitive advantage have already been lost.


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The moments of stability normally experienced between cycles of change have become shorter
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and shorter, to the point where change is constant. Faster business cycles, rapidly advancing
technologies, and expanding fields of competition, the threat of external change is much greater.
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The need for an agile strategic planning process is real.


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Agility Tips
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Each step in this methodology is necessary for the creation of a workable


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strategic governance practice. In addition to the formal processes laid out


in this document, we add “agility tips” – suggestions on how you might
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achieve each stage in a more informal and timely fashion.


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Introduction

How This Methodology Works


Below is a brief explanation of how
the methodology is laid out, and
what you can expect to encounter
in each section.

You have been provided with a


hard copy of the methodology and

P
background sections. The hard copy

G R O U
is intended as a quick reference, and
to be used in lieu of reading from
a computer screen. In undertaking
the steps of this methodology,
we strongly recommend using the
electronic version provided on the
CD-ROM. The electronic version

H
will save you time in completing most stages and makes it easier to make changes during the
process. Contents of the CD-ROM are designed for use on PC platforms using Microsoft Office

C
software (Microsoft Word, Excel and PowerPoint viewers are available on the CD-ROM in the

R
“Viewers” folder for accessing files without Office software). If the CD-ROM does not install

A
automatically, you can access the contents by exploring your CD-ROM drive.

E
Each Stage in the methodology is broken down into Steps, which include the following sections:

S
• Objectives: Each step has objectives. Reading these objectives will help you nail down

E
the purpose of each step and will give you direction.

R
• What You Need to Do: This section contains the action steps that you need to take in
order to complete the objectives. These sections are the “meat” of this methodology

H
and will guide you through the process in an easy-to-follow, step-by-step approach.

C
For each stage there are also corresponding Workbook sections as well as Background sections

T E
that provide further information on the subject of the stage.

• Background Sections: These sections should be viewed as optional reading - if you

~
are not comfortable with your knowledge level of the topic at hand, use the related
background information to quickly get you up to speed. Many workbook articles are O
drawn from Info-Tech advisory publications and have their own mini-action plans.
N F

• Workbook Sections: These sections help you complete the action steps and gather
documentation for a final report. All workbook documents are in Microsoft Word,
I

Excel, and PowerPoint format. Workbook documents can be accessed from the
electronic version of the methodology through the hyperlinks within specific action
steps.

Page 19
Strategic IT Planning and Governance

When you insert the CD into your computer, the electronic version will automatically load and
install itself onto your hard drive. An icon will be created on your desktop for easy access. Please
note that all of the workbook files and interactive tools will be saved by default to their original
location on your hard drive. We strongly recommend that you create a Strategic IT Planning
folder on a backed-up network drive and save all of your work there.

Please Note: While we refer to the business or company, and in many cases relate stages or steps
to business situations, this methodology is equally applicable to any type of for-profit, non-
profit, or government organization. This terminology was used purely for consistency and to
P

facilitate reading ease.


G R O U
H
C
R
A
E
S
E
R
H
C
T E
~
O
N F
I

Page 20
Stage 1> Plan the Plan

Stage 1> Plan the Plan Stage

Every moment spent planning saves three to four in execution.

Strategic planning is not just a task. It is a process. The better planned


the process, the better the results. A strategic planning process is also
1
a crucial communications vehicle between IT and the rest of the organization. An open and

P
inclusive process will lead to a better plan, increased understanding by all, and closer alignment

G R O U
of corporate and IT strategy.

In this stage you will establish the who, what, when and why of your strategic planning process.

• You will establish who the stakeholders are in your strategic IT plan and establish a
planning committee to include those stakeholders in the process.

• You and your committee will review the steps of this methodology and determine

H
what will need to be done specific to your circumstances and establish when each stage

C
should be completed.

R
• Finally you will complete a preliminary report for senior management that outlines the

A
scope and the goals of the plan (the why
why). Approval of this report will constitute a
green light for the entire process to commence.

E
S
Step 1 – Set Strategic Planning Goals

E
R
Start by answering the question, “What is Strategic?” when it comes to IT projects, processes,
and investments. The answer to this question will help set the scope for the Strategic IT Plan.
Work up a list of objectives for the strategic IT planning project. Identify areas where key steps

H
have already been taken as well as areas that will require more work.

C
T E
Step 2 – Establish a Planning Group
List all the major IT stakeholders in the enterprise. Select for your planning team a group that

~
can work productively on building the plan and then on championing the results across the
organization. A truly open and effective process begins with a well-rounded working group. O
N F

Step 3 – Hold a Kick-off Meeting


I

Review the steps of this methodology with the team and set a preliminary time frame. Your
timetable should establish momentum and a sense of urgency. Be aggressive but realistic with
your deadlines.

Page 21
Strategic IT Planning and Governance

Step 4 – Create a Preliminary Report


Make sure you have the full support and cooperation of senior management before you proceed.
Put together a preliminary project description report. Include the overall goals, the steps that will
be taken, the time frame, and any other preliminary cost estimates you have. Present this report
to senior managers and get their sign-off.
P

In This Stage
G R O U

Stage 1 > Plan the Plan..................................................................................... 21

Step 1 – Set Strategic Planning Goals .................................................... 23


Step 2 – Establish a Planning Group....................................................... 25
Step 3 – Hold a Kick Off Meeting ............................................................ 27
H

Step 4 – Create a Preliminary Report...................................................... 28


C

Stage Summary....................................................................................... 30
R

Background > Making the Case for Strategic IT Planning............................. 31


A

The Most Important Constituent: Senior Management............................ 32


E

The Importance of Communication ......................................................... 33


S

More Notes on Agility .............................................................................. 35


E

Co-opting the Power User ....................................................................... 36


R
H

Workbook
C
T E

Stage 1 > Plan the Plan....................................................................................... 7

1.1 Scope Statement Worksheet............................................................... 9


~

1.2 Project Goal Statement ..................................................................... 11


O

1.3 Planning Constraints ......................................................................... 12


N F

1.4 Identify Stakeholders ......................................................................... 14


1.5 Stakeholder Analysis Tool ................................................................. 15
I

1.6 Letter to Key Stakeholders ................................................................ 21


1.7 Kick-off Meeting Agenda ................................................................... 23
1.8 Convergence of Technology and Core Business Strategy ................ 24
1.9 Timeline Tool ..................................................................................... 25
1.10 Project Definition Statement ............................................................ 26

Page 22
Stage 1> Plan the Plan

Agility Tip: Have a Plan for the Plan


Every minute spent planning saves three minutes in execution. Two
critical issues require your attention in this first stage: establishing lines
of communication and agreeing on a reasonable scope for this effort.

Holding a kick-off meeting is a great way to focus everybody’s attention.


We recommend it. However, if your organization is small or averse to
large formal meetings, you still need to establish some kind of planning

P
circle.

G R O U
Rather than formal meetings with formal agendas, you might instead
try to schedule regular lunches or coffee break meetings with key
stakeholders.

The important thing is that you continue to drive the process while
keeping key stakeholders in the loop. Don’t try to go it alone.

H
C
Step 1 – Set Strategic Planning Goals

R
A
Objectives:

E
• Establish the scope of your Strategic IT Plan.

S
E
• Establish strategic planning goals.

R
• Review possible constraints and steps to mitigate those constraints.

H
What You Need To Do

C
ü Create a Scope Statement. It is good to start by defining the kind of IT investments
and activities your strategic planning effort will address. In most simple terms, start by

T E
defining boundaries. What is strategic? Use “1.1 Scope Statement Worksheet” to help
formulate a scope.

~
ü Outline the purpose of the plan. Use the worksheet “1.2 Project Goal Statement” to
draft the primary reasons for developing a strategic plan. O
N F

ü Identify (and plan to mitigate) possible constraints. Think about the constraints you
will encounter in implementing the plan. Use the worksheet “1.3 Planning Constraints” to
list these constraints and how they might be avoided.
I

State the purpose(s) of the Strategic IT Planning process. Why are you preparing an IT planning
document for your enterprise? What are the primary reasons you are undertaking this process
and what do you hope to achieve?

One example might be “To align the IT organization with the business strategy of the North
American operations.” Another example is “To identify technology-related projects that provide
our organization with the highest return on investment.”

Page 23
Strategic IT Planning and Governance

Keep the focus of your goals externally oriented and speak to the enterprise as a whole. A goal such
as “Make the IT department better at serving our customers” is a laudable departmental goal, but
it is more functional rather than Strategic. Your Strategic IT Plan should be about establishing
how information technology will make the enterprise more effective and competitive.

Identifying Constraints
As much as we would all like to believe that everybody in an organization is headed in the same
P

direction, the reality is that there are numerous internal agendas. Successful implementation of
any plan relies on a number of factors that are outside of your control.
G R O U

Think about the constraints you will encounter in order to implement your plan. List the major
constraints in the project constraints worksheet. Then think about what steps might be taken to
mitigate those constraints.

For example, you may have difficulty scheduling time with all of the stakeholders. Alternatively,
if IT has historically served in a support capacity at your organization, you may face resistance
H

from senior management who do not see the need for a strategic plan for the IT department.
C
R

What Is Strategic?
A

It will be noted later in this methodology that an IT governance structure is not a replacement
E

for the IT manager. However, there are certain IT projects that are beyond the scope of the
S

functional duties of the IT department. Give some thought to what kinds of projects occupy
this space.
E
R

Info-Tech Research Group suggests that you look at projects that might be strategic from three
perspectives:
H

• Reach and Impact: Who is affected directly and immediately by a proposed project?
C

Will it involve the participation of more than one department? What proportion of IT
users across the organization will be impacted?
T E

• Standards: Any action that sets or impacts an Information Technology Standard for
the entire enterprise will, by definition, affect everybody. Any such standard should have
~

demonstrable impact on moving the enterprise toward its goals.


O

• Cost: It may seem crass to identify a project as strategic simply because of its price tag,
N F

but another way to look at it is that any project that carries a price over a certain amount,
which does not advance the strategic goals of the organization, should be suspect.
I

As an example, consider something as simple as upgrading a PC operating system. Upgrading


one PC isn’t strategic. However, if a new Web services based content management system
requires Office XP running on Windows XP, then it may be necessary for the company to
standardize on Windows XP. A project to upgrade every PC to Windows XP would certainly
have the reach and impact, not to mention the cost, to make it a strategic project.

In this case the project should be analyzed and approved within a strategic context. An
enterprise-wide operating system upgrade does have the scope and impact, standards
implications, and cost to warrant being considered strategically.
Page 24
Stage 1> Plan the Plan

Step 2 – Establish a Planning Group


Objective:

• Identify and contact the key stakeholders who can participate in the strategic process.

What You Need To Do


ü Identify stakeholders. Use the worksheet “1.4 Identify Stakeholders” to create a

P
preliminary list of people who you may want on your steering committee, or those that

G R O U
you will enlist as ‘champions’, in order to implement your strategic plan.
ü Think carefully about this list. Your list should consist not only of management above
you, but also of your peers and subordinates. Use worksheet “1.5 Stakeholder Analysis
Tool” to further refine your list.
ü Invite key stakeholders to join the steering committee. The Strategic IT steering
committee will be the primary planning body for Strategic IT. This group will participate

H
in the creation of the strategic plan, and will be the basis for a permanent governance
group.

C
R
Creating your steering committee is the most crucial part of this stage of the strategic planning

A
process. The steering committee will be the basis for both drafting a strategic plan and for long
term IT strategic governance in your enterprise.

E
S
A steering committee will help perform two important roles for the management of an

E
organization’s IT direction:

R
• Alignment. The committee helps ensure that IT strategy is aligned with the strategic
goals of the organization.

H
• Ownership. IT enables all functional units within the organization. These units have

C
to play a role in larger IT strategic decisions since those decisions will impact their
processes.

T E
Consider the alignment model sketched in the introduction to this methodology. Other
department managers and key executive decision makers are going to have to be in the loop if
~
you are going to build both strategic fit and functional integration across the organization.
O
The steering committee will help you develop a strategic vision for IT in the organization. They
N F

will also act as an on-going review body that will help you judge the strategic merit of IT projects
and investments. As IT has enterprise-wide implications, it makes sense that you should involve
I

constituents of the enterprise outside of IT in strategic planning. It is also important, however,


to remember the following:

• A steering committee is not a clearinghouse for functional demands of the


various units in your organization. This is not the place for finance to complain about
bugs in their new system or for personnel to note inefficiencies in the help desk.

• A steering committee is not a replacement for the IT manager, or management


team of the IT department. The IT manager manages his or her department. The

Page 25
Strategic IT Planning and Governance

steering committee helps set priorities for IT investment and evaluates how well the
entire organization is progressing in meeting strategic goals.

• The steering committee is not a “rubber stamp” for the IT department. The
committee must be able to gauge the business impact of various proposed IT projects.
They are not there simply to communicate the latest decision by the IT managers. They
must have the power to say another project has higher priority.

Agility Tip: The Perils of Going It Alone


P
G R O U

What if your organization or department is small and culturally averse


to the idea of a formal committee? At the very least build an informal
network of contacts, keeping stakeholders and senior decision makers in
the loop about the planning process.

Whether it is a ten-person committee or a couple of decision makers with


whom you regularly have coffee, open communication and stakeholder
H

involvement is the key.


C

Meetings, communication, consensus building: These are all time


R

consuming tasks. Wouldn’t it be easier just to take this methodology into


your office, work through the steps, and present a finished strategic plan to
A

your CEO?
E

You can go it alone with this methodology, but the resulting plan will be
S

more likely to sit on a shelf and never really impact management decision
E

making. Wider involvement in planning guarantees better and more lasting


results as more people will have a stake in the outcome.
R
H
C
T E
~
O
N F
I

Page 26
Stage 1> Plan the Plan

Step 3 – Hold a Kick-off Meeting


Objectives:

• Bring together your steering committee to formally launch the project.

• Refine goals and establish an initial timeline for the project.

What You Need To Do

P
ü Use the “1.6 Letter to Key Stakeholders” template to make initial contact with your

G R O U
proposed steering committee members. Outline the goals and expectations of the
planning project.
ü Use “1.7 Kick-off Meeting Agenda” as a basis for your meeting. Discuss the goals
and possible constraints that you have outlined with the steering committee and if
necessary, revise goals and expectations based on their input.

H
ü Use “1.8 Convergence of Technology and Core Business Strategy” PowerPoint
presentation to help explain the importance of IT/Business alignment and establishing

C
IT governance.

R
ü Use “1.9 Timeline Tool” to establish a preliminary timeline for the Strategic

A
IT Planning project. Estimate an approximate time for each of the stages in this

E
methodology.

S
The kick-off meeting is an excellent opportunity to introduce your steering committee members

E
to each other and to the project. Review the goals and possible constraints that you have already

R
identified. Use this meeting to set a clear understanding of the importance of the project as well
as the importance of the committee.

H
• The project kick-off meeting should run no more than a couple of hours. You
don’t want to make the group think that the project is nothing but a series of long

C
meetings.

T E
• If you can have the President or CEO kick-off the meeting with some encouraging
words, it would be a great shot in the arm to the project.

• Introduce the members of the team to each other. Depending on the size of your ~
O
organization, some members may not know each other.
N F

• Discuss responsibilities of the team. Explain that this is an enterprise-wide IT plan


and the input of the entire steering group will be critical.
I

• Share your preliminary goals and discuss possible constraints with the team. Be
willing to listen to concerns and ideas. Make sure you encourage feedback from the
team.

• Finally, review the steps of the plan and put a rough timeline together. Better
to be up front with the group and let them know that this isn’t a ‘back burner’ project.
Make sure the group understands how the project will be tracked and what the status
update routines will be.

Page 27
Strategic IT Planning and Governance

Creating the Timetable


Review the steps in this methodology with your team and establish a completion date for each
step in the strategic planning process. Try to stick to your dates as much as possible.

This is your opportunity to streamline the process:

Although the best IT plans include all of the stages in this methodology, the information
gathering involved can be very time-consuming work. For each stage of the process, ask “Has
P

this been done already?” and “Do we already have this information?”
G R O U

For example, in Stage 2 you will be documenting your organization’s strategic vision and business
direction. If your organization has recently completed a Strategic Plan, this documentation
probably already exists and the time required to complete this stage will be drastically reduced.

Keep your timelines aggressive but realistic:

One of the biggest obstacles to creating and implementing a successful strategic plan is
H

managing the energy and enthusiasm of the people involved over time. At the outset, you will
C

likely have no shortage of energy to put into creating the plan. However, as time goes on, you
and your steering committee’s energy will wane.
R
A

If this exercise takes too long, or you keep missing deadlines, you will have trouble sustaining
enthusiasm, and the likelihood of creating a successful plan will diminish significantly.
E
S
E

Step 4 – Create a Preliminary Report


R

Objectives:
H

• Document the purpose of the Strategic IT Planning and Governance Project.


C

• Identify possible project constraints and limitations and mitigation options.


T E

• Set a timeline for the project.


~

• Gather top-level support.


O
N F

What You Need To Do


ü Use the template “1.10 Project Definition Statement” to bring forward information
from all the steps in this stage into a preliminary report.
I

ü Garner top level support. Make sure your report is understood and approved by senior
management.

In this step you will review and consolidate the content created in the first three steps of the
Plan the Plan stage into one consolidated report that you can take to senior management for
approval. In your project definition statement, you will do the following:

Page 28
Stage 1> Plan the Plan

• Begin with the purpose of the plan. State the purposes of the Strategic Planning
project in the Project Definition Statement. List the primary reasons that the
organization is undertaking this process and what it hopes to achieve. Use your revised
goal statements from worksheet “1.2 Project Goal Statement.”

• Include the constraints you have identified. Successful implementation of any plan
relies on a number of factors that are outside of your control. Using your completed
worksheet “1.3 Planning Constraints” list any constraints, limitations, or obstacles that
you can think of, as well as possible solutions within the Project Definition Statement

P
workbook.

G R O U
• Set a timeline. Use the “1.9 Timeline Tool” to lay out a preliminary timeline for the
project. These dates may be adjusted later, however setting some general targets now
is a good start. Use the various stages outlined in this methodology as macro-level
milestones and establish completion dates for each stage.

• Gather top-level support for the project. The CEO and other top-level management
should be involved in this project either directly or through a representative on your

H
planning committee. Either way their support and endorsement is essential when trying

C
to re-deploy resources to your project and soliciting help from organization employees.
This can be an informal meeting – if you can, sit down with some of the brass and get

R
their take on the project. Show them your definition statement, constraints, timeline and

A
budget, and solicit their feedback.

E
S
E
R
H
C
T E
~
O
N F
I

Page 29
Strategic IT Planning and Governance

Stage Summary: Plan the Plan


Time spent planning saves time in execution. You should now have a planning group with a
strong and shared sense of mission. In the next stage you will lead this group through a critical
information-gathering exercise. In order to align IT with the business, a clear picture of the
current business mission and goals needs to be drawn.

The following chart shows the progress of developing the plan after Stage 1 of the engagement.
P

Status Stage
G R O U

Creation Of Steering Committee Done 1


Scope Definition of “Strategic” Done 1
Strategic IT Plan Kickoff Meeting Done 1
Preliminary Report With Goals and Timeline Done 1
Document corporate Vision, Mission and Strategic Goals 2
H

Analyze Core Competencies and Competitive Position 2


Current IT Organizational Structure. 3
C

Hardware and Software Inventory 3


R

Analysis of IT Trends 3
A

Review of IT Against Governance Maturity Model 4


E

IT SWOT Analysis 4
S

List of Proposed Future IT Directions 4


E

List of Requirements for Resolving Gaps (Roadmap) 5


Corporate IT Vision Statement 6
R

Corporate IT Governance Charter 6


Strategic IT Goals 7
H

Achievable Measures 7
C

Budget Analysis 7
T E

Prioritized Project List 7


Completed Strategic IT Plan Document 8
~

Comprehensive Strategic Planning PowerPoint 8


O

Strategic Planning Communication Plan 8


N F
I

Page 30
Stage 1> Plan the Plan

Background > Making the Case for


Strategic IT Planning
In the pre-planning stage it is critical that you make the case for strategic planning of enterprise
IT investment. In many organizations, thinking strategically about IT may be a new concept.
This is because IT is more often seen as a functional enabler of business processes.

P
Consider the four-quadrant IT/

G R O U
Business alignment model that
was presented in the introduction
to this methodology. In an ideally
aligned IT organization, there
is a balance between Functional
Integration and Strategic Fit. The
IT department is integrated with

H
both the Business Infrastructure
and an overall Technology Strategy

C
that is aligned with the Business

R
Strategy.

A
IT alignment in actual companies can be quite different than what is modeled here. For example,

E
an organization could have a strategic plan, but IT has never been looked at strategically. In this

S
case the IT department’s agenda is very much influenced by the functional requirements of the
individual departments who are each striving to fit their individual plans with the overall strategy.

E
R
In this case the alignment model is entirely weighted toward functional integration. In Strategic
Alignment parlance, the business strategy is the anchor, the business infrastructure is the pivot
and IT is the impact domain. It is also possible, but perhaps less likely, to go too far in the other

H
direction. You could have an organization where IT is always seen as a strategic driver and

C
individual business units are left to fend for themselves. In this case it is IT strategy that is the
pivot between the business strategy anchor and the IT infrastructure impact.

T E
~
O
N F
I

Assuming that the image at left above comes closest to describing your situation, what is the
motivation for changing this relationship? You need to make the case that balancing functional
requirements with IT Strategy will benefit your organization. In short, make the case that a well-
thought-out IT strategy can make your enterprise more competitive and profitable.

Page 31
Strategic IT Planning and Governance

In late 2002 Info-Tech Research Group


surveyed IT managers about Strategic IT From Enabler to Strategic
Planning (SITP). Use the following points Investment
from the survey in bolstering you case:
The purpose of IT has shifted from enabling
• Increased Competitiveness: the organization to actually delivering value to
65% of organizations utilizing the customer. Consider these trends from A.T.
SITP reported that their entire Kearney.
organization was at least somewhat ü 1996: 50% of CEOs felt that technology
P

more competitive due to utilization decisions influence overall business strategy.


of SITP; 15% indicated that utilizing
G R O U

SITP has significantly increased their ü 1998: 55% of CEOs were devoting 22% of
organizations’ competitiveness. their time toward trying to keep abreast of
technologies that would affect their business.
• Increased Ability to Obtain ü 2000: Technology is not only viewed as
Funding: 73% of organizations part of the strategic business process, but is
utilizing SITP reported an increased considered a fundamental key driver.
ability to obtain funding for new IT
H

initiatives.
C

• Increased Executive Support of IT Strategy: 80% of respondents utilizing SITP


R

versus 67% of respondents not using SITP reported that IT strategy was of high or
A

moderate importance to senior management in their organization.


E

• Improved IT/Business Objectives Alignment: 94% of respondents utilizing SITP


S

reported having improved the alignment between their IT objectives and those of the
organization as a whole.
E
R

• Better Project Tracking and Budgeting: Organizations utilizing SITP were more
likely to finish their projects on time and on budget than those organizations not
utilizing this practice
H
C
T E

The Most Important Constituent: Senior


Management
~

Senior management involvement (CEO and senior managers) in the strategic IT planning
O

process is absolutely critical. In fact, if you don’t have upfront buy-in and support, it is really
N F

worth asking whether or not you should proceed.

In 1998 a research report from McKinsey Group argued that most companies fall within four
I

categories in terms of their use of Information Technology.

1. IT Laggards. Were slow to use new technologies either efficiently or effectively in


support of core business process. Almost half of the companies studied by Mckinsey
fell into this category.

2. Big IT Spenders. These are companies that have tried to stay ahead of the curve
with large IT expenditures. Unfortunately, they have not balanced these efforts with
efficiencies and are not getting enough bang for their buck.

Page 32
Stage 1> Plan the Plan

3. Cautious IT Spenders. These are companies that focus on efficiency of functional IT


but fail to think about how IT can have a strategic impact.

4. IT Stars. These companies are a minority (27%). They have successfully balanced
effectiveness and efficiency. They spend less than the big spenders, but the expenditures
they make have a greater return.

In their prescription for how IT


Laggards can become IT Stars,

P
the McKinsey researchers posited
“seven highly effective habits” for

G R O U
IT in companies. The very first of
these habits is “IT must be a top
management affair”. They found that
top management at IT laggards spent 20
hours per month focused on IT. At IT
stars, top managers devoted 45 hours.

H
At IT stars, the researchers found,

C
“top managers devote time and energy
to developing an IT strategy, and get

R
actively involved in introduction of new

A
systems.” (“Manufacturing Use and
Abuse of IT”, McKinsey Quarterly,

E
1998 issue 1, p 138.)

S
E
R
The Importance of Communication
A 1999 study of “Enablers and Inhibitors of Business-IT Alignment for the Association for

H
Information Systems” surveyed hundreds of IT executives and business executives. The survey

C
resulted in the following table of enablers and inhibitors.

T E
Enablers Inhibitors
Senior executive support for IT IT/business lack close relationships

~
IT involved in strategy development IT does not prioritize well
O
IT understands the business IT fails to meet its commitments
N F

Business - IT partnership IT does not understand business


Well-prioritized IT projects Senior executives do not support IT
I

IT demonstrates leadership IT management lacks leadership

An interesting observation of the study was that the enablers and inhibitors were seen as two
sides of the same coin. It is really all about communication. If you and your non-IT masters
and colleagues plan together, use a common vocabulary, and share the same vision, alignment
follows.

Page 33
Strategic IT Planning and Governance

Here are four suggested actions for enhancing alignment in your organization. All four are
addressed in this methodology.

1. Build Governance Procedures and Structures that involve the broader management
team in IT investment decisions. Such a governance body is usually called a “Steering
Committee” though other terms like “IT Investment Committee” can also be used. This
committee should make sure that IT planning and strategic planning are linked.

2. Learn the Language of Business: The benefits of any IT project must be expressed
P

in business, rather than technical terms. Prepare a business case for each significant
technology investment. Some can be difficult to justify in isolation (e.g. security, storage),
G R O U

but can be justified as part of a broader business objective (e.g. business continuity,
letting customers serve themselves online).

3. Measure Every Important IT and Business Outcome (e.g. project completion


dates, budgets, sales, and profits). Business and IT metrics should also be linked (e.g. $1
million in new sales in six months after completing the e-commerce project). You should
“treasure what you measure” because it sends an important message to everyone that
H

not only is the outcome important, but it’s important enough that you need to set goals
C

and monitor progress towards them.


R

4. Communicate Clearly through policies, procedures, service level agreements, and


A

project charters to ensure on-going understanding of both the functional and strategic
role of IT and IT investments.
E
S

Easier Said Than Done


E
R

In 2002, META group reported that alignment had been among the top five concerns of IT
executives over the previous five years (number one ranked in 2002). Yet, in spite of this fact
– and the fact that the idea of alignment has been around for 20 years – alignment is still elusive
H

in many companies.
C

In the same year Balanced Scorecard Magazine and CIO Magazine co-sponsored a survey of 500
T E

IT and business executives. Among the findings:

• While most respondents (58%) said there are general efforts to link IT spending with
~

strategy, only 10 percent said spending was “explicitly based” on strategic plans.
O

• 47% saw IT’s role as “reactive problem solver”, while only 28% reacted favorably to the
N F

title “strategic consultant”.

