it strategy session cio roundtable may 27 2010

IT Strategic Planning

What you do either drives or reflects who and what you are to the business

JPerzel & Associates Roundtable

May 27, 2010

5/27/2010 Copyright: Crocus Hill Associates, All rights reserved

A starting point…

A framework

Where does this fit in the IT planning system?

Where you are… responses

Open discussion

Take away slides…

5/27/2010 Copyright: Crocus Hill Associates, All rights reserved2

Discussion Topics

Our old buddy Nicholas Carr:

IT is best seen as the latest in a series of broadly adopted technologies that have reshaped industry over the past two centuries—from the steam engine and the railroad to the telegraph and the telephone to the electric generator and the internal combustion engine.

For a brief period, as they were being built into the infrastructure of commerce, all these technologies opened opportunities for forward-looking companies to gain real advantages.

But as their availability increased and their cost decreased — as they became ubiquitous—they became commodity inputs. From a strategic standpoint, they became invisible; they no longer mattered.

That is exactly what is happening to information technology today, and the implications for corporate IT management are profound.

A Starting Point


Martha Heller – former Editor in Chief for CIO Magazine

Ten years ago, I started asking CIOs a question:

When you walked into your job, what did you find? The answer, roughly 90 percent of the time: "I inherited a mess. The IT organization had major delivery problems and no credibility with the business."

A decade later, I am getting the same answer. How can this be?

Is every CIO I have ever spoken to an idiot? Or, more plausibly, is there something so inherently problematic about the CIO role that even the most talented and experienced leaders have trouble making it work?

A Starting Point


If this is the backdrop should we have an IT strategy?

Why and what should it be about?

A starting point


Carr:Commoditization

of IT

Heller:Buried in support

and delivery

What is ITs seat at the table?Are we a proactive partner or an

order taker?

Do we have control over our

environment or are we trapped by

legacy

In light of these

two views:

Do our planning processes reflect

or drive that position?

A framework


SupportApplications which

improve management

and performance but

which are not critical

to the business.

Strategic impact of future systems

Str

ate

gic

im

pa

ct

of

ex

isti

ng

sy

ste

ms

FactoryApplications which are

critical to the business.

TurnaroundApplications / projects

which may be of future

strategic importance

StrategicApplications / projects

which will be of future

strategic importance

Low

High

HighLow

Source: IT Strategic Grid. Harvard Business School, Warren McFarlan, L.J McKenney

What you do in

strategic planning

probably depends

on how strategic

IT is…

Strategic Mode– Systems failure causes immediate

loss of business– Decrease in response time impacts

internal and external users– New systems promise major

transformation and cost reductions– New systems will close gaps with

competitors

Turnaround Mode– New systems promise major

transformation and cost reductions– New systems will close gaps with

competitors– IT is more than 50% of capital spend– IT is more than 15% of corporate

expense

Factory Mode– Systems can’t fail for a minute– Decrease in response time

unacceptable– Most core activities online– Systems work is mostly maintenance– IT provides little strategic

differentiation or dramatic cost reduction

Support Mode– Service interruptions are acceptable– User response time is not critical– Systems are invisible to suppliers and

customers– Business can revert to manual

procedures– Systems work is mostly maintenance

What does it feel like to be in each box?


Does your strategic planning approach fit the position of IT in the company?


Respondent 1

Respondent 2

Respondent 3

Respondent 4

Planning processes and documentsDo you have a formal IT strategic plan Yes Yes No NoDo you have a formal IT business plan Yes Yes No NoAre they the same? Yes No NoDo you have an IT Capex and Opex budget Yes Yes Yes YesAre they included in the Strategic Plan Yes NoAre they included in the business plan Yes Yes

Planning timelines

How often is the IT strategic plan updated Bi Annually Yearly Not done

How often is the IT business plan updated Ad Hoc Yearly Not done

How often are the IT Capex and Opex budget updated Bi Annually Yearly Yearly

Does your strategic planning process reflect the position of IT in your company?

Would a change in the way you conduct planning make a difference in:– ITs’ impact on the business – could you make it more strategic if

you did something different?

– How IT is perceived by the business – would a change in planning processes bring IT the recognition it deserves?

Other?

Possible discussion questions . . .


Take away slides

For reference …


IT Business Planning is where we define the set of projects / initiatives

which drives or supports the business change agenda

– It’s the prospecting / mining exercise to determine what the business wants

or needs

– This is where we take the initial whack at ‘linkage’ and business case

development

– In theory this drives all the rest of the IT planning initiatives…

– In essence it is the ‘what and why’ for IT investment

IT Strategic Planning is where we define how IT will do its business.

– What is the organization structure and governance

– What is the staffing and sourcing strategy

– What are the architectural standards and biases (build/buy, integrated / best

of breed)

– In essence it sets the constraints and biases on how IT will deliver service

A couple of definitions



Where does IT Strategic Planning fit?

CAPEX / OPEX

Budgeting

Business Planning

Portfolio Management

PMO / Project

Planning

Where does IT

strategic planning fit

ITBusiness Planning

Drives

Drives

Drives

Drives

ITStrategicPlanning

Support– It’s questionable whether IT Business or Strategic planning is worth

the effort…

– Focus on service level management and OPEX budgeting

– Look at outsourcing strategy to drive cost effectiveness

– Keep eyes open and peeled for ‘glimmers of opportunity’ –turnaround…

Factory– Focus on IT Strategic planning concentrating on service level

management, core process excellence (ITIL…)

– Drive Capex expenses for delivery improvement (high availability, cloud etc.) and risk mitigation (Disaster rec., business continuity)

– Tighten down on OPEX but be careful about sourcing risks

What kind of planning should we be doing?


Turnaround– Develop and IT business plan which focuses on portfolio

management, business linkage and provides the development agenda to Capex budgeting.

– Develop an IT strategic plan focusing on the future support environment, sourcing strategy, ongoing governance etc.

– Focus on changes in the support environment that will drive future Capex investment (DR etc.) and OPEX changes.

Strategic– Consider building the IT business plan formally into the business

strategic plan. Tie investment to the businesses change / improvement agenda. Build the linkage directly into their plans.

– Focus IT strategic plan on delivery excellence and risk mitigation in same manner as Factory.

What kind of planning should we be doing?



For more information

Additions, arguments,

corrections or for a copy of

this presentation:

Contact us:

Craig Bickel

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