This paper examines the tools and methodologies used in IT strategic planning to align information technology investments with broader organizational strategy. The analysis covers the phases of IT strategic planning—from project initiation and environmental analysis through plan development and execution—and emphasizes the critical role of stakeholder management and change management. The paper argues that successful IT strategic plans depend on strong foundational practices, quantitative prioritization methods like Pareto analysis and ROI calculations, and the ability to shift IT perception from cost center to strategic enabler of revenue growth and customer centricity.
Organizations face a continually shifting series of challenges: customer requirements, supply chain constraints, costs, compliance and regulatory requirements, and drastically reduced time-to-market timeframes for launching new products. Among the many resources available for mitigating these risks while capitalizing on opportunities, information technologies (IT) provide essential insight into how operations are performing. IT also provides the system of record for organizations that is essential for making the best possible decision on a given issue within a specific timeframe (Fallshaw, 2000). IT has become so critically important to organizations that the fulfillment of strategic objectives is impossible without it. Organizations find it very difficult, and in some industries nearly impossible, to achieve their strategic plans without having IT tightly integrated into their strategic planning and execution process (Jaana, Teitelbaum, & Roffey, 2014). The intent of this analysis is to evaluate the tools and methodologies available to assist in the IT strategic planning process and explain how these methods are used to help organizations compete and succeed.
One of the most critical components of the IT strategic planning process—and a core component that underscores all tools and methodologies—is stakeholder management (Lee & Bai, 2003). For any strategic IT plan to succeed, the stakeholder management strategies must have well-defined change management programs and initiatives in place (Fallshaw, 2000). Overcoming resistance to change is critically important for any IT strategic plan to attain its full potential, because those most affected by each system, platform, or technology change must adopt the new applications and tools as part of their daily work routines (Fallshaw, 2000).
The most effective IT strategic plans become integral to the main strategic plans of an organization, often supplanting them with the needed data, insight, and intelligence. To accomplish this level of tight integration between IT strategic plans and the strategic planning process of an organization, enterprises often rely on multiple tools and methodologies. In evaluating the effectiveness of these tools and methodologies, the role of an organization's senior management in defining strategic direction and priorities is critical.
Underscoring the effective use of IT strategic planning tools and methodologies is the need for the Chief Information Officer (CIO), Chief Executive Officer (CEO), and other C-level executives to agree on a common set of priorities. IT strategic planning tools and methodologies are specifically designed to provide senior management, including C-level executives, with the opportunity to collaborate, debate, and decide on strategic priorities where IT can make the most contribution (Bai & Lee, 2003). Only by aligning the IT strategic plan and the broader strategic plan for the business can senior management hope to compete with greater accuracy, cost control, market and customer insight, and speed compared to competitors. With time-to-market for new products being the majority of revenue for many companies, having IT systems designed for efficiently developing new products and delivering well-orchestrated product introductions can mean the difference between growing profitably as a business or not.
Strategic IT planning tools and methodologies must ensure that technology investments stay aligned with organizational priorities, are fiscally responsible and capable of providing a positive Return on Investment (ROI), and deliver enhanced IT service levels (Jaana, Teitelbaum, & Roffey, 2014). IT strategic planning tools and methodologies are specifically designed to provide senior management with insights into managing the long-term technology investments of a business while ensuring that service levels are maintained and a foundation is built for future IT needs (Fallshaw, 2000).
Tools and methodologies commonly used for IT strategic planning are often organized into the categories of IT strategic development and IT strategy execution (Fallshaw, 2000). Categorizing tools and methodologies along these dimensions provides clarity in defining their contributions in each phase of an IT strategy plan, which often includes project initiation, environmental analysis, planning development, integration, and implementation (Jaana, Teitelbaum, & Roffey, 2014).
Project initiation tools and methodologies include defining the charter steering team (Fallshaw, 2000), creating a stakeholder plan that includes change management objectives and strategies (Lee & Bai, 2003), defining the IT strategic plan communications strategy, and most importantly, defining the key performance indicators (KPIs) and metrics of how an IT plan's performance will be measured (Jaana, Teitelbaum, & Roffey, 2014). All of these tools and methodologies are essential for creating a solid foundation for IT strategic planning to be successful and stay tightly integrated to the strategic direction of an enterprise. Senior management must continually be vigilant to the orchestration of these core foundational elements created and launched in the initiation phase of an IT strategic plan to accomplish the broader goals (Fallshaw, 2000).
Environmental analysis tools include a wide variety of frameworks for aggregating, interpreting, and taking action on external opportunities while minimizing the potential impact of risks. Increasingly, the voice of customers is being included in environmental analysis in the form of predictive analytics of purchasing behavior by technology platform, reliance on cloud and mobile technologies to increase customer service, and greater focus on service responsiveness (Jaana, Teitelbaum, & Roffey, 2014). The tools and methodologies used throughout the environmental analysis phase of a strategic IT plan are increasingly being aligned with customer experience first, as many strategic plans are predicated on delivering great customer experiences over simply getting more transactions completed. This mindset shift on the part of strategic plans toward customer experience is having a drastic effect on strategic IT plans, underscoring the need for greater agility, speed, and responsiveness.