• Almost half of respondents didn’t think their organization had done a good job making
I

strategic goals clear to all employees, and only a third thought their IT strategic priorities
were well linked to business strategy.

Does this mean that alignment, as an idea, has been a failure? A more realistic reading is that
perfect alignment is more theory than reality: it is an ideal that motivates on-going efforts, such
as strategic planning and governance. Research shows that the better aligned the business and IT
strategy, the better the potential for positive return for the enterprise.

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Stage 1> Plan the Plan

More Notes on Agility


Focusing on an open on-going strategic process, as opposed to writing an
annual strategic IT planning document, is the key to keeping your strategic
planning agile. Here are some additional tips on building agility from the
McLean Report article “An Agile Strategy for A Dynamic World”.

Consider this food for thought as you build your strategic practice.

P
1. Gather corporate and departmental support. Because IT strategic

G R O U
planning is closely tied to corporate planning, this initiative must be backed by senior
management. Since agility is an initiative that will affect the entire company, you will also
need to gather stakeholders from various departments and functional units. Overall,
there must be corporate initiatives in place that cultivate a change-tolerant and flexible
culture.

2. Envision the strategy. As a starting point for your agile strategy, identify the factors

H
that could change the business environment in the future and prepare multiple scenarios
to anticipate threats and opportunities more accurately. Outline a focused, long-term

C
strategy based on the scenarios most likely to occur, and develop high-level strategic

R
options for other likely scenarios. Set guidelines for the real-time creation of new
options in the event that unforeseen scenarios transpire.

A
E
3. Design the strategy and plan for changes to the corporate infrastructure. Ensure
that the strategy you envisioned is tactically possible given the various scenarios.

S
Consider the entire value chain – how will these initiatives affect your suppliers,

E
customers, and business partners? The largest hurdle in adopting a flexible, agile strategy
will likely be your IT infrastructure. Consider the following implications for IT:

R
• Open architecture needs to be a working reality. While individual technologies

H
and applications may change based on strategic objectives, the entire technology
infrastructure must evolve into a set of standards-based services, capable of

C
maximum flexibility.

T E
• The IT investment policy must change from simply endorsing planned replacements
to a model of continuous adaptation based on business needs.

• Information assets need to be made readily available and reusable to all authorized ~
O
users while maintaining a high level of security.
N F

• A process must be created to manage workflow – providing access to information


for those who need it, and restricting access from those who don’t. Strategic
I

decisions to outsource or in-source should be supported by flexible systems capable


of change.

• Business and IT processes need to be developed and resources deployed to gather


real-time performance measurements during the execution phase.

4. Execute the strategy and gather feedback. The success/failure of your strategy
should be measured in real-time as the implementation occurs. If feedback indicates that

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Strategic IT Planning and Governance

there are holes in the design or vision of the strategy, then these should be modified.
This is the crux of the real-time strategy, and is the most difficult to implement.

5. Maintain a continuous process for strategic development. Allow for the


introduction of new ideas and innovations mid-planning cycle and respond to new
opportunities and threats as they occur. Instead of an annual analysis of the strategy,
evaluation of strategic effectiveness should be occurring on an on-going basis. Once
the process is in place, the strategic planning process should be less time-consuming, as
changes will be incremental and less drastic.
P

• Preparation and execution are lengthy processes. Infusing these with real-time
G R O U

feedback of environmental and competitive changes as they occur will prevent


companies from wasting time on outdated initiatives. Document all changes,
initiatives, ideas, and market influences for later reference during the on-going
strategic planning process.
H

Co-opting the Power User


C

There is a power user in your organization. Let’s call him Bob (or Alice will also do). Bob is
R

respected in his department because of his above average understanding and use of information
A

technology. Bob doesn’t like you.


E

More precisely, Bob doesn’t like the direction your IT department is taking. He is openly critical
S

of IT with other users. Why? Maybe your department refused his request for non-supported
technology without explaining why or offering an alternative. Maybe the help desk failed to
E

answer his sophisticated queries. Maybe he just wants a little respect for his opinions from the IT
R

decision makers.

The Bobs and Alices of your organization could undermine your credibility and frustrate your
H

plans. It’s also true, however, that Bob and Alice could have some great ideas with genuine
C

business value. Your job is to understand these skeptics and make them your allies. How?
T E

• Ask department heads and your own IT support groups to give you the names of
the power users in various units. Skeptical business unit executives should be easy to
find since many of them come to executive meetings and make their skepticism known.
~

The skeptical end-user, however, is a bit harder to track down.


O

• Check help desk logs to see how often the power users on your list have used
N F

your services. If he or she is not using your services, take this as a sign that they do not
have adequate confidence in your ability to support them.
I

• Invite potential power user skeptics to meet with you to discuss IT directions.
The skeptic may be flattered by your request and more open to dialogue. Involve them
further by tapping them during fact-finding phases of planning for new projects.

• Help the skeptic become the local expert in new tools and services you plan to
introduce. This will help them protect their leadership status among their peers and
ease any feelings of threat they may have.

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Stage 1> Plan the Plan

• Post positive performance indicators and testimonials from satisfied users at public
places on your intranet.

Be prepared to listen to your power user skeptics. You may know more about IT, and they may
have more knowledge of how things have played out on the ground in the past. Keep in mind
that their skepticism may come from a perception that you’re repeating the mistakes of your
predecessors. Remember: the best way you can understand and win over skeptics is to keep them
close to your side and involve them in planning initiatives. They might even provide a valuable
window into the business needs of your organization.

P
G R O U
H
C
R
A
E
S
E
R
H
C
T E
~
O
N F
I

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Strategic IT Planning and Governance
P
G R O U
H
C
R
A
E
S
E
R
H
C
T E
~
O
N F
I

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Stage 2> Document Your Business Strategy

Stage 2> Document Stage


Your Business Strategy
In the four-quadrant business-IT alignment model outlined in the
introduction to this methodology, the IT strategy must be functionally
2
aligned with the business strategy. Realistically, you can’t hope to integrate your IT strategy with

P
the business strategy of the organization if you can’t first demonstrate a clear understanding of

G R O U
the business strategy.

In this stage you will analyze your organization’s


background, mission and core values. The Use your steering
culmination of your analysis should be a succinct committee
set of well-defined corporate objectives as well as
an understanding of the environment in which your Use members of your committee

H
organization competes. – such as participants from the senior
management team – for information

C
gathering.

R
Step 1 – Describe the Company Steering committee members should have

A
and Its Background information for this stage readily at hand.
If not, have committee members invite

E
Analyze how your organization got to where it resource people from their departments to

S
is today. Look at your history in terms of dates help you build this information.
and growth milestones but also in terms of past

E
challenges that have been overcome. Put together a reasonably detailed description on your

R
organization. Can you describe your organization’s overall purpose?

H
Step 2 – Conduct an Industry Analysis

C
An analysis of the industries in which your organization operates will provide a deeper context

T E
to your current strategic mission and key objectives. Use these analysis tools, as well as the theory
contained in the background section, to better understand your industry.

~
O
Step 3 – Document Vision, Mission, and Core Values N F

Document your organization’s mission and vision statements and list your core values. Your
organization mission statement should answer three equally important questions: Why do we
I

exist? Whom do we serve? What do we produce?

Step 4 – Define Core Business and Its Boundaries


Examine your organization’s core competencies. What makes you special and different? Once
you have defined your core business, determine what customers, channels, and competitors are
within those boundaries.

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Strategic IT Planning and Governance

Step 5 – Create a Financial Picture


Gather up-to-date financial information of your organization. Financial information is one of
the few ways you can make a real ‘apples to apples’ comparison of your organization to the rest
of the industry.

Step 6 – List Strategic Objectives


P

Summarize your analysis in a succinct and forceful set of business objectives. These are the
G R O U

specific strategic objectives that you hope our IT strategy will align with.

In This Stage
Stage 2> Document Your Business Strategy.................................................. 39
H

Step 1 – Describe the Company and its Background.............................. 42


C

Step 2 – Conduct an Industry Analysis.................................................... 43


R

Step 3 – Document Vision, Mission, and Core Values ............................ 44


A

Step 4 – Define Core Business and Its Boundaries ................................ 45


E

Step 5 – Create a Financial Picture......................................................... 46


S

Step 6 – List Strategic Objectives............................................................ 47


E

Stage Summary....................................................................................... 48
R

Background > Analyzing Business Strategy.................................................. 49


H

A Company’s Value Chain ....................................................................... 49


C

The Supply Chain .................................................................................... 51


T E

Industry Lifecycles ................................................................................... 52


Porter’s Five Forces Model ..................................................................... 54
~

Environmental Analysis (PEST) .............................................................. 55


O

Identify Your Organization’s Core Competencies .................................... 55


N F

Key Success Factors............................................................................... 57


I

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Stage 2> Document Your Business Strategy

Workbook
Stage 2> Document Your Business Strategy.................................................. 33

2.1 Company Background and Description ............................................. 35


2.2 Industry Definition.............................................................................. 38
2.3 Priority Industries............................................................................... 41

P
2.4 PEST Analysis ................................................................................... 42

G R O U
2.5 Core Values ....................................................................................... 44
2.6 Company Mission and Vision ............................................................ 45
2.7 Core Business and Its Boundaries .................................................... 47
2.8 Business Unit Core and Goals .......................................................... 49
2.9 Company Financial Picture................................................................ 51

H
2.10 Company Strategy and Goals ......................................................... 55

C
2.11 Key Success Factor Analysis Tool ................................................... 57

R
A
E
S
Agility Tip: Keep an Eye on Change

E
R
The tools in the workbook for this section are designed to help document a
company’s vision, mission, core business, and objectives. It is hoped that these
elements are already documented or at least there is a firm idea of what they are

H
in the heads of your senior executives.

C
An important issue, from an agility standpoint, is that you be kept in the loop if

T E
there are any significant changes in direction. Aligning with strategic goals that
are moving targets can be hard enough, but not knowing that the target has been
moved will be even worse.

~
O
N F
I

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Strategic IT Planning and Governance

Step 1 – Describe the Company and Its


Background
Objective:

• Build a synopsis of your organization including where it comes from and where it is
going.
P

What You Need To Do


G R O U

ü Outline Your Organization History. Use the worksheet “2.1 Company Background and
Description” to create a brief history and description of your organization.
ü Outline Recent/Future Challenges and Changes. What kind of challenges and crises
has your organization overcome? Are there major changes, such as a change in ownership,
on the horizon? Make sure your profile takes account of recent and pending changes.

Begin with historical information and documents about your organization. Much of this
H

information will be readily available, although it may not be in an ideal format. The key to this
C

section is to develop an appreciation of your organization from a business perspective.


R

Consult existing organization documents (e.g. business plans, financial statements, annual
A

reports). Members of your steering committee should also be able to supply this information. In
a public organization, the easiest place to start is the most recent annual report.
E
S

The aim of this stage is to build a structured profile of your company. You may be surprised to
find that, while everybody feels they know why the company exists, there is no consistent written
E

understanding of where the company came from or where it is going. By focusing on your vision
R

of the company you will better be able to focus on the technologies and policies that will help it
succeed.
H

Having sharpened your understanding of the company, you will in the next step sharpen your
C

understanding of where your enterprise stands in relation to competitors.


T E
~
O
N F
I

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Stage 2> Document Your Business Strategy

Step 2 – Conduct an Industry Analysis


Objective:

• Gather implications based on an analysis of the industries in which the organization


operates.

What You Need To Do

P
ü Define your industry. Use the worksheet “2.2 Industry Definition” in the workbook
to document your industry. Your definition is based on the answers to the following

G R O U
questions:

• In what industry (or industries) does the organization compete?

• How large is the industry and what role does your organization play in it?

• Is the industry dynamic and quick to change, or is it a traditional industry where

H
things have been essentially the same for the last 20 years?

C
ü Prioritize multiple industries. If your organization operates in multiple industries, use
the worksheet “2.3 Priority Industries” to determine if any industries are viewed as a

R
more important strategic priority to the organization.

A
ü Conduct a PEST Analysis. Depending on the size and complexity of your organization,

E
you may want to take your industry understanding a step deeper. If so, complete a “2.4

S
PEST (Political, Economic, Social, and Technological) Analysis”. A PEST analysis will
give you a firm understanding of the environment within which the organization is

E
operating.

R
Every organization operates in at least one market with at least one product. Depending on
the complexity of your customers and products, you probably have several distinct customer

H
sub-groups and product groups. Most importantly, your organization may operate in different

C
industries. Each industry has different dynamics, levels of competitiveness and levels of
profitability.

T E
Conducting an industry analysis and understanding industry drivers will help you better

~
understand your corporate mission and strategy. The background to this stage includes additional
information about Industry Lifecycles, Porter’s Five Forces Model, and PEST (Political, O
Economical, Social, and Technological) analysis. These are standard management theories that
N F

will help you in your analysis.


I

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Strategic IT Planning and Governance

Step 3 – Document Vision, Mission, and


Core Values
Objectives:

• Document the Mission and Vision Statements of your organization.

• List the core beliefs and philosophies that drive your organization’s strategy.
P

What You Need To Do


G R O U

ü List core values. Use the worksheet “2.5 Core Values” to list the values on which your
organization culture and direction rest.
ü Document organization mission and vision. Use the worksheet “2.6 Company
Mission and Vision” to document corporate vision and mission statements.
H

Your organization operates on a set of values that guide strategic planning and organization
direction. Core values guide our day-to-day behaviors and collectively create the desired culture
C

of the organization. Sometimes called “beliefs” or “philosophies”, they should be few in


R

number and meet the following criteria:


A

• They are shared by a majority in the organization. While individual values can be
E

different, an organization as a whole requires shared values.


S

• They determine the norms or standards of acceptable behavior concerning how to


E

approach your work.


R

• They are enduring and consistent over time. They are traits your organization will
never give up (even in difficult times).
H

• They are driven by, and crystallized from, the top leadership in the organization.
C

More than likely, your organization has both a vision and a mission statement. Use these
T E

statements to fill out this section. Don’t worry about finding the perfect wording for either the
vision or the mission statements. For now, just get the key concepts down on paper.
~

A vision statement describes an image toward which your organization is striving. Most
O

organizations’ visions say things like “to create an organization with which customers line up to
do business and for which employees can’t wait to come into work.”
N F

If your organization does not have a mission statement, use the Mission Development Triangle
I

below to develop a working statement.

Page 44
Stage 2> Document Your Business Strategy

P
G R O U
H
C
Step 4 – Define Core Business and Its

R
Boundaries

A
E
Objectives:

S
• Identify those activities that fall inside and outside of the core business.

E
• Identify core business and boundaries for individual business units.

R
What You Need To Do

H
ü Think about which line or lines of business are at the heart of your organization’s
success. Enter these unique core business lines into worksheet “2.7 Core Business and

C
Its Boundaries”.

T E
ü Define the boundaries for the core business in terms of market, operations, channels,
and competitors.
ü If you have more than one business unit, define core business lines and ~
O
boundaries for each unit. Use worksheet “2.8 Business Unit Core and Goals” to create
N F
a profile for each business unit.

Depending on the size of your organization, defining your core business may either be an easy
I

task or a very difficult one. There are a lot of consulting companies whose primary business
is helping firms determine their core business. It should not be as difficult as this – spend
some time thinking about which line or lines of business are at the heart of your organization’s
success.

Part of defining your core business is also drawing a boundary as to what falls outside your
core business. In contemplating this section, many managers often realize that they spend an
inordinate amount of time on activities related to ancillary business rather than focusing on

Page 45
Strategic IT Planning and Governance

making improvements to the core. For example, a car manufacturer’s core business may be
designing engines. Tire design and manufacture would not be included in the car maker’s core
business.

Once you have defined the core, determine what customers, channels, and competitors are within
the boundaries. Although you may already have an intuitive sense of what falls within and what
falls outside of your core business, putting it down in writing should solidify your understanding.
P

Step 5: Create a Financial Picture


G R O U

Objectives:

• Create a financial profile of your organization.

What You Need To Do


H

ü Use the worksheet “2.9 Company Financial Picture” to construct a financial


profile of your organization and its competitors. The worksheet lets your create profiles
C

for the following:


R

• Total Company Revenues • Capital Budget


A

• Growth Rate of Company Revenues • Operating Profit


E

• Total Revenue Over the Internet • Inventory Turns


S

• Growth Rate of Internet Revenues • Cost of Goods Sold


E

• Number of Employees • Cost of Labor


R

• Expected Number of Employees

ü For each category, list your organization’s information in the top box and list the
H

industry average in the box below.


C

Financial information is one of the few ways you can make a real ‘apples to apples’ comparison
T E

of your organization to the rest of the industry. If you work for a publicly traded company,
financial information about your organization is public record and should be easy to find.
~

Private companies are not obligated to furnish financial information to either their employees or
O

the general public. In most private companies, financial information is provided on a need-to-
know basis only. Talk to your finance department and senior management.
N F

You should still attempt to obtain some, or all, of the following information because it will give
you a sense of how well your organization is doing financially and how strong you are relative to
I

other companies in your industry.

Once you have collected information about your own organization, do some research using
either the Internet or industry associations to find out how you compare to others in the
industry.

Page 46
Stage 2> Document Your Business Strategy

Step 6 – List Strategic Objectives


Objectives:

• Create a succinct list of primary corporate strategic goals.

• Create a succinct list of business objectives.

What You Need To Do

P
ü Review all of the information collected in this stage of the methodology. (Mission

G R O U
Statement, Vision Statement, Core Business Definition, Financial Information)
ü Use the worksheet “2.10 Company Strategy and Goals” to formulate lists of primary
strategic goals and business objectives.
ü Take your analysis further with “2.11 Key Success Factor Analysis Tool”. This tool
will look beyond what the organization wants to achieve to a more specific analysis of
what the organization has to do.

H
C
An organization strategy can take many different forms and timeframes. It may consist of
financial targets, such as revenue and profit growth, increase in share price, or a decrease in levels

R
of inventory. It may also consist of other, non-financial goals, such as number of new product

A
launches, improved brand recognition, or additional partnership arrangements.

E
Businesses operate towards a set of business objectives. Depending on the organization, these

S
may or may not be properly defined. The point of this section is to clarify your organization’s

E
strategic business objectives.

R
Read back through the work you have completed
and tie it together into one powerful document
Key Success Factors

H
outlining your business objectives. We suggest Now that you have identified your goals
using point form and listing no more than ten and strategy, you can determine what the

C
objectives. Key Success Factors are for achieving

T E
these. After you have identified how the
Compare the business objectives you determined Key Success Factors influence management
with the ones listed in your organization’s decisions, you should prioritize the Key

~
business plan or annual report. Companies’ stated Success Factors so that you focus attention
intentions are often very different from the forces on the largest areas of opportunity. O
actually driving the organization.
N F

Keep your list of business objectives close at hand and refer back to it when completing
subsequent sections.
I

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Strategic IT Planning and Governance

Stage Summary: Document Your Business


Strategy
You should now have a set of descriptions of your organization that can be used to compare
with your IT strategy in order to promote alignment. In a few PowerPoint slides, you should be
able to tell an audience where your company comes from, what its primary objectives are, and
how it fits in the market in which it competes. This is foundational information for building
strategy.
P

The following chart shows the progress of developing the plan after Stage 2 of the engagement.
G R O U

Status Stage
Creation Of Steering Committee Done 1
Scope Definition of “Strategic” Done 1
Strategic IT Plan Kickoff Meeting Done 1
Preliminary Report With Goals and Timeline Done 1
H

Document corporate Vision, Mission and Strategic Goals Done 2


C

Analyze Core Competencies and Competitive Position Done 2


R

Current IT Organizational Structure. 3


A

Hardware and Software Inventory 3


E

Analysis of IT Trends 3
S

Review of IT Against Governance Maturity Model 4


IT SWOT Analysis 4
E

List of Proposed Future IT Directions 4


R

List of Requirements for Resolving Gaps (Roadmap) 5


Corporate IT Vision Statement 6
H

Corporate IT Governance Charter 6


C

Strategic IT Goals 7
T E

Achievable Measures 7
Budget Analysis 7
~

Prioritized Project List 7


Completed Strategic IT Plan Document 8
O

Comprehensive Strategic Planning PowerPoint 8


N F

Strategic Planning Communication Plan 8


I

Page 48
Stage 2> Document Your Business Strategy

Background > Analyzing Business


Strategy
In order to proceed with IT Strategy
development, you must start by building
your understanding of your business and its
strategy. Complete alignment between your

P
business strategy and IT strategy is the most

G R O U
important determinant of success.

If your organization is in the process


of developing a strategic plan, now is
the perfect time to pitch the idea of
concurrently developing an IT plan. Ideally,
IT strategy and business strategy should be

H
developed in a parallel process. If this is not
possible, use documented existing business

C
strategy as the basis for your IT strategy.

R
A
Throughout this methodology you will refer
back to the goals and strategic objectives

E
of the business and ask how IT initiatives

S
reinforce and support these objectives.

E
This background section contains many

R
common business strategy theories
that will help give you a more complete
understanding of the analysis and frameworks which are commonly applied to determine

H
business strategy. This information will be particularly helpful if you do not have a background

C
in management theory.

T E
It is not enough to simply know what your organization’s strategy is. To effectively develop an
IT strategy you not only need to completely understand the strategy, you must appreciate why
your organization’s strategy is set the way it is.
~
O
N F

A Company’s Value Chain


I

A value chain is a “string” of processes within a company that interrelate and work together to
meet market demands. By examining the value chain, one can uncover how an organization has
developed (or not developed) competitive advantage.

The following chart developed by Michael Porter shows the value chain found in a typical
company.

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Strategic IT Planning and Governance
P
G R O U

The various parts of the company’s business processes (inbound logistics, marketing and
H

sales, and so on) each contribute different amounts of value to the company. Strategic analysis
determines which of the activities are most important (i.e. contribute the most value) from the
C

customer’s perspective, and determines ways to increase that value.


R
A

Maximizing Margin
E
S

The goal of a well-functioning value chain is to maximize margin. Margin is essentially a ratio
of the operating income to the sales revenue – the bigger the margin, the higher the profit.
E

Obviously, maximizing margin is an objective of most businesses. How can a company


R

achieve this?

There are two main ways to improve margins: decreasing unit costs, and increasing unit revenue.
H

1. Decreasing Unit Costs: This is reducing the costs of providing the same amount of
C

value to customers. Examples include:


T E

• Savings on raw materials


~

• Productivity improvements
O

• Overhead reduction
N F

2. Increasing Unit Revenue: This usually involves improving the real and perceived value
to the customer, leading to higher prices. Examples include:
I

• Branding

• Quality and innovation

• Effective targeting

Page 50
Stage 2> Document Your Business Strategy

The Supply Chain


A supply chain is a process that consists of materials, information, and finances as they move
from supplier, to manufacturer, to wholesaler, to retailer, to consumer.

The average firm spends twice as much on its supply chain as the best firm, showing how
important the supply chain is to company performance.

P
G R O U
H
C
R
A
E
S
E
Considering the critical strategic role of the supply chain, nearly 50% of companies do not have
good information about their supply chains. This is even more astounding given the power of

R
information sharing that the Internet and similar technologies allow.

H
C
T E
~
O
N F
I

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Strategic IT Planning and Governance

Untangling Your Supply Chain


Companies that have the best supply chain performance follow six principles:

1. Straighten out the strategy first. Too many companies see salvation in technology.
One study says three of the four drivers of supply chain excellence are not related to
technology but to alignment of the organization and to performance measurement.
Defer IT spending decisions until key strategy elements are in place.
P

2. Enlist the A players. The supply chain leaders hire the very best strategists – the best
purchasing experts, the best logistics pros – and get them to work together under a top
G R O U

executive whose mandate is supply chain excellence.

3. Align the incentives correctly. People do what they’re paid to do. Tie incentives to the
big goals: as you would hook transportation managers’ pay to on-time performance and
tracking costs, tie supply chain executives’ pay to return on assets (ROA) and vendor
metrics. Reward cross-functional collaboration as well.
H

4. Replace rules of thumb with metrics. If you don’t measure, you can’t improve. Get
C

the data on everything from vendor delivery performance to forecast accuracy, and then
determine which metrics matter most. Measure the “what ifs” and track your entire
R

supply chain, not just what happens inside your business.


A

5. Work beyond your four walls. Practice enlightened self-interest – share forecast
E

and other data with suppliers, and demand the same of your customers. “Organized
S

interdependence” is the goal. To reach it, offer trust, ask for reciprocity and work to
improve your communications channel.
E
R

6. Avoid “one size fits all” solutions. Excellent supply chain management means
juggling multiple supply chains simultaneously. Top performers differentiate by product,
by channel, and by customer.
H
C
T E

Industry Lifecycles
Analyzing where your organization and industry is in terms of its lifecycle is another way
~

to understand management’s attitude towards IT planning initiatives. Find below two charts
O

popularized by Geoffrey Moore. Most of the time, these charts are used to explain the strategies
of companies bringing new products to market, but they are just as powerful in terms of
N F

understanding when and why companies spend money on IT planning and governance.
I

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Stage 2> Document Your Business Strategy

P
G R O U
There is no formula to determine what stage your organization is in. In fact, different divisions
or products may be at different stages in the lifecycle. Nonetheless, spend a couple of minutes

H
thinking about where your organization is in its lifecycle. This will help you later when you are

C
prioritizing your projects.

R
If you operate in a slow-moving industry with little prospect for growth, spending a lot of

A
money on untested technology may not be a sound business decision. On the other hand, an

E
organization in a young and rapidly developing industry may want to take the risk on untested
technology with the potential payoff coming in the form of exponential growth.

S
E
R
H
C
T E
~
O
N F
I

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Strategic IT Planning and Governance

Porter’s Five Forces Model


The following diagram shows Michael Porter’s famous strategy model that describes the five
forces of competition that affect a company and an industry.
P
G R O U
H
C
R
A

The essential elements in Porter’s Five Forces model are:


E
S

1. Industry Rivalry. Rivalry is intensified by factors such as a high number of competitors,


slow market growth, high fixed costs, high storage costs, low switching costs, low levels
E

of product differentiation, and high exit barriers.


R

2. The Threat of New Entrants. This threat is mitigated by barriers to entry such
as governmental regulation, patents, requirement of highly specialized technology/
H

equipment to make a product, and economies of scale.


C

3. The Threat of Substitutes. This usually impacts an industry through price competition
T E

i.e. the number of suitable alternatives available at a competitive price.

4. The Power of Suppliers. The power of suppliers increases if they can threaten to buy
~

the purchaser, are concentrated, there exists a significant cost to switch suppliers, or
O

customers are powerful. Suppliers are weakened if there are many competitive suppliers,
they offer commodity products, the purchaser could buy the supplier, and customers are
N F

weak.

