Developing IT Strategy for Business Value

Yasmine Badawy

What is IT Strategy• IT strategy is a comprehensive plan that

information technology management professionals use to guide their organizations.

Cost Human Capital

Hardware&

Software Vendor

Risk

Enterprise IT Environment

IT Strategy address all components in Enterprise IT Environment

Business Strategy• A business strategy is a set of guiding principles that,

when communicated and adopted in the organization, generates a desired pattern of decision making.

- Harvard Business Review

• A strategy is therefore about how people throughout the organization should make decisions and allocate resources in order accomplish key objectives.

Components of Business Strategy (Porter 1985)

Cost Leadership

Differentiation

Focus

Deliver the lowest costs in that industry

products of an organization meet the demands of some customers in the market place better than others.

Scope over which the company should compete basedon cost leadership or differentiation.

Business Strategy and IT Strategy• Management of technology is analogous to the management of

investment.• The development and use of technology must be guided explicitly by

the business strategy of the firm.

Role of “IT Strategy” in business• IT strategy is a potential powerful tool for pursuing the Business

Strategy.

IT Strategy

Business Strategy

How IT helps Business• Faster process, generate more money• Efficient• Easy access for customers• Effective- prevent mistakes• More enjoyable for customers• Opens new business opportunities

Today’s Business Environment• Increased globalization• Increased competitive pressure• Frequent mergers• Rapidly changing technology• Evolving patterns of consumer demand

IT Strategy development

Assess Current

State

Define Future Vision

Develop Improvement

Roadmap

1 2 3

IT assessment Approach is made of 3 steps

People

Process Technology

3 Elements of IT development Roadmap

Critical Success Factors of IT Strategy

• Revisit your Business Model• Adopt Strategic Themes right people Involved-• Work in Partnership with the Business

Initiatives to allocate the IT BudgetUtility and Basic Support eat up between 30 and 70 percent of the focus group budget. (James D. Mckeen & Heather A. Smith)

How to do more with lessAllocating the remaining budget

Examples of IT-led initiatives to savemoney: outsourcing,shared services, use of Software-as-a-Service (Saas)global sourcing and partnership

Five Types of Initiatives to implement a Strategic Program

Big Opportunities are at the enterprise level and cut across lines of business

• Eliminating unnecessary or duplicate activities• Revenue-Growing• Experimental Initiatives• Copy people’s ideas and do it better• Infrastructure-struggle how to justify funding

Strategy-Development process that reflects a balance of all dimensions of IT Strategy

• Linking IT Strategy with Business

• IT Budget needs attention more than once a year• An enterprise architecture (Merging work)• Different funding ‘buckets” (Incrementing)• Appointed IT Account Managers to work with key Lines of Business• A prioritization rubric

Challenges for CIOs• Broader scope• Underfunding and Overfunding Projects

“It’s always a balancing act between our tactical and operational commitments and the work that builds our long term capabilities.” James D. Mckeen & Heather A. Smith

Conclusion• Developing an effective IT Strategy and synchronizing it with an

overall business strategy

• Getting the balance between the many different ways IT can be used to affect a business is a constant challenge for leaders