IT Strategy

Business Strategy

The key to developing a good IT Strategy is to have a well articulated Business Strategy.  The strategy needs to be more than operational effectiveness, it needs to identify the key characteristics of the business that differentiate it from it's competitors.  In order for the strategy to be understood and adopted by the organisation, it needs to be articulated into 5 or so major dot points. The business activities then need to be identified.  Depending on the complexity of the business this might be 10 to 20 items.  Each activity needs to be  evaluated against the strategy to see whether it aligns and then whether each activity reinforces each other. Ultimately, the business activities are required to deliver the strategy.  A business activity system diagram can be used to highlight the main strategy points and the supporting business activities - it's a good visual representation.  For example, the business strategy of Southwest Airline's is represented in this business activity diagram:

Business Activity System - southwest airlines circa 1996

The High Level IT Strategy

The high level IT Strategy needs to be developed with the business leaders to ensure it is consistent with the business strategy and to ensure it is fully endorsed by the business leadership.  It is developed in a language that both business and IT leaders understand to ensure it is adopted.  Ultimately, it defines the constraints that IT must operate within.  Some example statements of a high level IT strategy:

  • Stay within 1% of business revenue
  • All business owned information (data) must stay on-shore
  • Only the IT for specific business systems can be out-sourced - i.e. not carte blanche
  • Open source software is to be evaluated first for infrastructure services
  • SaaS (Software as a Service) offerings are to be evaluated ahead of in-house solutions

It makes the most sense to develop/review the IT strategy well before the budget cycle begins to ensure any major investments or restructures resulting from the review can be factored into the budget.

The IT Business System Strategies

An IT Strategy needs to be defined for each business activity identified in the business activity system.  Aspects uncovered in this analysis include:

  • Uniqueness of Process – to what degree does the system need to be bespoke vs off-the-shelf vs customised
  • Investment profile – does investment in this system have a long or short ROI
  • Life-cycle – what are the life-cycle expectations of the application - i.e. is process rapidly changing requiring frequent technology refreshes or is it stable
  • Business Interfaces – how the customers, vendors and partners access the systems
  • Internal Interfaces – how employees interact with the systems
  • Application Architecture – for example, inter-application communication, data exchange, SOA, monolithic, client-server, web access
  • Knowledge containment – number of languages and APIs to be learnt and maintained by staff

The IT Infrastructure Strategies

Behind the scenes the IT infrastructure keeps all the business processes operational.  This includes components like IT security systems, networking equipment, computers (desktop, mobile and server), data storage (structured and unstructured) and service delivery systems.  A strategy needs to be formulated for each of these components.  Issues to be fleshed out during developing infrastructure strategies include:

  • degree of partnership with vendors - i.e. transactional based vs long term relationship
  • number of vendors to select technology from
  • processing architectures and number of operating systems to maintain in-house
  • degree of self-service provided to the IT users
  • performance and growth requirements
  • cost reduction initiatives
  • automation of incident resolution
  • data exchange formats and processes
  • equipment life-cycle planning
  • software licensing


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