5. The Power of Customers. The power of customers increases if there are few buyers
I

with significant market share or if they can threaten to buy the producing firm or rival
(backward integration). The power of customers decreases if buyers are fragmented,
buyers are highly dependent on producer for their output, or there are high switching
costs.

Applying this framework lets you understand the market forces that can impact your
organization. In essence, this model ties everything together – it, along with a PEST analysis,
allows leaders to fully understand all the market forces that can impact their organization.

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Stage 2> Document Your Business Strategy

Environmental Analysis (PEST)


The Environmental Analysis asks what external forces influence the company. A PEST
Analysis is commonly used to determine what these external factors could be. External factors
can be categorized in four ways:

1. Political

P
2. Economic

G R O U
3. Social

4. Technological

Political: The political environment is important in certain situations where there are legal
issues with the company’s products (e.g. tobacco) or disputes between jurisdictions (Canada/U.S.

H
lumber or U.S./Japan automobiles).

C
Economic: Economics can play an important role if the company’s product is highly cyclical

R
(e.g. housing, base metals) or if the company is impacted by changes in the general economic

A
environment (e.g. retail).

E
Social: Social trends can be positive or negative.

S
Technological: Technology also impacts companies and industries because of the new

E
possibilities it creates. Certain industries (e.g. music) can be suddenly impacted by new

R
technologies and related business models (e.g. KaZaA).

H
Identify Your Organization’s Core Competencies

C
T E
Successful managers identify and understand their organization’s core competencies and take
appropriate actions relating to them.

A core competency is a business function, process, or other discipline that provides significant ~
O
competitive advantage for the organization that has it. Core competencies are a subset of all
N F
business functions an organization has (e.g. sales, manufacturing, purchasing, recruiting). Since
an organization can’t do all things equally well, the core competencies are the major source of
differentiation in the marketplace that creates most of an organization’s profit.
I

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Strategic IT Planning and Governance

Examples of Core Competencies


Core competencies can exist in any
functional area. For example, SAP is Identifying Core
especially effective at writing enterprise Competencies
software. Dell also has a core competency
in manufacturing PCs. ü Look where the largest portion of financial
and other resources go. This may be your
core competency. However, certain industries
Companies’ core competencies do not
P

have most of their costs in one major category


extend to everything the organization does.
that is not a core competency (e.g. airlines
G R O U

For example, SAP is not the world’s best spend most of their funds on airplanes and
operating system or database software fuel, but don’t achieve competitive advantage
writer. In their case, it doesn’t really matter from these purchases).
because they can partner with Microsoft
or Oracle to make sure their enterprise ü Ask customers why they buy from you.
software runs on their platforms. If you have significant advantages that
customers see every day (as opposed to
process advantages they don’t really see),
H

Similarly, Dell is not effective at research


customers should be immediately able to tell
and development. They have a significantly
C

you what they think your core competencies


smaller R&D budget than Hewlett-Packard are (e.g. cutting-edge products, low price, great
R

or IBM and don’t produce any leading- customer service).


edge products. However, their efficient,
A

low-inventory manufacturing and supply ü Ask senior management. Core competencies


E

chain systems don’t require lots of research are usually part of the strategic plan, which the
and development – they can charge low executive team is responsible for.
S

prices and react very quickly to changes in ü Review your performance appraisal system
E

customer demand, which gives them more for core competency measurements and
R

of a competitive advantage than having the requirements. Ideally, your performance


latest products. appraisal system should be in sync with your
organization’s overall core competencies.
H
C
T E

Implications of Core Competencies


~

There are three major strategies you can pursue after identifying core competencies:
O

• Invest more resources in them. For example, you can increase your budget or
N F

increase the number of people working in those core competencies. In the IT


department, you should also invest more in supporting these core competencies (e.g.
investing in the latest CAD workstations if engineering is your core competency).
I

• Apply them to other related industries and opportunities. For example, if


marketing is your core competency, you can market new products that you don’t today.

• Monitor changes in core competencies over time. Gradually, core competency


areas become less and less of a competitive advantage. New areas must be developed
into core competencies. The change in core competencies has major implications for
which projects and departments IT should support.

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Stage 2> Document Your Business Strategy

For example, IBM used to have a significant core competency with manufacturing
mainframes and other hardware. However, other companies have developed similar
competencies and eroded IBM’s competitive advantage. Today, IBM is selling off
parts of their hardware business and focusing on developing new core competencies
in software and services. This has major implications for what functions their IT
department will support and how much support they will provide.

Key Success Factors

P
G R O U
Key Success Factors are the most important parts of the strategy or conditions that may exist in
the marketplace or your organization without which your strategy would fail. Since conditions
change, the Key Success Factors must be identified and monitored in case conditions change.

Key Success Factor Example: General Motors

H
General Motors has large investments and fixed costs in its manufacturing plants. Because these

C
large fixed costs are relatively constant, GM’s profitability is heavily influenced by the number of
units it can sell. Therefore, one Key Success Factor is sales and marketing capability.

R
A
Similarly, controlling overhead costs is very important. If there were a sudden increase in
overhead costs, GM would have to sell many more cars or increase the price per car to make

E
money. Therefore, controlling overhead costs is another Key Success Factor.

S
GM has several alternatives of how to structure the compensation package for its sales force.

E
Total sales revenue or total revenue of new products are two possibilities, but if a Key Success

R
Factor is the number of units produced by the factory, another possibility is to compensate
the sales force based on factory utilization or the number of units shipped. Note that this can
cause problems (e.g. selling cars below cost to increase factory utilization metrics), so you should

H
identify them and come up with ways of dealing with these problems during the process of

C
structuring compensation packages and not afterwards.

T E
General Motors would need some specific financial information about the two Key Success
Factors it has previously identified: increasing sales units and reducing overhead costs. For the

~
sales units metric, GM would need to know how much extra capacity manufacturing plants
had, and how much unit contribution GM made on each unit sold. For the overhead cost Key O
Success Factor, GM would need to know the total amount of overhead spending.
N F

If GM had an extra 100,000 units of capacity, and the average contribution per unit sold was
$5,000, the total opportunity from increasing units sold would be $500 million.
I

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Strategic IT Planning and Governance
P
G R O U
H
C
R
A
E
S
E
R
H
C
T E
~
O
N F
I

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Stage 3> Assess the Current IT Situation

Stage 3> Assess the Stage


Current IT Situation
A balanced Strategic IT Plan must integrate both with your business
strategy and with your IT infrastructure. In Stage 2 you were asked to map
3
the particulars of your organization’s Business Strategy. In this stage you will map and analyze

P
the characteristics of the Information Technology Infrastructure of your organization.

G R O U
A strategic IT plan has to integrate with
your functional IT plans and infrastructure Optimizing IT Infrastructure
(See Background). You can’t manage what
Info-Tech’s “Optimizing Your IT Department”
you don’t know you have. By documenting consulting methodology provides a detailed, step-
your current IT situation, you will be able by-step, process for analyzing all facets of your
to recognize key areas of opportunity. IT infrastructure – IT architecture, procedures

H
Understanding your current IT situation is and processes, and human resources – and for

C
achieved by looking at three key areas: developing an optimization plan.

R
• Organizational infrastructure This product will provide you with the tools
and processes to develop a comprehensive and

A
• Hardware and software infrastructure effective IT Infrastructure Plan that will optimize

E
IT in your organization to best serve both the
• Current IT projects functional needs of business units and the strategic

S
IT objectives of your organization.

E
Documenting and analyzing each of these
areas will provide you with a clear picture It is strongly recommended that you complete

R
of where you are currently sitting. Only by this methodology concurrently with Strategic IT
understanding your current position can you Planning and Governance.

H
begin to develop a strategy for the future.

C
T E
Step 1 – Document Your IT Organizational Infrastructure
Prepare an organizational chart of your IT department. This should include functional areas like

~
network support, programmers, and business analysts.
O
N F

Step 2 – Document Your Hardware and Software


Infrastructure
I

Identify and document your physical infrastructure. Without a firm understanding of your
existing technology assets, you are essentially operating in the dark and strategic planning will be
a futile effort.

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Strategic IT Planning and Governance

Step 3 – Audit Current IT Projects


Understanding the current workload and spending patterns is essential to planning for the future.
Defining the projects currently being worked on by the IT department will help you understand
whether IT is aligned with the overall goals of your business.

Step 4 – Understand the IT Environment


P

Analyze the trends in your industry and the actions of your competitors. Look at industry trends
G R O U

and create competitor profiles.

In This Stage
Stage 3> Assess the Current IT Situation ....................................................... 59
H

Step 1 – Document Your IT Organizational Infrastructure....................... 62


C

Step 2 – Document Your Hardware and Software Infrastructure ............ 63


R

Step 3 – Audit Current IT Projects ........................................................... 64


A

Step 4 – Conduct an IT SWOT Analysis ................................................. 66


E

Stage Summary....................................................................................... 68
S

Background > Mapping IT Assets.................................................................. 69


E

Thoughts on Staffing Needs .................................................................... 69


R

Skills Development .................................................................................. 70


H

Business Benefits of Asset Management ................................................ 70


C

Rolling Out an Asset Management Initiative............................................ 71


T E

Conducting a Hardware Asset Inventory ................................................. 73


Conducting a Software Asset Inventory .................................................. 75
~

Change Management .............................................................................. 76


O

Asset Management Best Practices.......................................................... 78


N F

Understand the IT Environment............................................................... 79


I

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Stage 3> Assess the Current IT Situation

Workbook
Stage 3> Assess the Current IT Situation ....................................................... 60

3.1 Organizational Chart.......................................................................... 62


3.2 IT Irregulars ....................................................................................... 63
3.3 Skills Mapping Tool............................................................................ 65

P
3.4 Network Diagram Primer ................................................................... 67

G R O U
3.5 Vendor Contact Information............................................................... 69
3.6 Software Inventory............................................................................. 71
3.7 Hardware Inventory ........................................................................... 75
3.8 IT Expenditures Analysis ................................................................... 84
3.9 Current IT Projects ............................................................................ 87

H
3.10 Project Scope Statement................................................................. 88

C
3.11 Industry Trends ................................................................................ 90

R
3.12 Competitor Profiles .......................................................................... 92

A
E
S
Agility Tips

E
R
You have to know where you are to chart where you are going. A basic audit of
current infrastructure, including talent infrastructure, should be a part of any
major initiative, from departmental optimization to disaster planning. You should

H
have a lot of this information already. If you don’t, perhaps you have more
pressing management issues to deal with before strategic level planning. Don’t

C
forget to form relationships with your “IT irregulars”. Find out what is going on

T E
outside of formal IT.

~
O
N F
I

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Strategic IT Planning and Governance

Step 1 – Document Your IT Organizational


Infrastructure
Objectives:

• Create a map of who does what in your IT department.

• Document IT service providers and key IT vendors.


P

• Document IT resources (power users, user groups, IT professionals in other


G R O U

departments) that exist outside of the IT department.

What You Need To Do


ü Prepare an organizational chart of your IT department. Use the tool “3.1
Organizational Chart.” This PowerPoint template will help you create a chart that includes
the number of people in your department, each employee’s responsibilities, and the
volume of activity by task.
H

ü Record individuals outside of the IT department who formally or informally


C

provide IT services (Such as power users and IT support personnel within other
R

departments). Use the worksheet “3.2 IT Irregulars” to record names and contact
A

information for this important internal IT resource.


E

ü Use “3.3 Skills Mapping Tool” to develop a map of the skills in your IT
department. This will help you understand, beyond a simple head count, where your
S

organizational IT skills lie.


E
R

Prepare an organizational chart of your IT department similar to the example below. This
should include functional areas like network support, programmers, business analysts, and so on.
Also include the following information:
H

• Number of people in your department.


C
T E

• Each employee’s responsibilities.

• Volume of activity by task (e.g. password reset, desktop recoveries, viruses, new
~

application installation).
O
N F
I

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Stage 3> Assess the Current IT Situation

P
G R O U
Step 2 – Document Your Hardware and Software
Infrastructure

H
C
Objectives:

R
• Create a detailed view of all physical IT assets.

A
E
• Audit all enterprise software.

S
• Document vendor and service provider contact information.

E
What You Need To Do

R
ü Create/acquire a network diagram. For each component that is identified in the
diagram, provide the following information: component’s name, manufacturer and model

H
number, operating system, IP address. See “3.4 Network Diagram Primer” for more.

C
ü Create a directory of all vendor account numbers, contact information, service

T E
and agreements. Use the worksheet “3.5 Vendor Contact Information” to gather this
information.

~
ü Create a software inventory. Use the worksheet “3.6 Software Inventory” to create
a document that includes license information, software packages, vendor information, O
vendor contact, and training and service level agreements.
N F

ü Conduct a complete hardware inventory. Using the worksheets in “3.7 Hardware


Inventory” to list each server, hub, switch, router, firewall, and desktop.
I

Without a firm understanding of your existing technology assets, you are essentially operating in
the dark and strategic planning will be a futile effort.

Managing your IT portfolio in a current networked computing environment requires more than
simply conducting a physical inventory. While the concept of asset management is familiar
to most decision makers, its implementation has largely been sporadic and half-hearted. For
example:

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Strategic IT Planning and Governance

• Many organizations send out hardware and software inventory surveys, but much of the
information is incomplete and inconsistent.

• Even if usable data is collected, it is often rendered unusable because it is stored in


separate formats across a variety of spreadsheet and database programs.

• More often than not, these stabs at asset management happen on a departmental level.
No enterprise-wide picture emerges upon which key strategic decisions can be made.
P

Asset management, if implemented correctly, can become an important decision-making


tool in any organization. For more information and advice on asset management, refer to the
G R O U

background section of this stage.

Agility Tip: Have You Been Here Before?


The kind of basic audit information required for this section may well
H

already be on hand. For example, you may do regular audits for asset
C

management or have reviewed your infrastructure for a Disaster Recovery


Plan.
R
A

Don’t reinvent the wheel. If you have recently gathered infrastructure


data, copy it into your workbook.
E
S
E

Step 3 – Audit Current IT Projects


R

Objectives:
H

• Develop a snapshot picture of current IT expenditures.


C

• Create a consolidated record of all current IT projects.


T E

What You Need To Do


~

ü Analyze current IT expenditures. Use the worksheet “3.8 IT Expenditures Analysis” to


O

record the current profile of expenditures in your IT department. The worksheet includes
seven questions you can ask in analyzing current expenditures.
N F

ü Document your IT projects. Use the worksheet “3.9 Current IT Projects” to list current
major IT projects. Use the template “3.10 Project Scope Statement” to create a project
I

description for each major IT project currently underway.

Understanding your department’s current workload and spending patterns is essential to planning
your upcoming year. This section focuses on identifying where your department spends its
money and what projects are currently on your plate.

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Stage 3> Assess the Current IT Situation

Where does your IT department spend its budget? If you have just completed a year-end, use
last year’s figures to complete this section. Alternatively, if you are part of the way through your
current fiscal year, your budgeted figures may provide you with a more accurate picture. Use
your judgment, but remember that the more realistic you make your numbers, the more accurate
your strategic plan will be.

Include spending in the following categories:

• Labor • Telecommunication

P
• Outside services • Repairs

G R O U
• Hardware • Leases

• Software • Training

• Other

H
Break down this information further in the following ways:

C
• Capital assets versus expenses

R
• Growth rate over time

A
E
• Percent of total IT budget

S
• Percent of organization sales

E
Clearly defining the projects currently being worked on by your department will help you

R
understand whether the IT department is aligned with the overall goals of your business. Be
ruthless in your analysis of current projects and expenditures. If projects or expenses do not match the

H
goals of the organization, be prepared to take action.

C
Agility Tip: Project Discipline is Key

T E
The Project Scope Statement will help you provide further detail on each
major project. The better your project information, the better you will be
~
able to make strategic decisions about projects.
O
Info-Tech offers a comprehensive consulting methodology, Effective
N F

Project Management: Tools, Templates and Best Practices to help you get your
projects into shape.
I

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Strategic IT Planning and Governance

Step 4: Understand the IT Environment


Objective:

• Create a view of where IT is going in your industry by looking at publicly available IT


news information as well as at your competitors.

What You Need To Do


P

ü Identify Important Industry Trends. Industry trends are changes happening in the
marketplace of technology. Meet with your IT department as well as your steering
G R O U

committee. Use “3.11 Industry Trends” to work up a list of technology trends that could
impact your company’s competitiveness.
ü Develop Competitor Profiles. Use the worksheet “3.12 Competitor Profiles” to profile a
selection of main competitors. Understanding how your competition is using technology
to gain a competitive advantage will provide you with a point of reference against which
you can benchmark your company’s performance.
H

Looking at what is happening in your industry and with your competitors provides you with one
C

of the best ways to benchmark your company’s performance. For example, you may be using
R

technology that is becoming obsolete, or are just starting to use a new technology that none of
A

your competitors are using.


E

This can be one of the toughest parts of Info-Tech Advisor


S

your job. If your company is like most, the


CEO and other senior management expect and McLean Report
E

you to have an opinion on, or knowledge of,


Clients of Info-Tech Research Group have ready
R

everything related to technology. However, access to two excellent tools for tracking technology
the pace of technological change suggests and business trends.
that much of what you knew two years ago
H

is obsolete. Info-Tech Advisor provides on-going research into


C

IT department management practice as well as the


Take this opportunity to do an intensive practical implications of technology trends.
T E

survey of industry trends and the actions


of your competitors. Getting a solid McLean Report provides more high-level advice on
understanding of the current environment the management and strategic use of technology in
~

will make the task of keeping up-to-date the enterprise.


O

easier in the long run.


Both products are based on extensive scanning of
N F

the business and IT management environment.


Industry Trends
I

Staying abreast of industry trends is an on-going process. Schedule some time into your week to
keep your knowledge base current and relevant. Here are some additional tips to help you and
your department to keep up-to-date:

1. Use a diverse set of information sources. On a weekly basis, you should at least be
reading publications focused on technology, business, and general news.

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Stage 3> Assess the Current IT Situation

2. Make environmental scanning a requirement for everybody in your department.


Assign each person a specific publication or topic area. Make “keeping up-to-date” part
of their performance evaluations.

3. Create an “Ideas and Opportunities” living document. Put the document into a
shared folder and make it a requirement that everybody in your department add at least
one idea to the document per week. Ideas from this document will become some of
your department’s future projects.

P
Competitor Profiles

G R O U
Here are some types of information you should know about your competitors.

Number of IT staff. Applications being used.


Status of PC environment. IT spending.
Functionality offered to customers (e.g. direct Internal technologies used (e.g. instant

H
payment, online ordering). messaging, video conferencing).
Enterprise systems (ERP, CRM).

C
R
Here are some ways of learning this information:

A
Magazines and other public sources of

E
Your employees who used to work for them.
information.

S
Competitors’ Web sites. Vendors.

E
Customers. Consultants.

R
Sort the information into files on your biggest competitors and update the files as you learn new
information. Conducting a periodic review of the files will provide you with better industry

H
trend data than you will find anywhere else.

C
Agility Tips: They Who Know the Competition

T E
Talk to your sales and marketing people about the competition. Though

~
it’s a difficult topic to broach, ask about lost sales. How have we been
beaten in the past? Is there something the competition is doing better O
than we are? How is technology aiding them? How have we used
N F

technology to get ahead of them in the past?


I

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Strategic IT Planning and Governance

Stage Summary: Assess the Current IT Situation


The IT audit sets a starting point against which you can analyze the gaps between what is and
what should be. In the next stage of this methodology, you will set your sites on an ideal IT
situation, one that will help the enterprise achieve its strategic goals.

The following chart shows the progress of developing the plan after Stage 3 of the engagement.

Status Stage
P

Creation Of Steering Committee Done 1


G R O U

Scope Definition of “Strategic” Done 1


Strategic IT Plan Kickoff Meeting Done 1
Preliminary Report With Goals and Timeline Done 1
Document corporate Vision, Mission and Strategic Goals Done 2
Analyze Core Competencies and Competitive Position Done 2
H

Current IT Organizational Structure. Done 3


Hardware and Software Inventory Done 3
C

Analysis of IT Trends Done 3


R

Review of IT Against Governance Maturity Model 4


A

IT SWOT Analysis 4
E

List of Proposed Future IT Directions 4


S

List of Requirements for Resolving Gaps (Roadmap) 5


E

Corporate IT Vision Statement 6


R

Corporate IT Governance Charter 6


Strategic IT Goals 7
Achievable Measures 7
H

Budget Analysis 7
C

Prioritized Project List 7


T E

Completed Strategic IT Plan Document 8


Comprehensive Strategic Planning PowerPoint 8
~

Strategic Planning Communication Plan 8


O
N F
I

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Stage 3> Assess the Current IT Situation

Background > Mapping IT Assets


In an ideal situation, your organization will have developed (or will concurrently be developing)
a business strategy. If no business strategy exists, you are at a disadvantage for creating
an Information Technology Strategy. Similarly, without a firm grasp of your current IT
infrastructure you will also be at a disadvantage for developing an IT strategy.

A strategic IT plan and an IT

P
infrastructure plan are not the same

G R O U
thing though they relate to each other on
a very fundamental level. Consider the
four quadrant IT/Business alignment
model discussed in the introduction to
this methodology. This model calls for
your Information Technology Strategy
to align on a horizontal axis with your

H
business strategy, but also on a vertical
axis with your Information Technology

C
Infrastructure.

R
In the Background section to Stage 2 we provided some additional information on business

A
analysis so that you can more fully understand the process of business strategic planning. In this

E
section we offer additional information on Information Technology Infrastructure analysis. This
section is not a substitute for a full Infrastructure Planning tool, however, it will give you added

S
insights into technology for infrastructure planning.

E
R
Thoughts on Staffing Needs

H
Theories abound on how to organize an IT department, including:

C
T E
• Organizing around the services to be provided such that business needs are adequately
reflected.

~
• Organizing around work roles so that people are easier to replace when they leave.
O
• Organizing around a complete team with a broad skill set to flexibly meet a variety of
N F

specific missions as they arise.

Each of these methods has its strengths and weaknesses. For example:
I

• Organizing around services ensures that business needs are being met, but if needs
change rapidly; you could be left stumbling to fill the holes.

• Organizing around work roles offers a simple “cookie cutter” approach, but what if you
can’t find a replacement worker fast enough? In this case, you could be left with a large
staffing gap with no one to do the requisite work.

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Strategic IT Planning and Governance

The approach you choose will depend on the pace of your industry and your organization’s
position within that industry. Fast moving organizations need to maximize flexibility, which
could lead to more extensive utilization of contractors and other outsourced services.

Skills Development
Specific jobs require different skill sets, ranging from technical, to business and management, to
P

personal and interpersonal skills. Degrees of technical versus management skills, for example,
will manifest differently at junior versus senior levels.
G R O U

Beyond generic job type skills and duties, you must consider other factors that relate to your
specific organization, such as industry affiliation and the specific technologies and tools your
organization employs.

Use these tips to help you create and maintain an efficient and responsive IT staff:
H

• Create a Skills Map: Almost 60% of skills required by IT workers are general business
C

skills, not IT-specific skills. Build a skills map that outlines those skills required by: all
workers, IT workers, specialized IT workers, and those at your specific organization.
R

• Look for Skills Upgrade Candidates: Staffers with a high-demand, ready-to-go


A

skill set are expensive and hard to find. This can really hamper your skills acquisition
E

process. Workers with low-demand IT skills can be hired and “reskilled” to do what you
S

need faster and at a lower cost.


E

• Avoid Niche Products: Niche technologies (e.g. Forte), or mainstream technologies in


R

a niche combination (e.g. COM on Tandem), demand a big training investment in highly
specialized skills that aren’t portable across other technologies. When that technology
fades away, so can employee value.
H

• Minimize Training in ‘Subsumable’ Skills: Do you want to invest heavily in training


C

for grassroots XML coding, or future XML design tools? Think ahead – invest in skills
T E

that will last and outsource the skills “du jour.”

• Train Small Groups: Don’t train your entire development team on a new technology.
~

Training small groups of specialists is faster and easier, and allows trainees to do a
O

specific job better. As skills become undesirable over time, you have fewer staff to
retrain.
N F
I

Business Benefits of Asset Management


Any business, large or small, can significantly reduce costs and engage in better decision making
by actively practicing asset management.

• According to Gartner Group, properly implemented asset management can save an


organization 20 to 40% per seat per year in IT costs. For a typical enterprise with 2,500
PCs, this could translate into $900,000 in savings over 12 months.

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Stage 3> Assess the Current IT Situation

• Gartner Group has also found that the average lifecycle cost for a given asset can be
reduced by 37.5% overall by using asset management.

• International Data Corporation discovered savings of 13% per year on PC staffing costs
alone due to asset management initiatives.

The beneficial applications of asset management are myriad. Listed in the table below are the
primary business “selling points” of diligent asset management:

P
G R O U
Financial Benefits Efficiency and Productivity Benefits
Perform accurate budgeting and forecasting Help ready the organization for organization-
of hardware and software expenses. wide migrations, installations and upgrades.
Calculate total cost of ownership (TCO) or Accommodate rapid technology changes
average price per equipment type. and deploy new applications more quickly.
Uncover vendor accounting and invoicing Anticipate and plan moves, personnel

H
errors. transfers, and organization restructuring.
Negotiate better hardware purchasing and Give end users access to the right

C
software licensing agreements. applications when they need them.

R
Cancel costly maintenance renewals for Remove end-user access to “time-wasting”
unused software. applications.

A
Identify correct amount of insurance Identify potential incompatibilities between

E
coverage required through correct asset components prior to purchase.

S
value estimation.

E
Avoid duplication in product purchases or Ready the organization to absorb mergers
double-coverage in contracts. and acquisitions more easily.

R
Discover and remove dormant assets. Make the helpdesk more productive by
giving them access to each desktop’s
inventory.

H
Assure the organization of software license Create at-hand information for IT budgeting

C
compliance, helping to avoid fines, minimize and planning.

T E
business disruptions, and reduce piracy.
Determine departmental charge-back billing. Move to standardized hardware and
software purchasing, allowing for eased

~
support and volume discounts.
Deter theft of components by deploying O
entirely traceable equipment.
N F
I

Rolling Out an Asset Management Initiative


Given that comprehensive asset management is enterprise-wide in nature, creating an effective
program is a sizeable undertaking. Follow this 15-point checklist to help you get your plan
underway:

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Strategic IT Planning and Governance

1. Plan for a Staged Rollout: Ideally, an asset management initiative should be rolled
out in small steps. Start with something you know you can solve, such as a single
project that addresses a pre-existing asset category like tracking machines under lease or
inventorying a single department. Once you have ironed out the initial process glitches
and demonstrated positive results, subsequent projects should be easier.

2. Identify Affected Parties: Understand all of the constituencies that will be affected by
the asset management initiative. These include all of the departments that you expect
to comply with new policies and from whom you will be collecting data. You need to
P

understand the business that the IT department serves and the different units’ goals and
G R O U

objectives in order to effectively sell the asset management concept.