Within the plan development phase of the IT strategic plan, the actual document is written with strategic planning assumptions, constraints, risks, and opportunities all categorized by IT initiative or program. Often during this phase, CIOs will use Pareto analysis to prioritize which projects contribute the most business value to the organization (Fallshaw, 2000). By prioritizing projects by business value, the Internal Rate of Return (IRR) and Return on Investment (ROI) can be calculated accurately and quickly. The majority of IT organizations conduct some form of Pareto analysis combined with IRR and ROI to clarify and validate the priorities of each project included in their strategic IT plans (Jaana, Teitelbaum, & Roffey, 2014). Advanced IT organizations also complete Earned Value Management (EVM) on each of their major initiatives to measure the business value being delivered from their investments in information technologies. All of these tools and methodologies for measuring value are defined in the development phase of a strategic IT plan.
Tools and methodologies used in the integration and execution phases of an IT strategic plan include vetting the plan with each group of stakeholders, financial projections based on the anticipated IT contributions to business initiatives, planned system and process obsolescence based on the new systems and technologies being adopted, and extensive use of metrics and KPIs to measure progress (Jaana, Teitelbaum, & Roffey, 2014). Many IT organizations will also begin piloting significant new systems and technologies during this phase, with cloud computing being one of the most pervasive today from a strategic IT planning standpoint. The best-managed strategic IT planning processes build in feedback cycles or processes to continually monitor and manage to a common set of goals and metrics that ensure alignment of strategic IT and overarching enterprise-wide strategic plans.
Achieving and maintaining synchronization of strategic IT plans with the enterprise-wide strategic plan of an organization delivers a myriad of benefits, with the most significant being greater agility, speed of execution, and increased customer centricity (Jaana, Teitelbaum, & Roffey, 2014). In addition to these benefits, tight alignment of strategic plans shifts the emphasis on IT being purely a cost center to being more of an enabler of greater revenue, profit, and customer base growth (Lee & Bai, 2003). Of the many tools and methodologies used throughout the phases of creating and implementing a strategic IT plan, the most critical are in the foundational phase, as they involve getting stakeholder buy-in on new initiatives (Jaana, Teitelbaum, & Roffey, 2014).
By addressing change management at the very beginning of a new strategic IT planning process, senior management can improve the probability of success significantly (Lee & Bai, 2003). Resistance to change is often the most common reason strategic IT plans fail (Fallshaw, 2000). By taking into account stakeholder requirements within and outside the organization first, CIOs are able to streamline each of the following phases of creating a strategic IT plan by making each phase as relevant as possible to those most affected by the new technology, process, and system changes (Jaana, Teitelbaum, & Roffey, 2014). With change management serving as a solid foundation for the use of tools and methodologies, environmental analysis outcomes and their acceptance are streamlined and more efficient (Bai & Lee, 2003). This is especially true of Pareto analysis and extensive use of IRR and ROI analyses that serve to prioritize each of the specific initiatives included in a strategic IT plan. By having stakeholder support for the use of these tools and methodologies, their implementation and results within organizations are multiplied (Bai & Lee, 2003).
The most telling test of whether a strategic IT plan has been successful is whether the daily processes, systems, procedures, and workflows of an organization are more oriented to the needs of customers while delivering greater value to the organization (Fallshaw, 2000). For a strategic IT plan to matter, the team implementing it must excel at managing expectations and making stakeholder plans and change management strategies a core part of its foundation and execution (Lee & Bai, 2003).
The combined effects of these tools and methodologies serve to first better prioritize investments in IT as they relate to the broader strategic direction of an enterprise. Second, strategic IT plans are very effective at moving beyond seeing information systems merely as a cost when in fact they are an investment (Fallshaw, 2000). Third, strategic IT plans are essential for the CIO and their team to continually deliver greater levels of service to each stakeholder segment that comprises the value chain of an enterprise. Excellent strategic IT plans balance the use of these tools and methodologies to accelerate enterprises toward their objectives.
The most effective organizations today are able to successfully integrate their IT systems, strategies, and investments with their broader strategic plans to accelerate the latter toward attainment. The use of tools and methodologies across each phase of strategic IT plan development must be predicated on a solid foundation of stakeholder involvement and buy-in, supported by change management strategies excellently implemented. As resistance to change is the most potent factor in strategic IT plans failing (Bai & Lee, 2003), senior management needs to plan ahead and take the needs of stakeholders in and outside the company into account first. The tools and methodologies included in this analysis are accelerated when change management is handled well.
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