3. Build Your Team: Form an asset management team made up of representatives from
the affected constituencies. This step is critical in order to uncover potential resistance
and to ensure end-user compliance. These individuals may also be aware of local
attempts at asset inventorying that you don’t know about.
H

4. Check Current and Historical Initiatives: Find out what asset data has already
C

been gathered, for what purpose, and how it is being maintained. By knowing your
R

organization’s current state, you can begin to identify areas of greatest need and plan
your target goals.
A
E

5. Understand Existing Policies and Procedures: This includes any hardware and
S

software purchasing policies, IT move/add/change request policies, and so on. One


of the goals of asset management is to create standardized practices. Finding out what
E

these policies currently demand, if anything, will give you a good indication of how
R

much work you will have to do.


H

6. Gather Records: Find all technical, financial, and legal records for all IT assets. Apart
from your own department, the purchasing department is a good place to check. You
C

will need to compare these records against your actual inventory to identify gaps.
T E

7. Pick Your Rollout Structure: Decide on a structured plan of attack. Are you going to
collect by department and roll into a centralized database, or perhaps tie inventory to
~

directory services? It’s up to you, but do decide early.


O
N F

8. Decide Whether or Not to Outsource: Given budgetary and personnel constraints,


outsourcing your asset management may be a wise choice. Look for a provider that
offers extra services like infrastructure design and planning, selection and deployment of
I

tools, software migration planning, and software license management in addition to basic
inventory services.

9. Organize Manual Asset Tagging: All current and incoming assets should be physically
tagged with unique asset tags, preferably permanent metal tags. This information must

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Stage 3> Assess the Current IT Situation

be recorded. Create and enforce a mandatory asset tagging policy.

10. Set a Schedule: Plan a schedule for regular automated inventory scans, database
merging, and reporting. Also set up a schedule to run manual checks on non-networked
devices that may be unscannable by automated tools.

11. Assign Ownership: To make sure that this initiative is converted into an on-going
process, someone needs to be assigned responsibility. In fact, IT may have to take on

P
responsibilities previously held by others to ensure an integrated process. This may
include purchasing, depreciation, budgeting, rebilling of expenses, contract management,

G R O U
and checking of supplier invoices. This is a big responsibility, so make sure the chain of
command is well established.

12. Pick Automated Tools: Gartner claims that asset management is 60% technology
and only 40% methodology. If you have more than 200 desktops, an automated asset
management solution is a must have.

H
C
13. Plan for Agent Installation: When buying an automated tool, you will have to install
agent software on each device. This is a one-time-only-per-device operation, but may

R
require some time. You may be able to automate this process using login scripts or a

A
software distribution program. Incorporate agent installation into all new and upgrade
machine builds.

E
S
14. Set Up a Baseline: Before using your new software, do a physical count of roughly 5%

E
of your current IT systems. This will represent a baseline against which you can test the
accuracy of the asset management product you bought. Next, use your new automated

R
system solution to scan the same machines and compare accuracy.

H
15. Plan Regular Checks: Perform regular asset scans not only to ensure your asset

C
inventory is up-to-date, but also to ensure that your asset management software is
registering newer device specifications.

T E
Combined with rigorous enforcement and follow-up, these 15 tips should place you in good

~
stead for deploying a successful asset management initiative.
O
N F

Conducting a Hardware Asset Inventory


I

A hardware asset inventory is a listing of all IT hardware in an organization, including client


computers, servers, add-in cards, peripherals, and network devices. This information is critical for
technical planning and support as well as financial management.

One of the major early benefits of conducting a hardware asset inventory is the discovery of
dormant or excessive assets. Such assets are financially wasteful on many fronts, including cost
of storage and lack of revenue-generating use. Consider these statistics from Micropath:

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Strategic IT Planning and Governance

• The average corporation has about 20% more workstations than they originally thought.

• The percentage of out-of-service IT equipment – desktops, laptops, servers, monitors,


printers, modems, etc. – runs between 17% for medium-sized companies and over 27%
for Fortune 1000 companies.

Careful structuring of the information you wish to collect is an important first step. You
need to decide early on the level of detail you wish to achieve in your asset registry. Below is a
comprehensive list of fields you may wish to include for each discrete component.
P
G R O U

Identification Data
Assigned user/department Component make Component model
Physical location Unique asset identification (serial number, asset tag number,
bar code)
Administrative Data
Date of acquisition Purchase order number Purchase/leasing price
H

Contract information Lease terms (if any) Warranty information


(maintenance and support)
C

Historical Data
R

Move/add/change history Service history Usage history


A

Other installed hardware Installed software Associated peripherals


E

Many hardware asset inventories will be conducted at the PC or server level: that is, the
S

components will be tied to and/or listed as part of an individual machine. As such, it is


E

particularly important to itemize each individual component within the PC or server, including:
R

• Processor name, make, and model

• Installed RAM
H
C

• All peripherals (keyboard, mouse, monitor, and modem)


T E

• Video card

• Network card
~
O

• Number, size, and type of disk drives


N F

• Amount of remaining disk space

• Any other drives (CD, DVD, tape, and zip)


I

If a component, like the ones mentioned above, is a part of a larger system, it is a good practice
to note which system the component is tied to using the larger system’s unique identifier.

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Stage 3> Assess the Current IT Situation

Potential Problem Areas: Performing asset management on wireless and mobile devices is
difficult given that they are highly portable, have rapid usage cycles, and are difficult to locate
exactly. Polling a network to find out where they are is often not an option. While including
mobile and wireless devices in your asset management plans is important, put this project at the
bottom of your to-do list. Start by mandating the use of specific products and only then plan to
conduct a manual count down the road.

Conducting a Software Asset Inventory

P
G R O U
A software asset inventory is an up-to-date listing of detailed information about the client,
network, and server software installed across your entire organization. The information
you collect can be used to better manage license and support contracts, plan technology
implementation, troubleshoot, and perform better financial management.

Compared with hardware, software is something of an “invisible” asset; because it is less


physical, it is much harder to track and much easier to misuse than its hardware counterpart.

H
C
• For example, the average organization spends 10 to 20% of their software investment
on software updates and support services. Unbeknownst to them, however, most do not

R
actually use a sizeable portion of these paid-for, yet superfluous, assets.

A
As with conducting a hardware asset inventory, you need to decide which data fields you wish to

E
populate. See the table below for key information to track in your software inventory.

S
E
R
Identification Data Administrative Data Historical Data
Unique asset identification Date of acquisition Support history
(serial number, product

H
number, license number)

C
Application name Purchase order number Usage monitoring details

T E
Application vendor Cost of license Move/add/change history
Application version Cost of annual support and Training history
update fees
Physical location License type, terms, and Consulting history ~
O
conditions (maintenance and
N F

support)
Assigned user/department License expiration date
Workstation/server upon Warranty information
I

which software is installed

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Strategic IT Planning and Governance

Change Management
Asset management isn’t a one-off project – it is an on-going process. As things change within
an organization, asset volume and allocation changes as well. In order for your asset database
to remain useful, it is essential that it remain reflective of the actual state of affairs in your
organization.

The change management aspect of asset management involves the recording of all installations,
removals, and configuration changes made to hardware and software. This is particularly useful
P

between actual inventory audits that just present a snapshot of what you have at a specific
G R O U

period in time. The result for IT is the ability to engage in risk management by responding to
organization expansions, employee changes, and technology advances.

If a hardware component is redeployed, make the following changes to the asset database:

• Location and/or staff to whom the hardware is assigned.


H

If it is a peripheral, then change the workstation identification to which the asset is


allocated.
C

• If the hardware is placed in storage, then change the workstation record.


R
A

• If the hardware is slated for disposal, then flag the asset as removed in the database. If
it is a workstation and has associated peripherals that are not being disposed, then delete
E

the peripherals listed and redeploy them.


S

If software is added or removed, make the following changes to the asset database:
E
R

• If software is installed, then add a unique identifier that ties it to the workstation or
server upon which it is installed. Add an install date.
H

• If software is transferred between machines, then change the workstation identification


C

field.
T E

• If the software is permanently removed, flag it as deleted in the registry.

Engaging in rigorous change management practices is probably the most critical, yet hard to
~

control, aspect of asset management. Managing change will necessarily involve the development,
O

communication, and enforcement of enterprise-wide policies for it to be effective.


N F

Example: Tracking Component Lifecycles


I

Let’s walk through the process of tracking a PC and an operating system license over the course
of their respective lifecycles. (The data provided in this example is for demonstration purposes
only and may not be accurate.)

Step 1 - Requisition: Enter the requisition information into the asset database. This can be
a single-field entry that lists the requisition date and number, who requested the purchase (by
name and department), and a brief description and statement of anticipated use of the intended
system. In essence, you are earmarking a place in the asset repository for your new acquisition.

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Stage 3> Assess the Current IT Situation

Step 2 - Procurement: When the asset arrives and before it is used, it is tagged with an asset tag
and described in the asset database.

Step 3 - Deployment: Once a user for the asset is identified, add the following information to
the asset database.

PC Dell Optiplex Local Hard Drive EIDE S.M.A.R.T. II


Ultra ATA/100 20 GB
User Emily Chesley Network Drives

P
Location / Facility Finance Local Printer

G R O U
Make Dell Network Printers
Model OptiPlex GX150
Serial Number PC000762 NIC / IP Information 3Com Etherlink
123.456.789.01
Operating System Windows 2000 Video Card 16MB 4XAGP
Professional NVidia TNT2 Pro

H
(#HD444366)
Processor Type / Pentium III (1.2 GHz) Modem

C
Speed

R
RAM 160MB SDRAM CD ROM

A
Step 4 - Maintenance: The asset is subject to regular inventories, usage monitoring, updates,

E
and support. When each of these events occurs, the following needs to be recorded in the asset

S
database:

E
Hardware - PC

R
Move/add/change history 07/07/01: Added 32MB RAM
15/03/01: Windows 2000 Professional (OS000578)

H
added - no previous operating system
Service history 23/05/01: Jammed CD-ROM drive (technician

C
deployed onsite)

T E
Usage history Basic office use
Software - Operating System

~
Move/add/change history 15/03/01: License transferred from PC PC000221 to
PC000762 - same user O
Support history 27/09/00: OS crash - technician deployed onsite
N F

14/06/01: Installation of Service Pack 2


Usage monitoring details Launched 43 hours per week on average. No
weekend use.
I

Training history End-User: Windows 2000 Professional Introduction


(2-hour seminar for all end users)
IT Staff: Microsoft Course 2152 (taken by Jane Jones)
Consulting history None

If a hardware component or software license is moved to a different machine, changes must be


recorded in at least two fields:

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Strategic IT Planning and Governance

• Details must be entered in the “move/add/change history” field. Include activity dates
in all history-related fields.

• The unique identifier in the “workstation/server installed on” field must be changed to
that of the new workstation.

Step 5 - Retirement: Upon retirement of an asset, an accurate account of where it is, what it
contains, and all changes it has undergone are already on record. At this time, decisions need to
be made as to which hardware components can be reused, sold, or discarded, and which software
P

licenses can be redeployed in the organization.


G R O U

• If a component is to be discarded, flag that asset’s record in the registry as deleted.


Ensure that changes are also made in the “installed components” and “associated
peripherals” fields.

A calculation can also be made at this point about how much the system cost over its lifecycle.
This is valuable in helping to identify potential cost-cutting areas as well as for planning future
budgets and investments.
H
C
R

Asset Management Best Practices


A

Like any management procedure, there is a collection of best practices associated with asset
E

management. Apply the following to your initiative:


S

1. Beware of Culture Shock: Asset management will probably require a restructuring


E

of how certain traditional processes, such as purchasing, are done. Some users and
R

department heads may resent this or have trouble making the transition. Learning to
comply with new asset management policies and procedures will likely require some
H

training, so be prepared.
C

2. Ensure End-User Compliance: Behavior modification may be in order to make your


asset management plan achieve the desired benefits. Here are some examples of what
T E

you may need to communicate in terms of end-user participation:

• Ensure that remote machines are left turned on during the scanning period.
~
O

• Mandate that users notify IT prior to any changes that might affect inventory.
This includes hires, terminations, moves, and strategic plans that involve IT
N F

assets. Employ e-mail or an asset change form on the intranet to facilitate this
communication.
I

• If the number of available software licenses is tight, ask end users to schedule use
for non-peak usage hours to avoid purchasing more.

• Get users to exit an application when they are not using it to ensure license
availability and avoid over-purchasing. Some users will “horde” an app by launching
it early and leaving it idle to ensure availability when needed.

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Stage 3> Assess the Current IT Situation

3. Enforce Standardization: META Group says standardization of hardware and


software purchased for the desktop alone can reduce costs by up to $650 per seat per
year. Standardization limits the number of products that helpdesk and IT staff need to
learn to support, as well as allows greater leverage in purchasing volume discounts.

4. Automate Software Distribution: Deployment is a key stage in the lifecycle of an


asset, and an excellent cost-saving opportunity. Automating software distribution is a
simple, labor saving device that has a big impact on the bottom line by lowering the cost
of managing IT assets.

P
5. Focus on Software Asset Management First: Potential cost-savings associated

G R O U
with well-managed software assets include overall reductions in license fees, update
fees, and software support. Other areas of benefit include system administration, and
management time spent on budgeting, documenting, and figuring charge backs. Because
of these factors, software asset management has the fastest return on investment.

6. Perform Inventory Scans During Off Hours: Evenings and weekends are ideal times
to perform automated scans since the tax on the system and associated bandwidth is

H
reduced.

C
7. Communicate With Others: To get the most benefit from asset management, the data

R
gathered through this process must be made available to financial, administrative, and
technical planners, as well as system administrators and the helpdesk. Key data includes

A
contract terms, hardware and software inventory, accounting, maintenance records,

E
change history, support history, and other technical and financial information. Decide

S
the types of reports needed and who will get them.

E
8. Broadcast Your Results: Publicize the beneficial results of your efforts. This will not

R
only make you look like a cost-saving star, but it will also help change the minds of buy-
in hold-outs.

H
C
Understanding the IT Environment

T E
Environmental scanning is becoming a skill required of more and more IT managers.

~
Understanding trends in your industry and the actions of your competitors has never been more
important to the IT function. O
N F

Depending on your situation, you will want to adapt the information for which you are looking
and you may want to broaden your scope to include trends and analysis not specifically related to
technology, but which may impact you and your department’s role in the future.
I

Industry Trends
Keeping on top of all the trends that may affect your business and your technology decisions
is a difficult task at best. This does not mean, however, that you do not have to scan the
environment on an on-going basis.

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Strategic IT Planning and Governance

Recognizing the business ramifications of new technologies and trends should be the
responsibility of company business executives. However, updating executives on new
opportunities and potentials are your responsibilities.

Competitor Profiles
Understanding how your competition is using technology to gain a competitive advantage will
provide you with a point of reference against which you can benchmark your department’s
P

performance.
G R O U

In some cases, every company in your industry may be using the same technology, but in others
you may be able to gain competitive advantage by implementing systems that differentiate your
company.

Knowing Your Competitors Pays Off


H

Organizations with a Strategic IT Plan were more familiar with the IT strategies of their nearest
C

competitors than those without. Familiarity with competitors’ strategies is generally low, but use
of a plan appears to drive some investigation of competitors’ IT strategies and departments.
R
A
E
S
E
R
H
C
T E
~
O
N F
I

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Stage 4> Propose a New IT Situation

Stage 4> Propose a Stage


New IT Situation
Now comes the fun part. Through the first three stages of this
methodology, you have focused on the past and present of your
4
organization and its use of Information Technology. Now it is time for you, and your steering

P
committee, to set your sights on the future.

G R O U
To this point in the methodology you have gathered information on two important issues:

• Where You Are. By examining and documenting organizational infrastructure, current


systems, and current projects you should now have a solid understanding of your
current situation and an excellent starting point from which you can benchmark future
endeavors.

H
• Where You Need To Be. By documenting your company’s strategic objectives, as

C
well as its market and core competencies, you have begun to construct a picture of

R
where your organization wants to go. Now you have to look at how IT can enable that
successful future organization.

A
Do You Have Your Act

E
In this stage, you will begin the process of
proposing a new IT situation. Be bold! Try not Together?

S
to worry too much about what can be done

E
Your information technology department has a
in the short term. This is your opportunity to critical role to play at this stage of strategic IT

R
look at the future and think about how IT can planning.
make a difference. The particulars of what can
actually be accomplished short, medium, and Your department will be expected to provide

H
long term will be addressed in the next stage. leadership in pitching new IT initiatives that

C
can be tested against strategic priorities. The
department can also be a valuable resource for

T E
Step 1 – Analyze IT Strengths evaluating and scoping out details for IT ideas
provided by stakeholders in other departments.
and Weaknesses

~
While strategic IT planning goes beyond the
Review your current IT situation asking tough borders of the IT department, you also don’t
questions about how performance, alignment, O
want to be in a position where your future is
and goal setting. Compare your current
N F
entirely dictated externally.
governance practice (if you have any) to an
industry maturity model. Conduct a analysis of
I

current strengths, weaknesses, opportunities and threats (SWOT).

Step 2 – Brainstorm Technology Opportunities


Hold a brainstorming meeting (or meetings) involving your strategic planning group as well as IT
staff, senior managers, line managers, power users, and special applications users. Formulate a set
of key questions to get the mental wheels turning.

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Strategic IT Planning and Governance

Step 3 – Document Your Results


Document your final recommendations for the future as approved by your planning group.
Use diagrams and charts as much as possible and remember to continually relate your
recommendations to the business goals of the enterprise.

In This Stage
P
G R O U

Stage 4> Propose a New IT Situation .............................................................. 81

Step 1 – Analyze IT Strengths and Weaknesses .................................... 83


Step 2 – Brainstorm Technology Opportunities ....................................... 86
Step 3 – Document Your Results ............................................................ 88
Stage Summary....................................................................................... 90
H

Background > The Art of Brainstorming ........................................................ 91


C

Brainstorm of One (Brainwriting) ............................................................. 92


R
A
E

Workbook
S
E

Stage 4> Propose a New IT Situation .............................................................. 94


R

4.1 Questions to Focus Discussion ......................................................... 96


4.2 IT Governance Maturity Model .......................................................... 98
H

4.3 SWOT Analysis ............................................................................... 105


C

4.4 Future IT Options Questionnaire ..................................................... 114


T E

4.5 Brainstorming Tool........................................................................... 121


4.6 Summary of Strategic Objectives .................................................... 124
~

4.7 Summary of Strategic Directions ..................................................... 125


O
N F
I

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Stage 4> Propose a New IT Situation

Agility Tip: Keep the Focus External


This is not a referendum on the effectiveness of the IT department.
While the IT department will likely play the largest role in the IT SWOT
analysis of the enterprise, don’t forget to address and analyze how IT is
being used throughout the organization to advance the corporate goals
you documented in Stage 2.

For example, if a particular department has forged a productive

P
relationship with an external IT service provider, the strengths and

G R O U
weaknesses of that relationship should be considered as part of the IT
SWOT analysis.

Step 1: Analyze Strengths And Weaknesses

H
Objectives:

C
• Review your current situation to identify specific issues of strategy and governance.

R
A
• Analyze the strengths, weaknesses, opportunities and threats of IT in your enterprise.

E
What You Need To Do

S
ü Distribute “4.1 Questions to Focus Discussion” to members of your steering

E
group. This document contains a set of questions that will help members of the group
focus on key issues of strategy and IT governance. Encourage steering group members to

R
share the questions with their constituents and gather their feedback.
ü Benchmark Current IT Management Practices Against “4.2 IT Governance

H
Maturity Model”. Analyze your current level of IT Governance against this governance

C
maturity model. This will help you map out what needs to happen in the short and long

T E
term to improve Strategic IT governance.
ü Conduct a directed SWOT analysis with members of your steering committee.
Discuss everybody’s answers to “4.1 Questions to Focus Discussion” as well as “4.2
~
Governance Maturity Model”. Use the tool “4.3 SWOT Analysis” to further flesh out the
O
strengths, weaknesses, opportunities and threats faced by enterprise IT.
N F

ü Analyze all IT initiatives. Be sure to consider the SWOT for all IT being used in the
organization, not just that which is the responsibility of the IT department.
I

After amassing the information in Stage 3, you and your planning team may be amazed at the
sheer volume of IT work being done. But strategic planning and governance is not about volume
or even the quality of work being done. It is about making sure that the work being done is most
effective toward the organization achieving its goals.

To get at the issue of effectiveness, begin by asking tough questions. The Board Brief on IT
Governance, which is based on Control Objectives for Information and related Technology
(COBIT), notes that asking the tough questions about IT is the necessary first step in developing

Page 83
Strategic IT Planning and Governance

the outcome measures, best practices, key success factors and performance drivers of successful
governance. Such questions would include the following:

To Uncover IT Issues
• How often do IT projects fail to deliver what they promised?

• Are end users satisfied with the quality of the IT service?


P

• Are sufficient IT resources, infrastructure and competencies available to meet strategic


G R O U

objectives?

• What has been the average overrun of IT operational budgets? How often and how
much do IT projects go over budget?

• How much of the IT effort goes to firefighting rather than enabling business
improvements?
H
C

To Find Out How Management Addresses the IT Issues


R

• How well are enterprise and IT objectives aligned?


A

• How is the value delivered by IT being measured?


E
S

• What strategic initiatives has executive management taken to manage IT’s criticality
relative to maintenance and growth of the enterprise, and are they appropriate?
E
R

• Is the enterprise clear on its position relative to technology: pioneer, early adopter,
follower or laggard? Is it clear on risk: risk-avoidance or risk-taking?
H

• Is there an up-to-date inventory of IT risks relevant to the enterprise? What has been
done to address these risks?
C
T E

A more extensive list is included in “4.1 Questions to Focus Discussion”. Before you tackle
these questions, be sure to review both your corporate strategy (from Stage 2) and your current
IT situation (from Stage 3). Distribute the questions to your planning group and make sure they
~

respond. It is critical that a range of views be brought to the table. Best practices and measures
O

will be discussed further in Stage 7: Build a Strategic Decision Making Framework.


N F

The Governance Maturity Model


I

The introduction to the Strategic IT Planning and Governance methodology states that IT
governance refers to formal high level processes and structures for IT strategic planning,
prioritization, decision making and performance measurement.

Benchmarking your current situation against a maturity model will inform your discussion of
strategic steps that you need to take, and strategic objectives that need to be set, to move toward
best practices in IT Governance. “4.2 IT Governance Maturity Model” is based on the maturity
model outlined in Control Objectives for Information and related Technology (COBIT). The
model looks like this:
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Stage 4> Propose a New IT Situation

P
G R O U
This Strategic IT Planning and Governance methodology lays out the steps for moving to a
Level 3 – Defined Process. These processes and structures form the basis for you to establish an
ongoing strategic planning and governance practice. It is through an effective ongoing strategic
practice that you can move to Level 4, and ultimately to Level 5.

H
C
Directed SWOT Analysis

R
A SWOT analysis is a simple and powerful way of analyzing an organization’s corporate

A
capabilities. The temptation in completing this section is to pick some generic areas, or pick

E
areas for political reasons. For example, stating, “the employees are Acme’s biggest strength” is
an easy answer with which nobody will disagree, but which provides little insight into the reasons

S
why Acme is actually successful.

E
Focus your analysis of strengths, weaknesses, opportunities and threats upon the key areas used

R
in “4.1 Questions to Focus Discussion” these include:

H
• Governance and Accountability.

C
• IT/Business Alignment.

T E
• IT Skill Sets and Performance.

• Process and Project Management.

• Budget Performance. ~
O
N F

For every category, spend some time thinking critically about your choices and how you can
work on them. Carefully consider the information you have gathered in the previous Stages of
this methodology. Enter your strengths, weaknesses, opportunities, and threats for each of these
I

categories in the “4.3 SWOT Analysis” tool.

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Strategic IT Planning and Governance

Step 2 – Brainstorm Technology Opportunities


Objectives:

• Brainstorm various options for IT in the future of the organization.

• Involve the widest possible circle of stakeholders in the exercise.

What You Need To Do


P

ü Lay the ground rules and prepare for the future. Planning ahead and getting everybody
ready for the upcoming brainstorming meeting is key to having a successful outcome.
G R O U

Distribute “4.4 Future IT Options Questionnaire” in advance to those attending


meetings.
ü Brainstorm within the IT department. Document ideas generated from the questionnaire.
The goal in this meeting is to come up with as many different technology-related ideas as
possible.
H

ü Hold brainstorming meetings with stakeholders. Distribute the same questionnaire as


well as any of the ideas already on the table. Meeting attendees could include: senior
C

management, middle management, power users, and specific application users. Use “4.5
R

Brainstorming Tool” to document ideas coming out of these meetings and the one within
your department.
A
E

Are there potential opportunities to use technology to further the goals of the business? What
S

can be done using technology to change your company and its processes, either incrementally or
exponentially?
E
R

Some brainstorming sessions will help you to determine all of the ways that technology can
deliver value to your company. Use the IT Options Questionnaire to get participants thinking of
how IT might fit into the company’s future.
H
C

Getting everyone involved in, and excited about, generating ideas for capitalizing on technology
will give you the chance to shape the way your company thinks about the IT department.
T E

Brainstorming Meetings
~
O

Your objective is to find the best possible ways that technology can be used to help your
company. To do this, you need to pull in a variety of people from your company. In the previous
N F

step, you decided who you wanted at your meeting and sent them a questionnaire to get them
prepared.
I

At this point, we suggest having at least two meetings.

1. First, have a meeting with your own IT staff and go through the list of ideas they
generated from the questionnaire. The goal in this meeting is to come up with as many
different technology-related ideas as possible.

• Make your staff accountable for coming up with new ideas to help your company.
Refer back to the “Ideas and Opportunities” document discussed in Step 4 of Stage 3.

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Stage 4> Propose a New IT Situation

By having this meeting prior to your meeting with other departments and senior
management, you can save time by presenting an initial list of possible ideas that
your department can undertake.

2. Next, have a meeting (or meetings) with the broader community. Expect this
meeting to take approximately two hours.

• Send out your compiled list of ideas well ahead of time, along with a meeting
agenda. Stick to your timeline as much as possible.

P
• During the meeting, brainstorm the various options that were brought up by

G R O U
the questionnaire. Encourage discussion, debate, and even disagreement. Only by
pushing the envelope will you come up with truly brilliant ideas.

• This is your opportunity to “blue sky” about ideas to reinvent the business
and change your industry. At this point don’t discount any ideas, regardless of size
or scope. In other words, don’t say that any ideas “wouldn’t work” – consider every
option.

H
• Focus on determining which options provide your company with the greatest

C
business benefit.

R
Before adjourning your meeting, make sure that you arrive at a list of options and potential

A
avenues to follow. This list will be used to create the follow-up document discussed next.

E
S
Agility Tip: Controlling the Chaos

E
Brainstorming sessions are a great way to both generate new ideas and

R
to push your own thinking outside of the box. However, without strong
leadership, brainstorming sessions can get out of control and end up
being counterproductive.

H
C
Be sure to read the background articles on brainstorming and
“brainwriting” (in this Stage) for tips on sparking and leading effective

T E
brainstorms. Consider designating a third party to be moderator/
secretary for your sessions, somebody with a methodical/procedural bent
(shouldn’t be hard to find somebody like that in IT).
~
O
N F
I

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Strategic IT Planning and Governance

Step 3 – Document Your Results


Objectives:

• Create a summary of project ideas from the brainstorming sessions.

• Include, where possible, cost estimates for making the ideas a reality.

What You Need To Do


P

ü Review all ideas with the IT department. Review the ideas that come out of the
G R O U

various brainstorming meetings with specialists in your IT department. Estimate the cost
of each idea if it were to become a formal project. (This includes outsourced IT projects.)
ü Follow-up and document. Hold a follow-up brainstorming meeting with your steering
committee. Review results from all previous meetings and cement together a list of ideas
into a document that outlines a roadmap of technology options for your company. Use
“4.6 Summary of Strategic Objectives” to record and list objectives and core values. Use
H

“4.7 Summary of Strategic Directions” to record and list all possible projects.
C

Use the “4.6 Summary of Strategic Objectives” form to list the overriding objectives of core
R

values for IT that came out of both your SWOT analysis and your brainstorming sessions.
A

For example, if the consensus was that your IT infrastructure is well disposed to supporting
E

open source development, and senior management is not averse to exploring this option from a
cost savings point of view, one of your objectives may be to:
S
E

• “Move toward adopting proven open source tools and applications for all core
technologies.”
R

On the other hand, your analysis and brainstorming could lead to an opposite set of objectives:
H

• “Seek industry standard commercial tools and applications for all core technologies.”
C

• “Continue to strengthen our relationship with key enterprise technology vendor


T E

Microsoft.”

The list of objectives you put together here will inform the Strategic Objectives and Core IT
~

Values sections of the Strategic Plan which you will construct at the end of this Methodology.
O
N F

Projects List
Your brainstorming sessions will also yield a wish list of specific projects ideas aimed at
I

advancing the core strategies of the organization. For each proposed IT project, include the
following information:

• Description of option.

• Benefit to the business.

• Estimated costs (high, medium, low).

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Stage 4> Propose a New IT Situation

• Estimated time to complete the option (number of months).

This list of ideas will be the basis for moving forward and ensuring that IT supports and
enhances the needs of the business. Using this process to create a list of possible projects
will also help when it comes time to implement because you will already have buy-in from key
stakeholders.

P
G R O U
H
C
R
A
E
S
E
R
H
C
T E
~
O
N F
I

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Strategic IT Planning and Governance

Stage Summary: Propose a New IT Situation


The results of this stage should be a “wish list” of projects that you and your planning group
believe will impact the company’s competitive position. In the next stage you will measure the
gap between the ideal situation (where IT projects are fully aligned with strategy) and the current
situation (as outlined in Stage 2).

The following chart shows the progress of developing the plan after Stage 4 of the engagement.
P

Status Stage
G R O U

Creation Of Steering Committee Done 1


Scope Definition of “Strategic” Done 1
Strategic IT Plan Kickoff Meeting Done 1
Preliminary Report With Goals and Timeline Done 1
Document corporate Vision, Mission and Strategic Goals Done 2
Analyze Core Competencies and Competitive Position Done 2
H

Current IT Organizational Structure. Done 3


C

Hardware and Software Inventory Done 3


R

Analysis of IT Trends Done 3


A

Review of IT Against Governance Maturity Model Done 4


IT SWOT Analysis Done 4
E

List of Proposed Future IT Directions Done 4


S

List of Requirements for Resolving Gaps (Roadmap) 5


E

Corporate IT Vision Statement 6


R

Corporate IT Governance Charter 6


Strategic IT Goals 7
H

Achievable Measures 7
C

Budget Analysis 7
T E

Prioritized Project List 7


Completed Strategic IT Plan Document 8
Comprehensive Strategic Planning PowerPoint 8
~

Strategic Planning Communication Plan 8


O
N F
I

Page 90
Stage 4> Propose a New IT Situation

Background > The Art of


Brainstorming
Brainstorming is a creative idea generating technique which results in a set of ideas from
which we can choose, and it also forces us away from our everyday mode of thinking. Use this
information to ensure that you make the most of your brainstorming endeavors.

P
Although there are different methods used to brainstorm ideas, group brainstorming is still

G R O U
considered an important activity to promote teamwork, socialization, and opportunity to build
on the ideas of others. Use the following steps to ensure that you succeed at brainstorming with
a group.

1. Schedule a Meeting: Everyone has a busy schedule so make sure that you book their
time in advance. Invite those who will be open to share their ideas and ensure that you
have coverage from all the required viewpoints. The ideal number of participants is 4-7

H
members.

C
2. Designate a Recorder: This individual will be kept very busy writing down the

R
ideas that will be generated, and therefore should not be a participant in the actual
brainstorming.

A
E
3. Discuss the Rules: There should be a defined code of conduct agreed to by all. For
example, there should be no criticizing of ideas because being relaxed and thinking

S
freely is the key. Quantity supersedes quality because it has been proven in history that

E
the best ideas are generated when the highest numbers of ideas were being generated.

R
4. Delegate a Moderator: A moderator is responsible for keeping order and ensuring the
discussion stays on topic and moves in a logical manner. For example, it is beneficial

H
to build on existing ideas before new ones are tackled. The moderator can also use the
following techniques to facilitate the idea generating process.

C
T E
• Pose an initial question that will encourage thought into what the brainstorming
session should provide ideas about, or what you are attempting to solve. This
presents a discussion starting point and it frames what the ideas/solutions are

~
intended to resolve.
O
• Identify a challenge to get the discussion moving and also because people are usually
N F

programmed to respond when faced with a challenge.

• Utilize word association techniques to find linkages between key words that will
I

assist in idea generation.

5. Regulate Time: Sessions are not recommended to go any longer than 15-20 minutes

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Strategic IT Planning and Governance

without breaks. Do not confuse a lull in idea generation as the end of idea generation.
You will find that after people have had the opportunity to “relax their minds,”
additional idea generation will recommence.

6. Make Copies: After the session has concluded, make copies of the ideas that were
generated and distribute them before the next meeting. This allows for closer study and
the ability to unearth further ideas for the next meeting.

7. Add and Evaluate: At the next scheduled meeting, add the new ideas and evaluate the
P

ideas that exist. If you show no intention to use the generated ideas, then the member
could become discouraged to join future groups.
G R O U

Brainstorming is a method to facilitate creative idea generation. Ensure that you understand,
encourage and properly use the keys to unlock the minds paralyzed by daily rituals.

Brainstorm of One (Brainwriting)


H

One of the reasons you are distributing the options questionnaire is to encourage thinking on
C

technology options in advance of, and outside of, the brainstorming meetings. Make sure not to
R

give the impression that formal brainstorming meetings are where all the thinking will happen.
A

A quantity of new scientific research suggests there is more to brainstorming than originally
E

thought. Scientists are studying cognitive processes and looking deeper into human behavior to
S

push people to their creative heights.


E

Psychologist Paul Paulus, for example, has spent the last 14 years studying brainstorming
R

techniques at the University of Texas Arlington Group Creativity Lab and has discovered the
following:
H

• Do not overuse group brainstorming as groups create distractions, conformity, and


social inhibitions.
C
T E

• Groups harbor illusions of their own effectiveness and therefore prematurely believe
that they have completed the task.
~

• Solitary brainstorming is as effective as group brainstorming. Groups with 4


O

members generated about half as many ideas as 4 individuals brainstorming individually


alone.
N F

Ideally, you want to get the most out of individual and group brainstorming. By distributing
some ideas as well as the options questionnaire in advance, you will be practicing what
I

brainstorming experts called “brainwriting”.

“Brainwriting” occurs when one member of the group writes their idea down and then
distributes the idea to others to obtain feedback and additional ideas. This technique has been
proven to generate 40% more ideas than individual brainstorming.

Page 92
Stage 5> Perform a Gap Analysis

Stage 5> Perform a Stage


Gap Analysis
It’s reality check time. In Stage 4 you were asked to blue sky a little bit
about how IT might play a critical role in the future competitiveness of
5
your organization. At the time, you were advised to be bold and to not worry too much about

P
what it might take to get there.

G R O U
This Stage compares your current IT situation to the proposed situation you developed in
Stage 4. By taking a detailed account of what you will need in the future and then matching
it against your current situation, you will be able to create a roadmap for your organization.

If you have completed all of the sections in the workbook up to this point, performing a gap
analysis should be a fairly straightforward process.

H
C
Step 1 – Analyze Alignment Gaps

R
Review the results of “Stage 2: Document Your Business Strategy” and “Stage 3: Assess the

A
Current IT Situation” in the context of the four quadrant strategic alignment model.

E
S
Step 2 – Analyze Infrastructure Gaps

E
Assess the IT requirements of the projects and areas of investment you identified in “Stage 4:

R
Propose a New IT Situation”. Look at where current IT systems and skills sets do and do not
fulfill those requirements.

H
C
Step 3 – Summarize and Resolve Gaps

T E
Put together a summary of the gaps identified in both Step 1 and Step 2 and chart the
implications for your IT strategy of addressing those gaps.

~
O
N F
I

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Strategic IT Planning and Governance

In This Stage
Stage 5> Perform a Gap Analysis .................................................................... 93

Step 1 – Analyze Alignment Gaps. .......................................................... 95


Step 2 – Analyze Infrastructure Gaps...................................................... 96
Step 3 – Summarize and Resolve Gaps ................................................. 97
P

Stage Summary....................................................................................... 98
G R O U

Workbook
Stage 5> Perform a Gap Analysis .................................................................. 126

5.1 Assess Your Alignment .................................................................... 128


H

5.2 Review Strategy to Assess Skills .................................................... 138


C
R

5.3 IT Infrastructure Gap Analysis ......................................................... 141


A

5.4 Recommendations to Resolve Strategic Gaps................................ 143


E
S
E
R

Agility Tips
Before you meet with anybody to discuss the gaps, take a few minutes
H

alone to play the Devil’s advocate. Write down ten things you wish you
C

did better. Then compare your list to corporate objectives. Drop the
items that don’t directly relate (these are your pet peeves which need to be
T E

dealt with at another time). Use what is left to spark the thinking of your
working group when you meet to discuss gaps.
~
O
N F
I

Page 94
Stage 5> Perform a Gap Analysis

Step 1 – Analyze Alignment Gaps


Objective:

• Analyze gaps between current operational goals and corporate strategy.

What You Need To Do


ü Review your strategic position. Review your summary of corporate strategy from Stage

P
2. Use the tool “5.1 Assess Your Alignment” to review information about your current

G R O U
alignment situation and to identify gaps.
ü Relate strategy to current skills. Use the tool “5.2 Review Strategy to Assess Skills”
to identify gaps between your current IT skill sets and the requirements of business/IT
alignment.

Tool “5.1 Assess Your Alignment” is based on the four-quadrant strategic alignment model. The
tool is divided into five sections. Sections one through four allow you to map the information

H
you have gathered so far into the four quadrants of the alignment model.

C
For example, in section “4.a” of the tool you are asked “Outline the key parts of your IT

R
infrastructure such as the main platforms, hardware, software, and network configurations that

A
you support.” You should be able to complete this table with information gathered in your Stage
3 IT Assessment.

E
S
The most important part of the tool, from a gap analysis perspective, is the final section. In

E
section five you will be asked to consider a number of questions to assess how well-aligned
your organization is and what gaps there may be. Use these questions as a starting point for a

R
discussion with your steering group. The questions include:

1. Do the current skills and processes of the organizational infrastructure (from Section 2)

H
support where the company wants to go in terms of strategic goals (Section 1)? If not,

C
what are the gaps?

T E
2. How can information technology improve business processes that will help the company
meet strategic goals?

~
3. What enterprise-wide technological initiatives would most benefit the strategic goals of
O
the company? (For example, if total customer lifecycle service is a strategic goal, what
N F
key technologies and tech services would go into an enterprise customer relationship
management system).
I

4. Do your current distinguishing competencies and strategic deliverables (your answers to


3-A and 3-B) relate to future strategic priorities of the organization? If not, what has to
be done?

5. Assuming that your IT strategy aligns well with your business strategy, and that the
organizational infrastructure and processes are well-suited to meeting strategic goals,
which parts of your IT infrastructure (architecture, processes, and skills) best deliver on
functional integration with other departments and strategic fit?

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Strategic IT Planning and Governance

6. What elements do not fit either horizontal or vertical alignment and what elements will
have to be built or bought?

From this discussion use the Alignment Gap Summary to list action areas where alignment gaps
might be addressed.

Step 2 – Analyze Infrastructure Gaps


P

Objective:
G R O U

• Analyze gaps between current infrastructure and the proposed new IT situation.

What You Need To Do


ü Identify future requirements. Completing a gap analysis between your current systems
and your vision of the future of IT at your company requires you to identify all of the
H

IT requirements needed in the future. Use “5.3 IT Infrastructure Gap Analysis” to enter
these requirements.
C
R

ü Identify the gaps. Using the Infrastructure Gap Analysis Tool, go through your list
of future IT requirements. Compare them to current capabilities. Make note of where
A

current capabilities don’t match future requirements. These are your gaps.
E

Depending on the level of detail you drilled down to when creating your vision of the future in
S

the previous stage, extra work may or may not be necessary here.
E

Your objective should be to make your vision of the future as concrete and detailed as possible.
R

You need to determine specifically what you will need in the future, so that you can evaluate
whether or not you currently have the capabilities and what you need to do to bridge the gap.
H

Every time you identify an IT requirement, write it down in a separate list. The more detailed
C

you make your list, the more useful it will be when you are trying to find gaps in your current
T E

systems.

After you have completed a list of requirements for each procedure, the next step is to compile
~

the list into one comprehensive master list of IT requirements.


O

The gap analysis tool uses a three column approach.


N F

1. In the first column, write your future requirements.


I

2. In the second column, identify the current system that fulfills the requirement.

3. Identifying the gaps is now a straightforward process. Go down your list. Every time
you find a future IT requirement that is not met by current systems, make a note in the
third column.

Be honest! If there are requirements listed that are not met, or are only partially met, by your
current systems, do not include a substitute for the sake of making the list look better.

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Stage 5> Perform a Gap Analysis

Remember, the requirements listed are future requirements, so you should expect to find a large
number of gaps in your current systems. Conversely, if you are not finding many gaps, chances
are you need to revisit your vision of the future of IT at your company because you have
probably not set the bar high enough.

Eliminate Irreconcilable Differences


You are likely to find that there are some things that simply cannot be accomplished. Go down

P
your list and rule these out early. There is no point in wasting time on goals that can’t be met,
whatever the reason.

G R O U
You should now be left with a set of achievable goals.

Step 3 – Summarize and Resolve Gaps

H
Objective:

C
• Create a summary document of gaps.

R
A
What You Need To Do

E
ü Gather strategic gaps and implications. Accumulate all of the implications and gaps

S
that you have identified thus far in this stage. Use “5.4 Recommendations to Resolve
Strategic Gaps.”

E
ü Resolve gaps. In a meeting with stakeholder(s), develop some recommendations as

R
to how you might overcome the gaps identified in this stage. Distribute the list of gaps
ahead of time so that people have time to think on their own and table ideas at the

H
meeting.

C
Get everyone involved and think creatively. Don’t discount any ideas yet, just try to get as many

T E
solutions on the table as possible. Use “5.4 Recommendations to Resolve Strategic Gaps” in your
workbook to help you document your ideas.

~
Is there a project here? Carefully examine the proposals for resolving gaps. These could spark
specific strategic project plans. O
N F
I

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Strategic IT Planning and Governance

Stage Summary: Perform a Gap Analysis


Your gap analysis should yield a solid list of possible actions that will get you there from here. It
should also help identify the things you are doing right – those projects and processes that are
already helping achieve competitive advantage.

The following chart shows the progress of developing the plan after Stage 5 of the engagement.
P

Status Stage
G R O U

Creation Of Steering Committee Done 1


Scope Definition of “Strategic” Done 1
Strategic IT Plan Kickoff Meeting Done 1
Preliminary Report With Goals and Timeline Done 1
Document corporate Vision, Mission and Strategic Goals Done 2
Analyze Core Competencies and Competitive Position Done 2
H

Current IT Organizational Structure. Done 3


C

Hardware and Software Inventory Done 3


R

Analysis of IT Trends Done 3


A

Review of IT Against Governance Maturity Model Done 4


IT SWOT Analysis Done 4
E

List of Proposed Future IT Directions Done 4


S

List of Requirements for Resolving Gaps (Roadmap) Done 5


E

Corporate IT Vision Statement 6


R

Corporate IT Governance Charter 6


Strategic IT Goals 7
H

Achievable Measures 7
C

Budget Analysis 7
Prioritized Project List 7
T E

Completed Strategic IT Plan Document 8


Comprehensive Strategic Planning PowerPoint 8
~

Strategic Planning Communication Plan 8


O
N F
I

Page 98
Stage 6> Propose a Strategic Vision and Governance Model

Stage 6> Propose a Stage


Strategic Vision and
Governance Model 6

P
With a firm grasp of your company’s business objectives – and having brainstormed various

G R O U
ways that IT can enable them – now is a good time to establish an overall strategic vision for IT
in your organization.
Enterprise vs. Department Vision
All of the work you have completed thus
far should help you to arrive at a firm This section focuses on an enterprise IT
understanding of the role that IT can play vision. It is not specifically about establishing
an operational vision for your IT department,
within your company. Setting a clear direction
though there will be obvious overlap.

H
will help you later when you are evaluating and
prioritizing the projects in the decision-making

C
Since the IT department is the primary mover
framework.
in advancing IT strategy, it stands to reason that

R
your departmental vision will be closely aligned

A
(if not synonymous) with a corporate vision.
Step 1 – Hold A Vision However, it is important that your corporate IT

E
Meeting With Stakeholders vision extend beyond the IT department.

S
Describe what needs to be done to achieve A good enterprise IT strategy will align closely

E
the future IT situation documented in Stage with your corporate strategy and vision. It will
also help focus the entire company on specific

R
4. Your IT core values represent the standard
IT goals. An IT strategy and governance
axioms by which IT is applied across the
structure that is exclusive to one department
organization. Similar to the core values you

H
(IT) leaves a space for other departments to
documented for your organization, as a whole, chart their own IT courses – a practice that

C
strategic IT core values are the set of beliefs or could have disastrous results.
philosophies that guide strategic IT decisions.

T E
For more see the articles on “One Vision
For All” and “Reigning In Rogue IT” in the
Step 2 – Establish a Strategic background section for this stage.
IT Vision ~
O
N F
Use the guidelines for the organization vision statement in Stage 2 when preparing the vision
statement corporate IT.
I

Step 3 – Propose a Governance Structure


The strategic IT vision applies to all strategic level IT decisions across the organization. The IT
Steering Committee is a cross-functional committee for the on-going application of strategic
priorities to all IT projects. Propose a charter for this group that draws a line from vision and
objectives to specific actions.

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Strategic IT Planning and Governance

In This Stage
Stage 6> Propose a Strategic Vision and Governance Model ...................... 99

Step 1 – Hold a Vision Meeting With Stakeholders ............................... 101


Step 2 – Establish a Strategic IT Vision ................................................ 102
Step 3 – Propose a Governance Structure............................................ 103
P

Stage Summary..................................................................................... 104


G R O U

Background > One Vision for All.................................................................. 105


Reigning In Rogue IT............................................................................. 106
Building Your Steering Committee......................................................... 109
H

Workbook
C

Stage 6> Propose a Strategic Vision and Governance Model .................... 147
R
A

6.1 IT Vision Meeting Agenda................................................................ 149


E

6.2 Strategic Objectives List .................................................................. 150


S

6.3 IT Core Values................................................................................. 151


E

6.4 IT Vision Statement ......................................................................... 152


R

6.5 Steering Committee Charter............................................................ 154


H
C
T E

Agility Tips: Forget the Poetry


~

The vision statement development should not take a long time.


O

Individuals and committees will spend hours trying to get the wording
perfect.
N F

Forget the poetry, a workmanlike statement that covers the bases of what
you hope to achieve is more important. If your company has a vision
I

statement, use it as a template, inserting technology-specific points.

Page 100
Stage 6> Propose a Strategic Vision and Governance Model

Step 1 – Hold a Vision Meeting With


Stakeholders
Objective:

• Meet with your strategic planning group to devise a vision and mission for corporate IT.

What You Need To Do

P
ü Review your corporate vision and future IT situation. Meet with your IT strategy

G R O U
committee. Use “6.1 IT Vision Meeting Agenda” to review the corporate strategy, as
established in Stage 2 as well as the list of IT options developed in Stage 4.
ü List strategic objectives for IT. As a committee, develop statements that capture how
various IT options can improve the competitive position of the organization and or the
services it provides. Use worksheet “6.2 Strategic Objectives List” to support this exercise.
ü List strategic core IT values for the company. Similar to the core values you

H
documented for your company as a whole, IT core values are the set of beliefs or

C
philosophies that guide strategic IT decisions. Use worksheet “6.3 IT Core Values” to
document your results.

R
A
Meet with the IT stakeholders in your strategic planning group. It is important to develop a

E
vision and mission for strategic IT . The vision exercise should be seen as growing out of your
strategic planning process. It is important to keep the broader constituency in the loop.

S
E
This does not mean, however, that you or a sub-group within the IT department can’t do some
“brainwriting” (see background to Stage 4) by circulating some draft vision statements and

R
objectives prior to the meeting.

H
Give ample time for this meeting and keep the tone positive. By this point in the process
everybody has already given considerable thought to the corporate agenda and where IT

C
resources might help advance that agenda. Participants should not feel like they are building from

T E
scratch.

At the meeting, do the following:

1. Begin by reviewing the company vision and mission statements. It may be helpful ~
O
to read the vision aloud. Make sure everybody is focused on that vision.
N F

2. Invite participants to reflect on all of the material that you have gathered to
date and contemplate the ways that IT is going to be able to best help your company.
I

Consider the options that came out of your earlier brainstorming sessions. Use a white
board or easel to record objectives.

3. Narrow down your list into five to seven specific objectives. The hardest part of
creating your strategic objectives will likely be the wording. It can be difficult to create
strategic objectives that are broad enough to encompass the goals you have set, yet
specific enough to be meaningful.

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Strategic IT Planning and Governance

4. On a separate white board or easel page, list some core values of corporate IT.
Similar to the core values you documented for your company as a whole, your core IT
values are the set of beliefs or philosophies that will guide your strategic IT decision
making.

For your list of core values, consider your scope definition from Stage 1 as well as your
commitment to alignment. Some examples of core values could include:

1. Information technology plays a critical role in achieving our strategic objectives and in
P

enabling critical processes across the organization. It should therefore be viewed as a


critical enterprise resource.
G R O U

2. IT projects involving an investment of $10,000 or more should be approved by the IT


governance body.

3. All IT projects in this class must have demonstrable benefit to advancing the corporate
mission.
H

4. We are committed to maintaining a unified standard for enterprise architecture across


the organization.
C
R
A

Step 2 – Establish a Strategic IT Vision


E

Objective:
S
E

• Draft an IT vision upon which you can base future strategic decisions.
R

What You Need To Do


ü Create an IT vision statement for your organization. Consolidate the various IT value
H

statements into one vision statement. Use the worksheet “6.4 IT Vision Statement” to
C

support this exercise.


T E

Your IT vision statement should reflect your vision of what IT might do for the organization in
the future.
~

• List some broad statements that reflect the values and goals of these lists.
O

• Some of the statements will overlap. Others will state the same principle more than
N F

once. Devise a single statement that covers off all the main points in your list.

• Work out a final draft of the vision statement as a group. Make sure that everybody
I

agrees to the vision statement.

Your IT vision should describe what the future will look like in terms of functionality and
operations (e.g. anyone can place an order from anywhere in the world, administrators can
manage storage capacity globally, and so on). A good vision is both inspiring and attainable.

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Stage 6> Propose a Strategic Vision and Governance Model

Step 3 – Propose a Governance Structure


Objective:

• Establish the terms of reference of a governance steering committee.

What You Need To Do


ü Establish and build consensus around a steering committee. Use “6.5 Steering

P
Committee Charter” to establish the terms of reference of the steering committee. The
steering committee should have broad representation and be promoted as the main body

G R O U
for IT analysis and investment decisions at the strategic level.

A steering committee is absolutely critical to on-going strategic IT planning and decision making.
You will know how serious your organization is about strategic IT when you see how serious it is
about a steering committee.

As was stated earlier in this methodology, steering committees are not a replacement for the IT

H
department. Neither are they, at the other extreme, a rubber stamp for IT department plans.

C
The mission of this committee, as stated in our example steering committee charter, could

R
include the following:

A
• The committee shall review all proposals for IT investments with projected costs over a

E
determined monetary threshold. This includes proposals from within IT services as well

S
as proposals from other departments that have a significant IT component.

E
• All proposals must be reviewed and approved for technological merit by the IT

R
department.

• All proposals must include clear definitions of business measures and benchmarks

H
of progress. These include cost/benefit analysis and clear calculation of Return on
Investment (ROI).

C
T E
• The steering committee has the authority to reject any proposal which it deems not to
have made a sufficient business case or which does not significantly contribute to the
strategic goals of XYZ Company.

In following this strategic IT planning process, you have recognized that strategic IT is bigger ~
O
and broader than any one department. It therefore stands to reason that strategic decisions
N F

should be made in a forum which is broadly representative, focused on aligning IT with


corporate objectives, and answerable directly to the senior executive.
I

Agility Tip: Formalize the Informal


In this stage you are basically proposing that the planning process used
thus far be made permanent. If you are a small organization, and your
planning committee is an informal group of three or four people, you
should still get written commitment from the chief executive that this
group shall continue to oversee strategy-level IT decisions.

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Strategic IT Planning and Governance

Stage Summary: Propose a Strategic Vision and


Governance Model
You now should know where you are, where want to be, and how you can go about getting there.
In this stage you are formally stating your vision for strategic IT development as well as a set of
formal rules for IT decision making. You should have these nailed down before you proceed to
the next stage: Build a Strategic Decision Making Framework. The following chart shows the
progress of developing the plan after Stage 6 of the engagement.
P
G R O U

Status Stage
Creation Of Steering Committee Done 1
Scope Definition of “Strategic” Done 1
Strategic IT Plan Kickoff Meeting Done 1
Preliminary Report With Goals and Timeline Done 1
Document corporate Vision, Mission and Strategic Goals Done 2
H

Analyze Core Competencies and Competitive Position Done 2


C

Current IT Organizational Structure. Done 3


Hardware and Software Inventory Done 3
R

Analysis of IT Trends Done 3


A

Review of IT Against Governance Maturity Model Done 4


E

IT SWOT Analysis Done 4


S

List of Proposed Future IT Directions Done 4


E

List of Requirements for Resolving Gaps (Roadmap) Done 5


R

Corporate IT Vision Statement Done 6


Corporate IT Governance Charter Done 6
H

Strategic IT Goals 7
Achievable Measures 7
C

Budget Analysis 7
T E

Prioritized Project List 7


Completed Strategic IT Plan Document 8
~

Comprehensive Strategic Planning PowerPoint 8


O

Strategic Planning Communication Plan 8


N F
I

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Stage 6> Propose a Strategic Vision and Governance Model

Background > One Vision for All


The strategic IT vision that is derived from this stage in the methodology should encompass IT
as it is applied across the entire enterprise. The IT department obviously has the greatest stake in
this vision; however, it is equally important for all your departments.

Helping the organization achieve its strategic goals and making the organization as a whole
more competitive or effective, is the key goal of strategic IT planning. According to Info-Tech

P
Research Group, the use of “strategic IT planning can improve organizational competitiveness

G R O U
and therefore should be seen as a priority for the entire organization and not just the IT department
department.”
(Use of Strategic IT Planning In Medium-Sized Enterprises).

H
C
R
A
E
S
E
R
Sixty-five percent of organizations utilizing strategic IT planning (or SITP) indicated that
having the plan resulted in at least somewhat increased competitiveness of their organization.

H
(In the case of non-profit organizations that were surveyed, “effectiveness” was substituted for
competitiveness.)

C
T E
Organizations with annual revenue of U.S. $0 to $100 million were most likely to realize this
benefit, with nearly 80% reporting an increase in competitiveness or effectiveness due to the
implementation of the IT plan. Fifteen percent responded that the use of SITP has resulted in

~
significantly increased organizational competitiveness.
O
However, a corporate-wide IT strategy and governance structure does not mean that the IT
N F

department’s role is somehow diminished or marginalized. The IT department should be the lead
unit in developing a corporate IT strategy and is the key developer and enabler for strategic level
IT projects.
I

Info-Tech Research Group has found that organizations that utilize SITP are more likely to view
the IT department as a strategic weapon, while organizations not utilizing SITP are more liable
to view their IT departments as playing a support role. This is consistent across all industry
segments.

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Strategic IT Planning and Governance
P
G R O U
H
C

Reigning In Rogue IT
R

“Rogue IT” projects – projects launched and funded by departments outside of the scope of
A

the IT department – can become a costly long-term headache for the company. How do you
E

deal with these shadow or ghost projects? See them as symptomatic of the need for a sound and
inclusive IT governance structure.
S
E

Rogue IT Scenario
R

Here is the situation: A department feels that a new system will help them achieve business goals
H

cheaply and more efficiently. They also feel that central IT cannot, or will not, support a project
to develop the system. So they go ahead and do it themselves using their own IT experts or by
C

outsourcing the project.


T E

What is the problem with doing that? It shows initiative and a willingness to move quickly to
embrace an innovative solution. Why should you care? Here are three good reasons:
~
O

• The Solution Might Not Scale. Overall organizational IT goals are probably outside
of the scope of the narrow rogue project. It might solve an immediate problem, but
N F

it might also not be suitable to scale up to provide enterprise-wide solutions. When


enterprise initiatives are taken down the road, the departmental solution may have to be
re-tooled or replaced – an additional cost of the project.
I

• Bad Data/Inconsistent Format Costs. Data formats may end up being inconsistent
with other enterprise IT projects and data quality that is “good enough” for the rogue
project may not be good enough for other applications. For example, the marketing
department may have customer data from its own project that could benefit a new
CRM package in sales, but the costs of reformatting and correcting that data will add
considerably to the cost of the CRM project.

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Stage 6> Propose a Strategic Vision and Governance Model

• Off-the-Books Spending. Rogue IT represents IT spending beyond your control.


However, as CIO, you remain responsible for total IT spending. If these projects cost
more than expected, or if the IT department has to spend to rescue a rogue IT project
gone bad, it will be on your head.

Forrester Research predicts that 5 to 15% of corporate technology spending is due to non-IT
sponsored projects. Add to that the spending by IT departments fixing problems that might
be created by rogue IT (such as paying for eventual replacement systems or for fixing non-
standardized data.)

P
G R O U
What Can Be Done?
The CIO Insight feature “Rooting Out Rogue IT” notes that “ghost IT is being seen as a
symptom of poor technology management and a sign of chronic communications problems
between IT and business units.”

In other words, you can’t just complain about rogue IT projects and petition higher-ups to make

H
them stop. You must take responsibility and exercise leadership. All IT spending, by the IT

C
department or otherwise, needs to be more closely and accountably linked to corporate strategic
and spending goals.

R
A
Lack of an effective IT governance structure and communication between IT and other
departments leads to conditions that breed rogue IT projects. These include:

E
S
• The “Dr. No” Syndrome. When IT investment decisions are made in a vacuum, and
the justifications not communicated, other departments don’t know what IT is up to or

E
why certain projects are more important than others. All they know is that their project

R
is “not a priority”. Many an IT manager has been nicknamed Dr. No.

• “Just Do It Anyway” Syndrome. Senior management pressures departments to be

H
more efficient, while also pressuring IT to spend less, and there is no accountability for

C
the disconnect. Line managers are confronted with the message, “There is no money for
this, but do it anyway.” Of course, if they do go ahead, they get criticized down the road

T E
for adopting non-standard IT solutions.

Treat rogue IT projects, or the threat of such ghost projects, as an opportunity rather than a
~
threat. Meet with senior decision makers and press for the following:
O
1. Establish an IT Steering Committee. IT spending decisions have enterprise-wide
N F

impact. It simply is not fair to force the CIO or IT manager to make these decisions
alone. The steering committee should involve key department representatives as well as
I

senior administrators.

2. Require Committee Approval for All Major IT Projects. Set a projected cost
threshold. The committee must approve all projects above that threshold. Each project
should be judged on criteria such as cost/benefit, strategic alignment, and how it might
positively or negatively impact customer relations.

3. Manage Expectations Both Up and Down the Line. It is one thing to involve

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Strategic IT Planning and Governance

departments in decision making and get their support for IT decisions. It is also
important to manage the expectations of senior management. Leadership sometimes
means saying no to the boss (with the ability to justify that position).

Rogue IT projects happen when departments and project leaders feel they must move forward
with a project even though they don’t have the support of central IT. This is a symptom of poor
communication between IT and other departments, as well as between senior management and
line managers. This is a situation that you can use to push a responsive IT governance plan.
P

As was stated earlier in this methodology, an IT steering or governance committee is not:


G R O U

• A replacement for the IT manager or management team of the IT department. The


IT manager manages his or her department. The steering committee helps set priorities
for IT investment and evaluates how well the entire organization is progressing in meeting
strategic goals.

• A “rubber stamp” for the IT department. The committee must be able to gauge
the business impact of various proposed IT projects. They are not there simply to
H

communicate the latest decision by the IT managers. They must have the power to say
C

another project has higher priority.


R

• A complaints clearing house. The committee is not the place to air the latest problems
A

a department is having with their technology or with the IT department.


E

Steering Committees Work


S
E

A 2000 study of “The Effects of MIS Steering Committees on Information Technology


R

Sophistication” (Journal of Management Information Systems, Vol. 17 No. 2) surveyed 270 IT


managers in the Financial Services industry. The study found that steering committees do indeed
improve the effectiveness of IT management across the organizations surveyed.
H

Management Sophistication was defined as “management maturity” or effectiveness of the


C

management function. Greater sophistication implies that managers are “aware of the firm’s
T E

long-term strategic plans, the firm’s future strategic plans are explicitly included in IS planning,
and IS performance is evaluated based on contribution to the firm’s overall objectives.
~

The study results indicated that “presence of IT steering committees indeed helps enhance the
O

level of IT management sophistication within firms”. It also noted that the roles that steering
committees play also impacts on “sophistication” and that firms should carefully define that role
N F

in the interest of getting the most benefit from steering committees. The three roles are:

1. Steering Groups, which guide and approve IT strategy, give business direction to IT
I

activities, and prioritize IT activities.

2. Policy Committees, which are involved in strategy implementation and creating


policies and procedures associated with IT planning.

3. IT Boards, which formulate IT department strategy, control and manage IT units, and
“ensure IT is run as a business.”

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Stage 6> Propose a Strategic Vision and Governance Model

The study also notes that the three are ideal groups and in reality, IT committees can have a mix
of these roles, with one or another dominating. For our purposes, we are looking mainly at the
Steering Group with the policy function as a possible subset.

Building Your Steering Committee


Steering committees can be large or small depending on the size and complexity of the

P
organization. Steering committees can also have sub-committees or working groups. For
example, there may be a networking working group or a Web working group. Here are some tips

G R O U
for establishing your first steering committee.

1. Start with a small core group. At the very least your steering committee should
include a representative from Finance and Human Resources as well as representatives
from key business driving departments and yourself as head of IT. Additional ad hoc
experts can be brought in on a project-by-project basis.

H
2. Establish a monetary threshold for projects. The steering committee shouldn’t be

C
bogged down with small projects (even though some small projects will yield big returns.
Set a cost figure above which projects must be reviewed and approved by the steering

R
committee.

A
3. Establish project benchmarks. Each project should be brought to the committee

E
as a business case, rather than a technology case. Project plans should also have clear

S
benchmarks by which the committee monitors progress.

E
4. Prioritize projects based on Strategic Alignment and Return on Investment. In

R
addition to reviewing and recommending projects for IT investment, the committee
should also be tasked with prioritizing all of the on-going projects (or approving a
prioritization that you come up with). This prioritization exercise has a number of

H
benefits:

C
• At budget time you will be able to set spending priorities based on broadly based

T E
recommendations.

• Other departments will be able to see their IT demands in the larger context of

~
strategic plans, and at least understand (though maybe not agree with) the rationale
behind decisions to proceed with one project over another. O
N F

Your steering committee should have a regular set of meetings, perhaps once a quarter or
twice a year. Make sure that project proposals are lined up ahead of time and that the business
benefits are clearly stated. The committee should also approve a detailed project charter for each
I

investment.

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Strategic IT Planning and Governance
P
G R O U
H
C
R
A
E
S
E
R
H
C
T E
~
O
N F
I

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Stage 7> Build a Strategic Decision Making Framework

Stage 7> Build a Stage


Strategic Decision
Making Framework 7

P
When you are faced with a decision, the best thing is to do the right thing,

G R O U
the next best is to do the wrong thing and the worst thing to do is nothing.
Roger Enrico, CEO of PepsiCo

You have identified the gap between where you are and where you want to be. You have also
established a governance structure that identifies a strategic vision and incorporates a steering
committee. Now it is time to make some concrete recommendations and determine a course
of action.

H
Translating your strategy into some tactical and operational goals is the objective of this stage.

C
We have divided it up into four steps. Each step builds on the previous. By the time you have

R
completed this stage, you will have a prioritized list of projects for the upcoming year.

A
These are the steps in this section:

E
S
Step 1 – Set Strategic Goals and Measures

E
Begin the process of turning your strategy into action by setting some clear goals for corporate

R
IT. This takes the work you did in the previous stage – Propose a Strategic Vision and
Governance Model – and turns it into some actionable objectives for the upcoming year.

H
C
Step 2 – Perform a Budget Analysis

T E
Goal setting and measurement are only two steps of the cycle. The last step is budgeting future
performance levels. After you have gathered some actual information on this year’s budget,

~
budgeting next year’s information becomes much easier.
O
N F

Step 3 – Identify Your Options


Begin identifying your options by taking a high level approach. Using your gap analysis from
I

Stage 5, group together functions that you think can be fulfilled by a specific IT project.

Step 4 – Prioritize Your Projects


Use a three-tier approach to prioritizing your projects. Our Project Ranking Framework is
designed to provide you with a robust prioritization process that ensures that your department’s
projects are aligned with the objectives of the business. These include:

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Strategic IT Planning and Governance

• Info-Tech Project Matrix

• Info-Tech Priority Index

• Info-Tech ROI Calculator

This is the last step in creating your Strategic IT Plan. Once you have finished this section you
will have a plan that establishes the direction for the IT department for the upcoming year and
clearly explains how you will achieve your objectives.
P
G R O U

Stage 7: Build a Strategic Decision Making Framework ............................. 111

Step 1: Set Strategic Goals and Measures ........................................... 113


Step 2: Perform a Budget Analysis........................................................ 116
Step 3: Identify Your Options................................................................. 117
H

Step 4: Prioritize Your Projects.............................................................. 120


C

Stage Summary..................................................................................... 124


R

Background > Types of Goals IT Should Set .............................................. 125


A

Financial ................................................................................................ 125


E

Organizational Goals ............................................................................. 126


S

Technology Operations.......................................................................... 128


E
R

Customer Service Goals........................................................................ 129


IT Governance Goals ............................................................................ 130
H

Getting Buy-In for Your Goals................................................................ 131


C

Using Your Budget as a Management Tool ........................................... 132


T E

Dealing with Budget Cuts ...................................................................... 133


~
O
N F
I

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Stage 7> Build a Strategic Decision Making Framework

Workbook
Stage 7: Build a Strategic Decision Making Framework ............................. 156

7.1 IT Strategic Goals............................................................................ 158


7.2 Balancing IT Measures.................................................................... 161
7.3 Budget Analysis Worksheets ........................................................... 165

P
7.4 Budget Summary............................................................................. 171

G R O U
7.5 Analysis of Available Options .......................................................... 172
7.6 Business Case Template ................................................................. 173
7.7 Comprehensive Project List ............................................................ 174
7.8 Info-Tech Project Ranking Framework ............................................ 176
7.9 Prioritized List of Projects ................................................................ 184

H
C
R
Agility Tip: Consensus On Procedure

A
This Stage is the foundation of all future strategic planning and decision-

E
making. How you do it (make decisions) is important. But more important

S
is consensus on how it will be done from now on.

E
In this Stage you are agreeing on a common language for expressing the

R
strategic value of IT projects. Worry about getting that consensus more
than on the details of the framework – these will continue to develop over
time.

H
C
T E
~
O
N F
I

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Strategic IT Planning and Governance

Step 1 – Set Strategic Goals and Measures


Objectives:

• Establish strategic goals for IT, based on your new vision and objectives.

• Establish measures for ensuring that goals are achievable.

What You Need To Do


P

ü Start turning your strategy into action by setting some clear strategic goals for
G R O U

enterprise IT. Take the work you did in the previous stage – Propose a Strategic IT
Vision and Governance Model – and brainstorm some actionable objectives for the
upcoming year. Use SMART (Specific, Measurable, Attainable, Relevant, and Timely)
criteria to help clarify your goals. List your goals in the worksheet “7.1 IT Strategic
Goals”.
ü Establish clear measures for each goal. Take a balanced scorecard approach to
H

creating sets of measures for your strategic IT goals. Use the example scorecard “7.2
Balancing IT Measures” as the basis for your own scorecard.
C
R

Setting goals is critical for the on-going success of any IT department. However, according to
one TechRepublic Survey, 58 percent of IT managers either didn’t set goals or didn’t measure
A

their performance towards goals. To be a successful IT manager, you must set goals, measure
E

your performance towards these goals, and translate the goals into documents like budgets and
job descriptions.
S
E
R
H
C
T E
~
O
N F

The SMART technique for goal setting is fairly well known. While not all goals fit into the
I

SMART formula, it’s an excellent starting point that addresses the key characteristics most goals
should. Use these SMART criteria to help you establish departmental goals.

Specifi
pecific: The goal must be clear, understandable, and state the expected result. Give each goal
a clear start and end point, and limit your number of goals to four to seven. Focus is critical to
achievement.

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Stage 7> Build a Strategic Decision Making Framework

Measurable: The goal must stipulate quantitative and/or qualitative measures to help you
determine if the goal has been achieved. Build in milestones to help break goal achievement
into manageable tasks and help you identify problems earlier. Be sure to include goal review and
revision in your milestones.

Attainable: The goal should move you beyond your comfort zone into new growth areas, but
still be realistic and within your departmental or organizational capabilities.

Relevant: The goal must be clearly derived from, and harmonized with, organizational

P
strategic goals. Prioritize your goals against organizational objectives before creating plans for
accomplishing them. Plan execution of your highest ranked goal first – this way, you can ensure

G R O U
that sufficient resources are allocated to your most important target.

Timely: The goal must be tied to deadlines and put into a timetable in order to prevent delay of
activity. Remember that many IT projects can run well over a year in length, which effectively
overshoots most goal-setting timelines. Make sure senior management is committed to
supporting stated IT goals beyond the current year.

H
C
The Balanced Scorecard Beware of Goal-Setting

R
The Balanced Scorecard (BSC) combines traditional Pitfalls

A
financial measures with supplemental measures such
Knowing how to set SMART goals is only
as gauging innovation and customer satisfaction.

E
the first step. The goal-setting process
itself contains a few traps of its own. Here

S
Objectives and measures are set from four are some common pitfalls to avoid.
perspectives:

E
• Do not set goals for others. Much

R
1. Financial Perspective: Traditional financial of the work done in IT is in support
measures such as profitability, revenue, and of other departments. Know
sales growth. their business. Only set goals after

H
you have discussed priorities and

C
2. Customer Perspective: Customer implications with those that they
retention, customer satisfaction, and market affect, including your staff.

T E
research.
• Aiming for perfect goals can
3. Internal Business Processes Perspective: paralyze you. Not all goals can be

~
made specific, measurable, and time-
Processes instituted to meet or exceed
bound. Set your sights on being O
customer expectations. reasonable, not perfect.
N F

4. Learning and Innovation Perspective: • Remember that you can always


How the organization and its people grow make changes. In fact, changing,
and change to meet new challenges.
I

deleting, and adding elements to your


goals is often the responsible thing to
do. Relax.

• Avoid rigidity. Overly strict


adherence to goals can inhibit
adaptability and learning. Stay away
from goal attainment at the expense
of flexibility and growth.

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Strategic IT Planning and Governance

The balanced scorecard and sample measures provided in “7.2 Balancing IT Measures” are
derived from Measuring Performance and Demonstrating Results of Information Technology, an Executive
Guide of the Accounting and Information Management Division of the US General Accounting
Office. You can download the complete guide from:

http://www.gao.gov/special.pubs/ai98089.pdf

BSC and Strategic Planning.


P

Advocates of the BSC method agree that a BSC without a strategic planning vision is next to
G R O U

useless. For your BSC to have a hope of success, you should be able to answer in the affirmative
to the following questions.

1. Is there a strategic vision? A scorecard doesn’t provide you with a vision. If there is no
vision, there is no way to apply measures.

2. Does the scorecard have executive buy-in? Without buy-in on strategy and objectives you
H

can’t set measures that will have an impact.


C

3. Do your initiatives and measurements tie into your strategy? If initiatives and
R

measurements don’t link to strategy, you’ve expended resources on activities that won’t
contribute to the success of the organization as a whole.
A
E

Your vision has been created through an inclusive process, which has strong executive buy-
in, and business/IT alignment is a strong focus of your planning .If you have followed this
S

methodology so far, answering yes to the above should be a no-brainer.


E
R

Step 2 – Perform a Budget Analysis


H

Objective:
C
T E

• Analyze the budget implications of meeting strategic objectives.

What You Need To Do


~

ü Perform a high level analysis of the IT budget. Use “7.3 Budget Analysis
O

Worksheets” to review your current and projected budget.


N F

ü Summarize your budget. Use “7.4 Budget Summary” to summarize key points of your
budget that are germane to the strategic planning process. This information will go into
your Strategic Plan document.
I

Goal setting and measurement are only two steps of the cycle. The last step is budgeting future
performance levels. After you have gathered some actual information, budgeting for next year
becomes much easier.

Use the actual performance information you gather to help set your departmental budgets (both
capital and expense) for next year. Performing this analysis will give you insight into where the
money is going and where it may need to go in the future to support strategic initiatives.

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Stage 7> Build a Strategic Decision Making Framework

Showing that you have a realistic grasp of the mechanics of the IT budget will help you sell your
ideas for IT investment.

Step 3 – Identify Your Options


Objective:

P
• Identify strategic options and create business cases for each.

G R O U
• Recommend a set of projects for the coming year.

What You Need To Do


ü Identify your options. Begin identifying your options by taking a very high level
approach. Using your gap analysis from Stage 5, group together functions that you think
can be fulfilled by a specific IT project or investment. For example, you may be able to
group together a number of functions that relate to customer contact. These are likely to

H
be fulfilled by investing in a contact management application.

C
ü Analyze the options. Once you have listed a number of options for each possible

R
solution, take your understanding a step deeper by analyzing each of the options. Use “7.5

A
Analysis of Available Options” to review all available options.

E
ü Create a set of business cases. Use the “7.6 Business Case Template” to create

S
a business case for each project. Include financial information as part of your
recommendations. This cannot be emphasized enough since it is the one thing that

E
senior management looks to first, and the one thing that IT tends to overlook.

R
ü Make recommendations. Meet with your planning group and review the business cases.
Draft specific recommendations for inclusion in your group’s Strategic Plan document.

H
If you have been diligent in your option identification and analysis work, your final
recommendations should be clear, logical, and fit with your company’s overall business

C
strategy.

T E
As applications evolve, many of the lines of distinction between types of applications or
hardware solutions and their associated functionality are being blurred. Nonetheless, as the IT

~
manager, you will likely have a reasonably good sense of the types of high-level systems that you
will need. List all of the high-level systems that you will be evaluating. O
N F

Once you have done this, begin to identify at least three options for each. Do some research
and determine options and their respective vendors. You can probably begin by doing some
research on the Internet, but to get to the level of detail you require to make a final decision, you
I

will probably have to send out some Requests for Information (RFIs) or Requests for Proposal
(RFPs). Don’t exclude any option at this stage for financial or other reasons.

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Analyzing the Options Digging Deeper:


Once you have listed a number of options for each Vendor and Software
high-level system, take your understanding a step Selection Methodology
deeper by analyzing each of the options on the
following dimensions: Info-Tech’s in-depth vendor and
software selection methodology can
• Costs (hardware, software, outside services, help you dig deeper into the software
training, support) selection process.
P

• Time required to implement (i.e. duration of


G R O U

“Buying Right: Vendor and


the project) Software Selection” will help you
make the right choice by providing you
• Time required to maintain with a proven, best practice process
that will walk you through all of the
• IT resources required
issues you need to consider and the
• User resources required potential pitfalls you need to avoid.
H

• Benefits to your company This methodology provides you with


C

the means to focus your efforts on


R

• Reasons you might not want to go with this core organizational needs rather than
option (deterrents and risks) on the minor issues that can often
A

sidetrack this type of evaluation.


E

• Compatibility with existing systems


For more, go to www.infotech.com.
S

Create a Set of Business Cases


E
R

Use the information you just gathered to prepare a business case for making the suggested
changes. Management thinks in terms of costs, benefits and return on investment (ROI) – make
H

sure that your business case takes this into account.


C

For example, stating that:


T E

“We have to add extra RAM to 10


desktops because PCs they are slow at
~

running the new version of the customer


O

service application”
N F

is not as likely to get a positive response as saying that:

“By adding extra RAM to 10 desktops PCs, at a cost of $2,000, we estimate that
I

the help desk can handle 20 more customer service requests per hour, which will save an
estimated $20,000 per year in labor and phone costs.”

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Prepare a business case for each solution. In your business case, include the following
information:

• General description of the high-level system

• Identified options

• Benefits

• Costs

P
G R O U
• Risks

• Recommendation

Remember, these are going to be read by senior management. A good business case is no more than
two to three pages in length. Keep them clear and concise. You don’t need to include every detail
your research uncovered. Add value through your insight and analysis.

H
If management has asked you to include all of your background research, you should still

C
prepare an executive summary of your findings and include it at the beginning.

R
A
Make a Recommendation

E
Preparing a complete set of business cases gives you an objective way of analyzing the various

S
solutions available. Once you have prepared a business case for each solution, the final step is to

E
make some recommendations.

R
Make sure that your recommendations are clear and justifiable in language that a non-technical
person can understand. Any questions or concerns will be directed towards your decisions, not
your background research.

H
C
Remember, the objective here is not just to make recommendations – you have to sell your
recommendations to senior management. This is where the work you did on documenting and

T E
understanding your company’s business strategy will pay off by ensuring that your suggestions fit
with the overall goals of the company.

~
O
N F
I

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Step 4 – Prioritize Your Projects


Objective:

• Create a prioritized list of projects for inclusion in the annual strategic IT plan.

What You Need To Do


ü List all projects that are currently in progress. Refer to the work you did in Stage 3
P

documenting your current IT projects. Use “7.7 Comprehensive Project List” for this
G R O U

purpose.
ü Add to your Comprehensive Project List all of the possible projects that your
department can pursue in the upcoming year to the list. Do not exclude any
project for any reason. The Project Ranking Framework will take care of sorting out less
attractive projects.
ü Use “7.8 Info-Tech Project Ranking Framework” to analyze and sort your projects
H

into priority order.


C

• Use the “Info-Tech Project Matrix” to sort projects into four distinct groups: Pursue
R

Aggressively, Scale Down, Pursue Cautiously, and Terminate Immediately.


A

• Use the “Info-Tech Priority Index” to ensure that your projects are aligned with the
E

objectives of the business.


S

• Use the “Info-Tech ROI Calculator” to create comprehensive return on investment


E

criteria for each project.


R

ü Use “7.9 Prioritized List of Projects” to list your top ten projects in priority order as
established by Info-Tech’s Project Ranking Framework. This prioritized list is one of the
H

central components of the Strategic IT Plan that you will submit to management.
C
T E

1. Info-Tech Project Matrix


The first step in sorting your initiatives is fairly straightforward. Use the project matrix
~

below to sort your projects into four separate groups. Projects should then be carried
O

forward in their groupings and prioritized using the Info-Tech Priority Index.
N F

This framework shows the four generic strategies for IT projects: Pursue Aggressively, Scale
Down, Pursue Cautiously, and Terminate Immediately:
I

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Economic and Upside Potential


High
#3 #1
Pursue Pursue
Cautiously Aggressively
(EUP)

P
G R O U
#4 #2
Terminate Scale
Immediately Down
Low
Low High

H
Contribution to Core Business
(CCB)

C
R
For a more detailed definition of each quadrant of the project matrix see “7.8 Info-Tech

A
Project Ranking Framework” in the workbook. Once you have sorted your projects into the

E
four groups, take your prioritization a step further using the Info-Tech Priority Index.

S
E
2. Info-Tech Priority Index

R
Use the Info-Tech Priority Index to sort each group of projects. The Priority Index is a
simple, but effective, analytical tool you can use to help you prioritize your projects. Info-

H
Tech has assigned a suggested point rating to each factor, but these can be adjusted to reflect
your company’s objectives.

C
T E
Info-Tech Priority Index

Customer Value Proposition – CVP – (0 -15)

~
Viability Economic And Upside Potential – EUP – (0-25)
Industry Attractiveness – IA – (0-15) O
N F

Fit With Company Goals/Capabilities – CGC – (0-15)


“Fit”
Ease Of Implementation – EI – (0-15)
I

Possibility of Missing Schedule – PMC – (0-5)


Risk Risk of Cost Overrun – RCO – (0-5)
Technical Risk – TR – (0-5)
Total: Total out of 100

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For a detailed definition of each of the factors listed above, see the Priority Index in “7.8
Info-Tech Project Ranking Framework.” Assigning each project a rating out of 100 on the
Info-Tech Priority Index is the first step in creating a prioritized list of projects. Rate each
individual category separately.

To Complete Info-Tech’s Priority Index:

• List all of the possible projects down the left-hand column of the Info-Tech
Priority Index Template.
P

• Schedule a meeting and include all of the key stakeholders, including senior
G R O U

management.

• Hand out copies of the project list to each meeting participant.

• Ask them to assign rankings to each project under the criteria in the Priority
Index Template.
H

• Briefly explain each project and wait until everybody has finished assigning the
project a numeric ranking. By completing rankings together as a group, it allows
C

individuals to clarify any information they need to assign a ranking.


R

• Once you have assigned a ranking for each project, ask every attendee to submit
A

their completed Priority Index template to you.


E

• Depending on the number of projects on your list, you will want to tally and
S

average the scores after the meeting by inputting them into the spreadsheet
E

provided with this workbook.


R

• Once you have tabulated the scores, sort them in order of priority, with the
highest scoring project listed first.
H

• Distribute the prioritized list to all meeting attendees.


C

Completing the Info-Tech Priority Index has moved your highest priority projects to the
T E

top of the list. Before you finalize your list, take your analysis a step further by applying the
Info-Tech ROI (Return on Investment) Calculator to your top ten projects.
~
O

3. Info-Tech ROI Calculator


N F

The Info-Tech ROI Calculator will provide you with one last step of prioritization. It will
also force stakeholders to think through the project and identify potential risks.
I

Info-Tech’s ROI Calculator is an Excel spreadsheet and can be found the accompanying
CD-ROM with additional explanation found under Info-Tech ROI Calculator in “7.8 Info-
Tech Project Ranking Framework.” Use the spreadsheet to determine the ROI for each of
your top projects.

Input all of the necessary data for each of your top ten projects. Once you have inputted all
of the costs and benefits of each project, re-sort the projects based on the expected ROI of

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Stage 7> Build a Strategic Decision Making Framework

each project.

Your project with the highest return on investment should be the highest priority. Consider
eliminating projects that do not meet the “2:1” Rule of Thumb. If the benefits of your
proposed solution are not at least double the expected costs, then the project is not worth
doing.

Agility Tip: Show Your Work

P
G R O U
The tools in the Info-Tech Project Ranking Framework will help provide
you and your stakeholders a common language and touchstone for
prioritization.

If you don’t have time to work through the framework in a workgroup


setting, as suggested above, make sure to at least distribute the framework
to senior decision makers. Make sure they understand and approve of the

H
methods being employed and be prepared to show your work in justifying
prioritization decisions.

C
R
A
E
S
E
R
H
C
T E
~
O
N F
I

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Stage Summary: Build a Strategic Decision


Making Framework
This stage is critical because, in addition to analyzing and recommending specific projects for the
coming year, you and your governance group are establishing practices for how strategic level IT
projects will be measured and evaluated from now on.

The following chart shows the progress of developing the plan after Stage 7 of the engagement.
P

Status Stage
G R O U

Creation Of Steering Committee Done 1


Scope Definition of “Strategic” Done 1
Strategic IT Plan Kickoff Meeting Done 1
Preliminary Report With Goals and Timeline Done 1
Document corporate Vision, Mission and Strategic Goals Done 2
H

Analyze Core Competencies and Competitive Position Done 2


C

Current IT Organizational Structure. Done 3


Hardware and Software Inventory Done 3
R

Analysis of IT Trends Done 3


A

Review of IT Against Governance Maturity Model Done 4


E

IT SWOT Analysis Done 4


S

List of Proposed Future IT Directions Done 4


E

List of Requirements for Resolving Gaps (Roadmap) Done 5


R

Corporate IT Vision Statement Done 6


Corporate IT Governance Charter Done 6
H

Strategic IT Goals Done 7


Achievable Measures Done 7
C

Budget Analysis Done 7


T E

Prioritized Project List Done 7


Completed Strategic IT Plan Document 8
~

Comprehensive Strategic Planning PowerPoint 8


O

Strategic Planning Communication Plan 8


N F
I

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Stage 7> Build a Strategic Decision Making Framework

Background > Types of Goals IT


Should Set
Here are the five major types of goals you should consider setting. Each has different sub-types,
metrics, and management issues. Below we will discuss appropriate measures for each category.

P
• Financial • Customer Service

G R O U
• Organizational • IT Governance
• Technology Operations

Aligning IT and Business Goals


Financial IT goals and business goals must be continuously
aligned and realigned. This point should be

H
Enterprising IT managers will create and abundantly clear to you by now, based on the work
beat their own internal financial goals. you have completed. Below is a quick reiteration

C
Here are a few examples of the different of some of the key points you should remember to

R
sub-types of financial measures: ensure that your department’s goals fit squarely with
the overall direction of the company.

A
E
Budgeting 1. Make sure the business goals are clear.

S
Transferring high-level goals down to operational
There are two kinds of budgeting IT goals can be a lot like playing the children’s

E
IT managers perform: capital and game of whispering a message to the person
expenditure. Capital budgeting is for

R
sitting next to you in a circle (the message gets
projects and assets that will last over a long distorted). Get the latest information about
period of time, such as more than one business goals from business managers and ask if

H
year. IT managers can set budgetary goals you don’t understand something.
such as reducing the capital budget 25%,

C
reducing the toner cartridge budget 20%, 2. Communicate business goals to all IT staff.

T E
or reducing the total expense budget to After business goals have been finalized or
$1,000,000. changed, you need to communicate them to your
IT staff. Asking questions about the business

~
goals is a good way to test if the information
Purchasing has been communicated effectively. Remember O
that business goals don’t usually translate directly
N F

Purchasing involves selecting vendors into IT goals, but IT staff should keep this
information in mind when doing their jobs.
and products that meet corporate
requirements. Many vendors also require
I

long-term management and strategies (e.g. 3. Earn the trust of senior non-technical
Microsoft). IT managers can set a large management. This isn’t easy, but is critical for
variety of purchasing-related goals, such the success of projects that span multiple years
(e.g. e-commerce) and high-profile projects (e.g.
as reducing the number of PC suppliers
management reporting). Trust can’t be won
immediately, but must be built up over a period
of time. This methodology is an important step
in that process.

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Strategic IT Planning and Governance

from five to one, increasing the dollar amount of purchases from a strategic vendor by $500,000,
reducing total purchasing expense by 10%, and so on.

Total Cost of Ownership (TCO)


Total cost of ownership (TCO) is a measurement of all the costs of purchasing and using a technology.
These costs include both direct (e.g. the purchase price) and indirect (e.g. other system resources that
P

will be used). TCO is a major issue for IT managers, especially in the current environment of cost
cutting and budget control. You can set TCO goals such as reducing you network TCO to $25 per user,
G R O U

or reducing overall TCO by 10%.

Organizational Goals
In addition to financial goals, companies can set organizational goals for their IT department.
H

Organizational goals relate to the people working in the IT department and how they work.
Here are some examples of organizational goals:
C
R

Staffing
A
E

When more than a few people are in an IT department, its manager must create an
organizational structure with specific roles and responsibilities. As companies grow, you can
S

see where new staff will be needed in the future and plan for the changes necessary in the
E

organizational structure. For example, your company may be integrating systems with dozens
R

of new customers, which is increasing the demands for customer system support. You can set a
staffing goal of having three full-time people to handle all your customers’ system issues at the
end of December. You can also set a goal of creating a new department for customer system
H

support at the same time.


C

Another staffing goal you can set is related to productivity. If some of your current staff is
T E

under-worked, you can assign more work to increase productivity. If you measure their output
(e.g. lines of code, number of hours worked) before this change, (e.g. 100 lines of code per
week, 30 hours worked per week), you can set a productivity improvement goal (e.g. 200 lines
~

of code per week, 40 hours worked per week). Similarly, if you have staff not working as hard
O

as you think they should, you can measure their output and set productivity improvement goals.
Remember to agree on the consequences of not meeting the goals with your staff before starting
N F

to measure performance.
I

Training
Because technology changes so quickly, skills become obsolete very rapidly. Keeping IT
staff current with the latest technologies is a necessary investment to keep your technology
functioning optimally. However, training also costs money, and financial budgets need to be set.

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You can set training goals of having all your Windows NT 4.0 certified staff upgrade their
certification to Windows XP certification by June 30, or reducing the training budget from
$10,000 to $8,000.

Management/Reviews
Having subordinates means that you must review their performance and manage them through
problems. Although many large organizations require semi-annual or annual performance

P
reviews of all employees, smaller companies often don’t have these requirements. You can set
management and review goals for doing performance reviews for all your employees by the end

G R O U
of the current quarter.

In addition, you can set management goals for coaching employees with poor reviews. An
example of this type of goal would be to improve a specific employee’s evaluation from “Poor”
to “Good” by the next review through coaching.

H
Technical Skills Inventory

C
In larger organizations, the IT manager often doesn’t know every member of the department

R
personally or what their skills are. These companies make inventories of their employees’ skills

A
to match their skills with the projects they have to do. For example, you can set a technical skills
inventory goal of creating the inventory by December 31, or adding “years of experience” to the

E
database by the end of April.

S
E
Application Development Productivity

R
Programming output is a very difficult activity to measure, but managing this is critical to
the success of your IT organization and the overall company. You can set an application

H
development productivity goal of 1000 lines of code per quarter per employee, or no more than

C
10% of the initial programming time spent on debugging afterwards.

T E
Efficiency and Effectiveness

~
Efficiency and effectiveness are related concepts that are critically important to any activity.
Efficiency measures whether you are doing things right, and effectiveness measures whether you O
are doing the right things.
N F

Efficiency in the IT department can be measured by taking outputs (e.g. business value created)
I

and comparing them to inputs (e.g. total departmental costs) over time. You can set a goal of
improving the ratio of business value to IT department costs by 10%.

Effectiveness in the IT department can be measured by surveying users to determine how


satisfied they are with the IT department’s work. You can set a goal of an average customer
satisfaction rating of 4 out of 5 (where 5 is high) and measure performance towards that goal by
surveying users.

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Strategic IT Planning and Governance

Technology Operations
On-going operations may appear routine and boring to users and support staff, but measuring
their performance is critical to managing the trade-off between costs and user satisfaction.
There are several sub-types of technology operations goals you can set:

Help Desk
P

Most IT professionals and users are familiar with help desk operations. However, many IT
G R O U

departments do not measure help desk performance on attributes like average response time,
percent of issues resolved, customer satisfaction, and so on. You can set goals for each of these
metrics and offer performance guarantees (e.g. support staff will respond to each inquiry in 30
minutes, 95% of issues will be resolved 30 days after the initial logging of the request, and users
will have an average satisfaction rating of 4.5 out of 5).

Uptime
H
C

Uptime is a more technical measurement of


Service Level Agreements
R

IT operations, but is still critical to many users.


Certain users require a great deal of system (SLAs)
A

uptime (e.g. order entry), while others don’t


E

require as much (e.g. building maintenance). Service level agreements are critically important
to managing external service providers, but are
S

You can set uptime goals for the overall becoming more important at managing internal
E

company and/or specific departments and services. For example, you can set internal
applications (e.g. the order entry application will SLA goals for responding to all help desk
R

be available 95% of the time Monday to Friday inquiries within 30 minutes, and providing 99%
uptime to all network users.
8:00 – 6:00). You can also set uptime goals for
H

specific days and times (e.g. during month-end,


all financial systems will be up 99% of the time,
C

and support staff will be available 24-7).


T E

Security
~
O

Security goals are critical to protecting the company’s reputation and assets. Security goals can
include having all extra-company data communications encrypted with 128-bit encryption, and
N F

having virus definitions updated every day instead of every week.


I

Disaster Planning/Business Continuity Planning


Business continuity planning is a critical issue for senior management today. IT managers need
to be able to offer business continuity solutions that will let the company operate normally or
almost normally very quickly. IT managers can set goals for business continuity planning of
having real-time data available in the off-site location, or being able to restart operations in 24
hours after a major disaster.

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Asset Management
As IT becomes a more critical component of the organization, managing IT assets is becoming
a strategic imperative for IT managers. For example, you can set asset management goals for
doing your first asset inventory by the end of December, or auditing all PC assets by the end of
June.

Policies

P
G R O U
Users can do serious damage to systems in a variety of ways (e.g. hogging bandwidth with
streaming media, spreading viruses). To prevent this, IT managers must make all users sign
policies that describe what behavior is acceptable, what behavior is not acceptable, and what the
consequences are for unacceptable behavior.

IT managers can set goals for getting users to sign existing policies (e.g. Internet use, e-mail use)
or for writing new policies (e.g. handheld devices, wireless networking). For example, you can set
a goal of getting everyone in the company to sign the Internet use policy by March 31, getting

H
all new employees to sign all computer policies, or writing and distributing a wireless networking

C
policy by September 30.

R
A
Customer Service Goals

E
S
Customer service goals are very important because your users have more day-to-day awareness

E
of them relative to other goals. Here are some customer service goals:

R
User Services/Levels of Service

H
Many new services are possible with new technologies (e.g. Active Directory). You can set goals

C
to deploy new services to your users (e.g. Active Directory to every sales employee) or higher
levels of existing service to your users (e.g. higher bandwidth VPN access).

T E
Customer Satisfaction
~
O
Customer satisfaction is probably the most important measurement of how good a job you’re
N F
doing. Measuring customer satisfaction can be done informally by asking users what they think
of your service or formally through surveys.
I

You can set customer satisfaction goals of having certain performance ratings (e.g. 4.5 out of
5) or improving existing poor performance (e.g. improving the 2 out of 5 rating in the shipping
department to 4 out of 5 by August).

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Strategic IT Planning and Governance

IT Governance Goals
IT governance refers to the high-level strategies and practices of IT management. Here are
some sub-goals you can make in the IT governance category:

Project Approval Method/Process


If you don’t have a standard methodology or tools for approving projects, you can set a goal of
P

making one. You can also set a goal of creating standard tools for aiding this process.
G R O U

Business/IT Alignment
Aligning IT with business goals is a critical issue for both business and IT managers. Measuring
alignment can be difficult, but surveys of business and IT managers can be used to determine
how aligned you are today and to set targets for future alignment.
H
C

Environmental Scanning
R

One of the most critical activities an IT manager performs is scanning the environment for
A

critical technologies and issues that may affect the company in the future. You can set goals for
E

how much time you spend scanning, which technologies you want to spend extra time scanning,
or what you want to do with what you learn from scanning the environment.
S
E

Business Partnership
R

As business requirements change, you may need to develop expertise in a specific technology
H

that is not yet mature. This will require a business partnership with vendor(s) to ensure that the
technology meets your requirements today and in the future. You can set goals for what features
C

you need to develop from this business partnership, or when and how you want to end such a
T E

partnership.

Top Management Commitment


~
O

In many companies, senior management doesn’t understand and is not committed to using IT
N F

for competitive advantage. You can set goals to improve senior management’s understanding
and/or increase their commitment to IT (e.g. get the VP of marketing to sponsor a CRM project
by December 31).
I

Project Portfolio Management


As you start to run many IT projects at the same time, you need to manage them as a portfolio.
Portfolio management means that you calculate business value for each project and determine
which projects to undertake based on the amount of business value they will generate.

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Outsourcing/Insourcing Measuring the Success of


IT departments need to outsource many routine Your Goals
and non-strategic activities (e.g. help desk
Once you have created goals, you need to
support). However, IT departments sometimes
measure your actual performance towards them.
also need to develop new competencies in new This requires establishing specific numeric
technologies (e.g. Java). IT managers can set metrics. Tracking actual performance lets you
goals for both outsourcing (e.g. all five locations do several important tasks:
will have outsourced help desk support by

P
December 31) and insourcing (e.g. by December • Create and modify specific service level

G R O U
31 the company will have hired five Java agreements (SLAs) as you learn more about
programmers and written 1,000 lines of Java what different customers want.
code).
• Conduct performance reviews of IT staff
based on the goals you set.

Getting Buy-In for Your • Change job descriptions of IT staff to


match IT department goals and influence

H
Goals behavior.

C
Before you assign goals to employees, you need • Publicize what a great job you’re doing with

R
to make sure they agree and are committed to the specific data you gather.

A
them. Otherwise, they will feel excluded from
the goal-setting process and work to sabotage the results. Here’s how to get buy-in for your

E
goals:

S
1. Involve employees in selecting measurements and quantifiable performance

E
levels. This should be a negotiation instead of you imposing expectations on them.

R
2. Map the performance expectations to their job descriptions. This will give them a
greater sense of responsibility and ownership in the outcome.

H
3. Get the employees to measure and track the results themselves. This increases

C
their ownership and lets them take corrective action as quickly as possible.

T E
4. Evaluate employees based on the goals you have agreed to. You should also ask
how the performance level goals can be improved and set the goals higher each review.

~
O
N F
I

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Using Your Budget as a Management Tool


Management Application Management Benefit

Decision makers are forced to think through activities in


Planning
detail.
Information on projected expenses helps to assess
Risk Management
feasibility and risk, and secure resources in advance.
P

Working collaboratively to prioritize expenditures helps gain


Commitment
G R O U

buy in from all staff.


The budget can be used as a living prioritization document
Control that differentiates between essential and non-essential
activities.
Compensation and performance reviews can be tied to
Performance Evaluation
hitting budget targets.
H

Use the budget analysis tools in your workbook to help you identify potential line items on your
IT department budget. Next, use this plan to help you turn your budget into a useful decision-
C

making document.
R

• Look at Last Year. Last year’s final operating budget is your best “reality check” on
A

actual costs. However, avoid making your budget a mere extrapolation of the past - new
E

anticipated projects will have a big impact on your final numbers.


S

• Involve Others. Getting your decision-making staff on board with the budgeting
E

process and helping them understand that the budget will be used as a measurement tool
R

will ensure their commitment. Lay your assumptions on the table to ensure everyone is
on the same page.
H

• Talk to the Right People. HR and finance will be able to provide you with some
valuable information to help ensure accuracy. HR will be able to provide accurate
C

headcounts, benefits figures, and predict salary increases, whereas finance can help
T E

predict the impact of seasonal variations on income.

• Identify Your Variables. The cost of some factors is hard to predict. Know your
~

variables and draft several advance budgets (“flexible budgets”) that account for
O

potential variances. See if you can gain permission to include a contingency budget - a
specific percentage of your total budget - for covering cost variances in “iffy” areas.
N F

• Look Into “Rolling Budgets.” Rolling budgets work by adding an additional quarter
to the end of the budget as the current quarter ends. This forces you to think long term,
I

revisit your plan four times a year, and continually revise your projections. This method
keeps your budget current and accurate, which is better for forecasting.

• Prepare Quarterly Reports. Every three months, compare how well your department
is faring against budget predictions. Prepare a report and share it with your staff. Identify
and investigate what are causing deviations from the budget and take action to either
rectify or justify the differences.

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Stage 7> Build a Strategic Decision Making Framework

Dealing with Budget Cuts


Before your CEO demands a 10% cut to your IT spending, build flexibility into your budget
today. The downturn in the U.S. economy makes this the smartest pre-emptive move you’ve ever
made.

Why IT Gets Cut

P
IT is often the first to get slashed when an organization is facing a financial squeeze because

G R O U
those in IT have traditionally done a mediocre job of linking IT performance with company
business objectives.

META Group states that 80% of Global 2000 enterprises have failed in merging their IT
and business strategy. Only 20% will succeed in creating a unified business/IT strategy and
establishing an architecture process that addresses the enterprise’s key business goals. What
should you do?

H
• Be Prepared. Make it a practice to tie IT performance with business performance

C
measures like return on investment, return on equity, return on assets, and profit per

R
employee. Show through the numbers that IT is not just a cost center.

A
If a budget cut is necessary in your organization, use these key methods to “trim the

E
fat.” Also, integrate these methods into your IT department culture so that future
cutbacks won’t cause insomnia.

S
E
• Budget Comprehension. Make it your practice to understand the economic returns
for the company on each line item within the budget. This knowledge will allow you

R
to foresee what would take place if a particular line item were trimmed down or cut
completely. This allows you to prioritize projects and protect those of high priority.

H
• Utilize Methodology. Make it a practice in your IT department to identify the target

C
line item for budgetary reductions. Then ask your employees to consider ways in which

T E
to maintain the business benefit of the line item while cutting costs simultaneously. This
push toward creative thinking will have big results.

~
• The Best Defense is a Good Offense. Building flexibility into your IT budget is
key. This way, you won’t be sorry when your CEO asks you to cut your budget by “X- O
percent.”
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Strategic IT Planning and Governance
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G R O U
H
C
R
A
E
S
E
R
H
C
T E
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N F
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Stage 8> Publish, Promote, and Maintain Your Strategy

Stage 8> Publish, Stage


Promote, and Maintain
Your Strategy 8

P
Congratulations. You have completed the work of creating a Strategic IT Plan for your

G R O U
organization. Now you need to pull everything together, seek formal approval, and get the ball
rolling. In this stage we outline what you need to do to formally launch your Strategic IT plan. As
with much in the realm of strategic planning, communication is the key.

Step 1 – Build Your Strategic Plan Documentation

H
Use the Strategic IT Plan template to bring together all of the elements you have created in this
process into one concise plan that can be recommended to senior management. We also have a

C
template that you can use to create a comprehensive strategic plan presentation.

R
A
Step 2 – Present Your Plan to Senior Management

E
Present the plan to Senior Management and require its official approval. Executive sponsorship is

S
critical for any strategic initiative to succeed.

E
R
Step 3 – Communicate and Manage Change

H
If your planning process has been open and broadly-based, the completed plan should not be a
surprise to anybody. However, it is still important to develop a communications plan to ensure

C
that all stakeholders are fully aware of the plan’s contents and implications. You also need to

T E
consider the organizational impact of your initiative.

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N F
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Strategic IT Planning and Governance

In This Stage

Stage 8> Publish, Promote, and Maintain Your Strategy............................. 135

Step 1 – Build Your Strategic Plan Documentation ............................... 137


Step 2 – Present Your Plan to Senior Management.............................. 138
Step 3 – Communicate and Manage Change ....................................... 139
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G R O U

Stage Summary..................................................................................... 141


Background> A Guide to Killer Boardroom Presentations........................... 142
Guide to developing a communications plan......................................... 143
Design the Roll-Out Plan ....................................................................... 146
The Rollercoaster of Change................................................................. 147
H

Adjusting Your Current Organizational Structure................................... 149


C

Tips For Ongoing IT Strategic Governance........................................... 150


R
A
E
S

Workbook
E

Stage 8> Publish, Promote, and Maintain Your Strategy............................. 185


R

8.1 Notes for the Strategic IT Plan Template......................................... 187


H

8.2 Notes for PowerPoint Slide Presentation ........................................ 190


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8.3 Communications Plan Template ...................................................... 192


T E
~

Agility Tips
O

The end of this strategic planning methodology is not the creation


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of a strategic plan document. The end of this methodology should be


the creation of a permanent strategic planning process that includes a
governance model and an overall goal of business/IT alignment.
I

Review your progress. If your proudest achievement is a nice looking


plan document, but you still feel that the executive and IT can’t talk about
strategy, you still have work to do.

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Stage 8> Publish, Promote, and Maintain Your Strategy

Step 1 – Build Your Strategic Plan


Documentation
Objectives:

• Create a formal strategic plan document.

• Create a master strategic planning PowerPoint presentation.

P
What You Need To Do

G R O U
ü Assemble your strategic plan document. Open “8.1a IT Strategic Plan Template”.
Most of the content for the plan should now be in your workbook. “8.1 Notes for the
Strategic IT Plan Template” indicates which workbook content should be incorporated
into the plan.
ü Circulate a draft of the plan to your planning group. If your process has been
inclusive, there will be few surprises in the content of the plan for your planning group.

H
However, it is still important to have unanimous approval of the document before it is

C
presented to senior executives and the stakeholder community.

R
ü Create a master strategic plan PowerPoint presentation. “8.2 Notes for PowerPoint
Slide Presentation” provides you with notes for incorporating your SITP workbook

A
content into a comprehensive presentation. The file contains a link to the shell

E
PowerPoint presentation “8.2a Slides to Present Your Strategic IT Plan.”

S
A formal plan provides a tangible object that you can bring to senior management for approval

E
and adoption of:

R
• The strategic IT planning procedures that you and your planning group have established
including the steering committee and the prioritization matrix.

H
• An initial set of prioritized projects that have been identified as providing the greatest

C
strategic value to the organization.

T E
Much of the content of your strategic plan can be derived from the workbook tools you have
already completed. The final step of the plan creation process is, paradoxically, to write the first

~
page – the “Executive Summary” (also called a Management Overview) section of the template.
This is a succinct summary of your entire plan with specific focus on changes or projects O
proposed, costs involved, and expected timelines.
N F

The Executive Summary is the single most important section of your plan and, in many cases, it
is the only section that management will actually read. Your Executive Summary should be one
I

to three pages long and should persuade management that your suggested plan is the best course
of action for your company.

Once you have completed the Executive Summary, your Strategic IT Plan is complete and ready
to be proofread. Treat your plan as carefully as you would a resume to a prospective employer.
Spelling mistakes, grammatical errors and poorly structured ideas can seriously impact your
credibility and diminish the likelihood that management will approve, let alone champion,
your projects.

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Strategic IT Planning and Governance

Have a draft of the plan reviewed and approved by your planning group. Invite them to critique
it and make suggestions for improvement. Make sure that you give them at least a week before
you need to create a final draft.

The PowerPoint Presentations


In addition to the strategic plan template document in Microsoft Word, we also provide you with
two PowerPoint presentations.
P

• The first is an empty template called “8.2a Slides to Present Your Strategic IT Plan” that
G R O U

you can fill out with highlights of your plan.

• The second – “1.8 Convergence of Technology and Core Business Strategy” – is more
focused on educating your audience about the reasons that you have completed a
strategic plan for the IT department.

These presentations will provide valuable backup material for communicating your strategic
H

IT plans and processes, whether it is to senior executives, other managers, or line workers. Use
either or both, depending on your objective. You may also want to cut and paste slides from one
C

into the other to create your own presentation.


R

In the workbook section “8.1 Notes for the Strategic IT Plan Template” you will find detailed
A

notes suggesting how to use your workbook content to populate the slides in “Slides to Present
E

Your Strategic IT Plan.”


S
E

Step 2 – Present Your Plan to Senior


R

Management
H

Objective:
C

• Win formal approval of the Strategic IT Plan and its recommendations.


T E

What You Need To Do


~

ü Send out the final version of your plan ahead of time to everybody you have
O

invited to the presentation. Since your document is probably fairly lengthy by now,
highlight specific areas that they should focus on in case they do not have time to read the
N F

whole document. Make sure that you make the time and date of your presentation clear
and confirm who will be attending ahead of time.
I

ü Keep your presentation short and punchy (one hour or less) and leave a lot of time
for questions. Remember that your audience is probably not very technically oriented,
so don’t alienate and bore them by using techno-babble. They will want to talk in terms
of costs and benefits, so make sure that you have these figures handy for every single
aspect of your plan.
ü Wrap up with approval and next steps. Make sure to conclude your presentation by
asking for formal approval of the plan. Outline what will happen next.

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Stage 8> Publish, Promote, and Maintain Your Strategy

All the work you have done thus far is not worth much if you do not communicate and sell your
plan to senior management. For your plan to be truly successful, you need senior management
to approve and champion it. Many well-conceived IT initiatives have failed because they did not
have executive sponsorship and support.

Your understanding of your company’s business objectives and your ability to demonstrate the
ways in which your plan supports those objectives is essential in gaining support from senior
management.

P
G R O U
Step 3 – Communicate and Manage Change
Objectives:

• Communicate the plan to the broader community.

• Prepare for change management.

H
• Establish long term goals for Governance.

C
R
What You Need To Do

A
ü Develop a formal communication plan for the SITP. Use “8.3 Communications Plan
Template” to devise a communication strategy to promote the goals and objectives of

E
your strategic IT plan. The plan should clearly indicate actions that need to be taken by

S
you and others to promote and raise awareness of the plan.

E
ü Prepare to manage change. It isn’t enough just to inform people of impending change.

R
Plan to mitigate the impact that strategic projects may have on your staff.
ü Establish a timetable for change. Make sure your strategic planning effort does not

H
become an historical footnote. In addition to project milestones, make sure there is a
timetable in place to review the plan and develop annual revisions/additions to the plan.

C
T E
Creating a Strategic IT Plan has limited value if you do not communicate the end result to others.
Although this is perhaps the most important section of this entire document, it is the one that
most IT professionals overlook, for a variety of reasons.

To some, communicating with others is something they do not feel they are particularly good at. ~
O
To others, laying out a plan with milestones is done only when requested, and given to only those
N F

who request it. Do not fall into any trap that prevents you from communicating your plan with
as many people as possible.
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This should be the most enjoyable part of completing a strategic plan for IT. It is your
opportunity to get others excited about the opportunities that technology can create for your
company.

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Strategic IT Planning and Governance

Establish a Formal Change Management Process


Follow these steps to manage your process of change:

1. Define the Project Adequately: Clearly defining the project being pursued will help
sharpen the vision. Nebulous or overly broad problem statements are harder to work
with than more direct statements. Break the problem down into bite-sized portions.

2. Make the Intended Outcome Clear: The goals of the anticipated change should be
P

made clear to all those affected by the change. Focus on measurable value that is highly
visible.
G R O U

3. Prioritize Multiple Improvements: Often there is more than one change opportunity
in play. Determine which of these to pursue at which time, and then stick with your
priority. Consider building a prioritization matrix that measures each opportunity against
established criteria.

4. Determine Costs, Feasibility and Benefits: To help calculate the possible costs and
H

benefits of the change, brainstorm how the process will look in its new and improved
C

state. Consider all users of the process and how their interactions will change. The new
process may mean less waiting time for client support, fewer people behind the scenes,
R

or less paperwork. Market these benefits to the user community.


A

5. Assess Your Training Needs: Training is essential when changing a process. Do a


E

training assessment in conjunction with the Human Resources department, especially if


S

the change requires new skills or competencies. Coordinate to ensure the right people
receive the right training at the right time to maximize positive effects.
E
R

6. Construct a Timeline: Once you know what needs to happen, the next decision is
when it will happen. Develop an implementation timeline that incorporates major
milestones and actions for approvals, budgets, and resource requirements. Identify which
H

actions may be taken concurrently and which are dependent on other elements. Clearly
C

identify on the timeline all items that can halt the progression of the plan.
T E
~
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Stage 8> Publish, Promote, and Maintain Your Strategy

Stage Summary: Publish, Promote, and Maintain


Your Strategy
By following this process you have established a framework for formulating IT strategy and
making strategy level decisions about IT for your organization. In this final stage you have put
together plans and materials that will help you communicate this process and the value it will
create to the organization as a whole.

P
The following chart shows the progress of developing the plan after Stage 8 of the engagement.

G R O U
Status Stage
Creation Of Steering Committee Done 1
Scope Definition of “Strategic” Done 1
Strategic IT Plan Kickoff Meeting Done 1
Preliminary Report With Goals and Timeline Done 1

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Document corporate Vision, Mission and Strategic Goals Done 2
Analyze Core Competencies and Competitive Position Done 2

C
Current IT Organizational Structure. Done 3

R
Hardware and Software Inventory Done 3

A
Analysis of IT Trends Done 3

E
Review of IT Against Governance Maturity Model Done 4

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IT SWOT Analysis Done 4

E
List of Proposed Future IT Directions Done 4
List of Requirements for Resolving Gaps (Roadmap) Done 5

R
Corporate IT Vision Statement Done 6
Corporate IT Governance Charter Done 6

H
Strategic IT Goals Done 7

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Achievable Measures Done 7

T E
Budget Analysis Done 7
Prioritized Project List Done 7

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Completed Strategic IT Plan Document Done 8
Comprehensive Strategic Planning PowerPoint Done 8 O
Strategic Planning Communication Plan Done 8
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Strategic IT Planning and Governance

Background> A Guide to Killer


Boardroom Presentations
Giving a presentation on the best of days is a nerve-wracking experience, but confronting a team
of cynical executives is the ultimate presentation stress test. Use these tips to help you master the
art of boardroom presentations.
P
G R O U

Presentation Best Practices:


1. Plan Your Time: Allot one minute
per slide, and two minutes for those Tips for Building
with graphs, charts, or tables that Blockbuster Presentations
require explanation. When planning
your presentation, follow this time With Microsoft PowerPoint, a laptop computer,
H

management rule of thumb: and an LCD projector anybody can put together
an effective presentation. When the CEO
C

• To decide on the total number of invites you to make a presentation to the senior
management group, you need to knock, not
R

slides you should have, take the


bore, their socks off. Here are some tips to help
total time allowed, subtract 10% of
A

make your presentations sing.


that time, and round down to the
E

nearest five. • Organize Your Information. You


S

should be able to state the goal of your


• For example, you have 30 minutes presentation in fifteen words or less.
E

to present. Subtract three (10%) Consider not only the information you
from 30 to get 27, and round down
R

must present, but also the questions that


to 25. This means that you should you are likely to be asked. Presentation
have no more than 25 slides for a technology won’t save poorly organized
H

30-minute presentation. material.


C

2. Maintain Readability: Projections • Use Slides to Hammer Home Key


Points. The most boring presentations
T E

aren’t as clear as on-screen visuals.


feature a speaker reading the content of his
or her own slides to the audience. Speak to
• Use Arial or Times New Roman
the audience and have the slides support,
~

fonts only and a minimum 18-


not repeat, your words.
point size.
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• Balance Words with Images. Wordy


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• Master the 5x5 rule - no more than slides are dull and distracting. Use
five lines per slide and five words short bulleted information nuggets
per line. complemented by photos and graphics.
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Limit yourself to 20 words per slide.


• Stay within your presentation
software’s default title and text
blocks.

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Stage 8> Publish, Promote, and Maintain Your Strategy

3. Don’t Use Technology Just Because You Can: Technology cannot replace creativity.
Other media – such as handouts – are sometimes more appropriate, especially for
detailed or complex visuals. If you do present an electronic slide show, always have print
copies of it available (note: conserve paper by printing multiple slides per page).

4. Bring Two of Everything: Assume that your technology will fail. Double or triple
up. For starters, bring an extra laptop, modem, cables, and backup copies of your
presentation saved to CD-ROM (floppies are not reliable enough).

P
5. Avoid Real-Time Visits to the Internet: The risk of technology failure is too high.
Instead, store a copy of the site on your hard drive and use your browser to open the

G R O U
file.

6. Hone Your Style: The only way to improve is to practice, practice, and practice.

• Focus on perfecting the first 30 seconds and last 15 seconds of your presentation.
These moments are where lasting impressions are made.

H
• Practice holding eye contact with individual audience members for upward of five
seconds. Quick left to right scanning of the audience is less likely to engage them.

C
R
• Finish early. Be brief and candid. This shows respect for your audience’s time.

A
In the boardroom, your budget and your reputation are on the line. Developing your

E
presentation skills is an important way to get your voice heard in your organization.

S
E
Guide to Developing a Communications Plan

R
Face it: communications skills are not among the many abilities for which information

H
technology (IT) professionals are known. IT professionals pride themselves on being doers, not
talkers. But a “do first, explain later”, attitude can doom a project as surely as faulty technology.

C
T E
IT is central to business processes and organizational goals. To move your projects ahead you
must be able to build consensus and develop relationships whether it be with other business
units within the organization or with a client base. You must be able to communicate what you

~
are doing and why it matters to them.
O
This brief guide will walk you through the creation of a communications plan. We have attached
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a downloadable template document that you can use to create your own planning documents.

Your organization may be large enough to employ professional communications staff.


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Remember, their job is not to communicate on your behalf; it is to help you communicate. Use
this guide to evaluate their services. Are they asking the right questions?

When Do I Need a Communications Plan?


It should only take a few hours to draft a communications plan. You have to ask yourself
whether the issue that needs communicating is worth the time investment. Here are just some
possible initiatives that might warrant a communications plan.

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Strategic IT Planning and Governance

• Major Software/Service Roll-out. To maximize awareness and acceptance of a new


application or service. “Build it and they will come” is not enough.

• Department/Organization Wide Desktop Upgrade. Do some advance legwork to


help clients see the value of a change to their desktop workstation. This should reduce
service-calls after the fact.

• New Policy Initiatives. Communication is crucial to encouraging compliance with


policy such as a new security policy or a disaster recovery plan.
P

• Introduction of New Communications Vehicle. A new communication vehicle


G R O U

– such as a newsletter, regular e-mail, or intranet page – should itself be given maximum
introductory exposure to encourage its use.

It is also important to note that if you have a range of existing communications vehicles, this
does not mean you don’t need to do communications plans. A newsletter or a Web site is only a
tool; you need to plan how to make effective use of that tool. Saying “we’ll put something in the
newsletter or on the Web site” is not enough. A communication plan will help you identify the
H

how, when, what, and why of using these media.


C
R

Key Point: Start With the Audience


A

A key failing of many communications initiatives is that they begin with output products – such
E

as a distributed e-mail, a newsletter, or a memo – without appropriate consideration of the


S

audience or what you would like that audience to do. If you have ever been in a meeting where
somebody said, “We should have a newsletter” or “Let’s e-mail everybody about it” then you
E

have witnessed this thinking.


R

Before you commit anything to paper, it is a good idea to sit down with those involved in a
particular project and brainstorm about your audience. Consider these questions:
H


C

Who is our audience? This seems like a “no-brainer”, but it can be more complicated
than you think. If a newsletter is being done solely to “make the head office happy”
T E

then the audience is the head office, not the people reading the newsletter. Does your
audience read newsletters or do they line budgie cages with them? Do they read and
respond to e-mail? Do they use the Internet/Intranet?
~
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• What do we want our audience to know? Information Technology is complex;


however you should be able to state the benefits of a particular technology in simple
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terms. Focus on creating a list of key messages. If you can’t put what it is you want to
communicate into three or four simple bullet points, your communication effort is in
serious trouble.
I

• What do we want our audience to do? The best communication plans encourage an
action on the part of the audience. During Y2K initiatives, for example, communication
of Y2K issues to clients was part and parcel of encouraging due diligence steps
that needed to be taken. The action encouraged by your plans might be as simple as
attending an open meeting or going to a Web page for more on a new application.

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Stage 8> Publish, Promote, and Maintain Your Strategy

The considerations prompted by the above questions should be interlocking. For example,
the nature of your audience and how they receive information will guide your choice of
communications vehicle. Your key messages will provide the “why” for what you want that
audience to do.

Anatomy of a Communications Plan


Your communications plan will lay out how key considerations – such as audience, message,

P
and action – fit together and with other considerations such as budget and timeline. The
goal is to have a simple, one or two page document that lays out your plan to achieve clear

G R O U
communications goals.

Here then are the components of your communications plan and what each of them means:

• Overall Goal(s): Begin with a statement of what you hope to achieve with this
communications effort. In essence you are stating your conclusion first. This should be a
brief statement, no more than one short paragraph.

H
• Objectives: Break down your overall goal into two or three discrete objectives.

C
R
• Key Messages: This is where you list the gist of what you want to communicate. You
should be able to boil down your messages into two or three bullet points.

A
E
• Potential Barriers: You know whom your audience is and what you want to say to
them. Now ask what possible barriers stand between your message and your audience.

S
Be realistic; ask yourself why they should care about your message.

E
• Suggested Actions: Now comes the fun part. Given all of the possible barriers that

R
may exist, what are the best ways of carrying your message to your audience to help
you move them toward a particular goal? This part lends itself well to a brainstorming

H
session: start with all the options regardless of how unusual or expensive.

C
• Budget: Time for a reality check. If you are going to produce anything on paper, make

T E
sure you consider the cost of production and distribution. Consider the costs that will
be incurred if you outsource the job in whole or in part. Time is also a resource that
should be budgeted.

• Timeline: By this point you should have a short list of actions that are “do-able”. Now ~
O
it’s important to plot out a timeline for the proposed actions to take place. Take care to
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consider maximum impact for each action and a mutually supportive timetable.

• Roles and Accountability: Many an exciting communications plan has died because of
I

inadequate follow through. Your plan should be clear about who will be responsible for
various actions and who will make sure the timeline is met.

• Post Mortem: A firm date should be set for reviewing whether or not the timeline was
met and what impact the communication plan had.

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Strategic IT Planning and Governance

Design the Roll-Out Plan


Control is an essential part of any project roll out. Make sure your project plans have the
following components to ensure you’re controlling it instead of the other way around:

1. Team Management: The project managers need to develop skills that create an
efficient production system and a cooperative and effective team culture.

2. Communication Management: This enables interaction between project teams,


P

stakeholders, clients and senior management.


G R O U

3. Risk Management: This includes strategies and tactics used to identify, avoid and
control project risks.

4. Quality Management: Activities and techniques used to ensure that all project activities
and work products comply with all relevant standards, procedures and requirements.

5. Time Management: This includes processes and techniques used to ensure the timely
H

completion of each project.


C

6. Cost Management: This includes processes used to ensure that the projects are
R

completed within the approved budget.


A

Double check to ensure that the following steps are included in your project implementation:
E

1. Define Each Project. This section will help the Project Managers start the task of
S

outlining each project. Each project requires a Project Charter with the following
E

components:
R

• Sponsorship: Who is commissioning the work?


H

• User Community: Who will use the product? How many users are there?
C

• Functions: What will the product do? What purpose will it serve?
T E

• Deadline and Other Constraints: When must the project be ready for release?

• Budget: Who is paying for the product?


~
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2. Plan Each Project. Always come equipped with a detailed project plan complete with
goals and milestones. Keep your team apprised of problems and progress – change
N F

is much less harrowing when people can see where they are headed. Don’t forget
a contingency plan – if things aren’t working, you need a well-thought-out backup
I

strategy. Proper planning requires the project manager and sponsors to do the following:

• Create a Work Breakdown Structure. This involves determining in detail all tasks
needed to finish each project.

• Estimate Task Times Accurately. Time estimates are difficult aspects to predict
accurately. Unexpected delays and unforeseen aspects of implementation often
extend a timeline by over 40%.

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Stage 8> Publish, Promote, and Maintain Your Strategy

• Create Task Analysis Forms. A Task Analysis Form is used to collect information
of the most consequence for your schedule and budget.

• Schedule Each Task (using a Gantt chart or Critical Path Charting). Gantt charts
attach work tasks to a calendar, while the Critical Path charts aren’t date specific but
represent more accurately the task-by-task progression of the project.

• Create a Budget. A budget can only be useful if it is realistic, so make sure


your estimates do not turn into a “pie in the sky” piece of work. An unrealistic

P
budget will only create frustration and disappointment among your project teams,
multiplying the lack of incentive to complete the projects in a timely manner.

G R O U
• Staff the Project Team. When selecting members for your project teams, you
may have limited options available. Make sure that your selections reflect the
collection of skills needed as well as who is available. If your selection list extends
beyond the skill set requirement, make your selections based on individual (or
team) track records. This may seem to be a simple point, but it cannot be stressed
enough. Selecting teams and team members with proven track records improve the

H
probability of your project being delivered on time and within budget.

C
• Win Client Approval for the Plan. The final step in planning your projects is

R
obtaining the approval of your clients. Depending upon client demands, the project

A
plans may need revising, but this is essentially the reason for the project plan
– better to revise the requirements now than to do it during implementation. The

E
formality of client approval generally depends on the size and complexity of each

S
project. Make sure that the project plans are signed by someone with the authority
to approve each project.

E
R
Rolling out a full-scale IT strategy can be a large undertaking that required meticulous planning.
If you think you’ve covered all the bases, check again, and then check one more time for good
measure.

H
C
T E
The Rollercoaster of Change
Regardless of the reasons for change, managers must understand how to conduct change
~
correctly in order to minimize department and company-wide stress during and after
O
implementation.
N F

The effect of change on employees and managers is stressful at the best of times. Make
absolutely sure that you convey to your personnel why changes are being made and how they will
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affect different people’s positions.

The diagram below represents the “highs” and “lows” of the change process as experienced by
individuals in a given organization.

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Rollercoaster of Change
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G R O U
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• Step 1 – Shock/Denial: When change is announced, personnel will probably respond


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negatively. Previous change experiences play a large role in the perception amongst
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personnel of how the change process will play out over the long term. Unfortunately,
many change experiences are fraught with stress. Watch for “fight or flight” responses in
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personnel, which may manifest as shock, anger, or denial.


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• Step 2 – Acknowledge Depression: Pretending that personnel are not experiencing


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stress brought on by change is dangerous. Organizations involved in a large change


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process experience higher rates of employee dissatisfaction, lower productivity, and high
turnover. Clear two-way communication can mitigate many of change-associated staffing
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losses. Acknowledge the stress, listen to personnel concerns, express empathy, dispel
uncertainty, and explain why the change is taking place. Acknowledge the disruption
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and insecurity change can bring, but also sell the benefits for the organization and its
employees.
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• Step 3 – Hope/Readjustment: As demonstrated by the diagram above, expect a


“bottoming out” period. This is the most painful part of the change process. However,
shortly after the bottom, things start to improve. People start to become more
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proficient with the new way of doing things, and their productivity improves. This
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gives employees a sense of hope about the future, which creates a virtuous circle of
productivity improvement and greater hope.
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• Step 4 – Rebuilding: The pieces of the puzzle should all be on the table and how the
pieces fit together increasingly apparent to individuals at all levels of the organization.
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Delegate tasks so that all staff members are participating in putting the pieces together
in order for them to buy in to the new post-change vision. With consistent progress and
small successes at the front-end of the project, people will become more comfortable
with the concept of change. Establish a rewards system based on success measures to
motivate participation.

Change usually has a cultural impact that is often underestimated. Pay close attention to the
people factor, communicate clearly and often, and stress the positives of what lies ahead.

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Stage 8> Publish, Promote, and Maintain Your Strategy

Adjusting Your Current Organizational Structure


If you did the work on the previous pages to assess your optimal organizational structure, you
probably had one of two reactions when you saw the results:

• No wonder I never get a break. We don’t have enough people.

• How do we get anything done? We don’t have the mix of skills we need.

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Simply put, most IT departments are either staffed inadequately or inappropriately. Take heart in

G R O U
knowing that you are not alone. The important thing to do now is to recognize the situation and
determine an action plan for making improvements. Here is what we suggest:

• Conduct performance reviews. Before you make any changes, it is only fair to your
staff to provide them with feedback on their performance. If you are behind on
completing your performance reviews, get them caught up as soon as possible.

• Make the obvious moves. Chances are that a number of your staff are very

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competent, but are not currently in positions ideally suited to their skill sets. You run

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the risk of losing these people if you do not move them into positions where they can
use their abilities.

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• Get rid of the bad apples. It is probably equally likely that you have some people who
are counterproductive to your efforts. There may be a number of reasons that you have

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held on to them until now, but you should begin planning to replace them. Depending

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on the nature of the problem and the potential to replace lost skills, your timeline for
terminating the ‘bad apples’ should be at most six months.

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• Hire to fill gaps. Only once you have moved your existing staff into positions that
best fit their skills and terminated employees who do not fit should you begin hiring to
fill gaps. Waiting to hire people may feel like you are moving slower than necessary, but

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you have to be careful to avoid disrupting your current culture. Too many moves too

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quickly can make everybody paranoid that they are the next to be replaced.

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• Train to retain. Now that you have the right mix of people, show them some
appreciation by investing in training to keep their skills current – they will repay you with
increased loyalty and improved productivity.

• Manage their careers. Let’s face it – managing your people is probably one of the ~
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most difficult parts of your job, but it is probably also the most important factor in both
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your and your department’s success. Creating an organizational infrastructure plan for
your department, communicating it to your staff, and managing to it will make your
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department happier and more productive because everyone will know where they stand
and where they are headed.

• Adjust the mix. Review your organizational chart quarterly and make adjustments as
your needs change.

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Strategic IT Planning and Governance

Tips For Ongoing IT Strategic Governance

Complete Quarterly Top Executive Investment Reviews


A quarterly review of your projects and investments is essential to guaranteeing the health of
your overall strategy.

However, most projects are often treated as independent silo operations. This approach can
result in too many projects and too few resources. Governing your projects as a comprehensive
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portfolio will help you to track projects over the long haul.
G R O U

Project Portfolio Management (PPM) allows you to collect and control your entire suite of IT
projects as a single set of interrelated activities. PPM is based on the same theories as those
governing financial investment portfolio management. PPM allows you to:

• Catalog and know what projects are planned and/or already underway.

• Prioritize all projects against strategic business goals.


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• Allocate shared resources more effectively and flexibly.


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• Prevent project redundancy and overlap.


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One of the first steps you should take is to assign a Project Portfolio Manager. This person
will manage the Project Portfolio Master Schedule and be responsible for calling all quarterly
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meetings of top executives.


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The goal of these quarterly meetings, and the Project Portfolio Manager in general, is to identify
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project winners and loser early, minimize risk, and optimize resource allocation.
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Review Utilization Opportunities


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Cross-project thinking will help you identify opportunities and risks. If one project falls behind
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schedule, this could have a ripple effect through all other projects with which it shares resources.
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Become aware of the interrelationships and interdependencies between projects that could
cause ripple or domino effects in the event of a problem. Look at which projects share common
resources, namely staff, and map out risk points and mitigation plans. Similarly, if some
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resources are being underutilized, you should find new ways to make use of them in other
projects.
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Identify the following:

1. Underutilized assets that can be deployed elsewhere


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2. Over-utilized assets that need to be conserved

3. Ways to improve asset utilization by training, mentoring, and other techniques

Always be vigilant in watching for ways to maximize resource utilization.

Re-establish Project Priorities


Projects should be re-prioritized as funding and business conditions change.
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Stage 8> Publish, Promote, and Maintain Your Strategy

1. Catalog all projects: Using a spreadsheet or database, consolidate all project details.
For each entry, include the project name, description, goals, estimated costs, established
timeframes, and all staff members assigned, including their role and degree of
involvement. Make this repository as detailed as possible.

2. Re-prioritize all projects: Project value should directly correlate to organizational


objectives. Once these objectives are clear, assign rankings and update your catalog.

• Projects that most closely align with organizational objectives, maximize profit, and

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minimize risk are your most important and should receive top ranking.

G R O U
• Localized cost-cutting projects should be of the lowest priority.

3. Divide your ranked projects into types: Different projects achieve different
organizational aims, involve different stakeholders, and often receive funding from
different sources. Separating out these projects will help you decide what percent of
your budget should be directed at which project types. Label your projects as:

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• A utility project (basic necessary maintenance)

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• An upgrade project (improvement of the existing technology base)

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• A strategic investment project (new endeavor that will bring revenue or increased

A
service). These should receive the highest resource allocation.

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4. Make Cuts: The overall health of the portfolio, not individual projects, is your goal.

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The cuts you make to your portfolio may be dictated by resource availability. Cuts could

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come in the form of complete cancellation of, or in reduced resource allocation to, low
priority projects.

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5. Reprioritize Regularly: Projects should be re-prioritized; funds and resources
reallocated, and timelines rescheduled on at least a quarterly basis. If you make any

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changes, add them to your project portfolio repository as soon as they are made.

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Remember: all changes should be made at the portfolio level, not the project level.

T E
Meet with key stakeholders from sales, marketing, operations, finance, IT, and other departments
on at least a quarterly basis. If you make any changes, add them to your project portfolio

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repository as soon as they are made. Remember: all changes must be made at the portfolio
level instead of the project level so that the best opportunities from across the organization are O
pursued.
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Strategic IT Planning and Governance

Conclusion
A good plan today is better than a perfect plan tomorrow.
George S. Patton

Congratulations! You now have a methodology and a living document to guide you, your
department, and your organization in the strategic application of information technology.
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You should now have the support of key stakeholders in your organization, which will make
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implementing your plan much easier. Keep their support by maintaining an open and continuous
dialogue through your IT Steering Committee.

We suggest reviewing your plan and making revisions on an annual basis, unless there is a
significant change to your business that requires you to rebuild your plan. If you take enough
time to complete this plan properly, once per year should be often enough to ensure that you are
changing with the times, but not so often that you are operating reactively.
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I N F O ~ T E C H R E S E A R C H G R O U P
Strategic IT Planning and Governance

About Info-Tech Research Group


Info-Tech Research Group is a research and professional services firm focused on providing premium research and
advice geared to the unique needs of IT Managers of mid-sized enterprises.

Info-Tech provides practical and thorough solutions that enable IT Managers to bridge the gap between
technology and business. Our web publications, reports, methodologies, education, and consulting services help IT
professionals across North America and the U.K. to stay current, effectively manage people and technology, and
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achieve professional success.


G R O U

Strategic IT Planning and Governance:


Info-Tech’s Step-By-Step Consulting Methodology

Authors

• John Sloan, Research Analyst

Contributors:
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• Davin Juusola, Vice President,


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• Jason Livingstone, Research Manager,


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• Joel McLean, CEO.


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For more information about the Info-Tech Research Group, and how we might help you, see our Web site at
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http://www.infotech.com.
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Note: All Web links in this document were checked for accuracy and functionality at the time of publication. We
cannot, however, guarantee that referenced Web sites will not change the location or contents of linked materials
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and will not be held responsible for such changes.


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© Info-Tech Research Group, 2004.


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