Organizations need to shift to Digital Strategy from IT Strategy to create greater impact on their businesses through technology. The shift involves changes in traditional methods of IT investment planning.
Information Technology has over the years become an integral component of managing an enterprise successfully. Technology enabled organizations are found to engage with their customers better, improve efficiency of their operations and practice better financial control. In the past, in order to bring in the right technology at the right time, organizations would rely on a formally developed IT Strategy. The aim of IT Strategy would be to identify and prioritize IT investments that enable the business to achieve the overall goals. The plan would cover what the companies need to do in the next 2-3 years, with clear description off initiatives, programs and timelines and would act as a reference for the CIOs in their investment decisions. Technology partners or management consultants would be engaged to assist in this exercise who would understand the business imperatives and overlay an IT roadmap to align with the strategy.
There were a number of implicit assumptions that went into the such an exercise; that the business environment would be more or less stable, technology advancements would be predictable and organizations would benefit from a longer term investment plan. Cut to today’s times – businesses operate in an increasingly volatile and complex environment; the role of technology is changing and in certain cases driving the business models.
In such a situation, how should organizations approach their technology strategy? Can we hold on to these assumptions of stability? Can we still follow a hard-coded 2-3 year approach when the pace of change outside is drastic?
Digital disruptions we see suggest that organizations need to follow a radically different approach to formulating their technology strategy. Disruptive technologies have brought in new business models with the likes of Uber or Airbnb. Convergence of devices, connectivity and information availability have greatly enhanced the way we see and use technology. These developments have far reaching impact on the role of IT in the organization and thus the approach to IT Strategy.
To navigate through the complex and dynamic environment, businesses would gain by shifting from developing an IT strategy to promoting a Digital Strategy. An important aspect of this shift is the recognition of the potential of technology in determining business direction, a radical change from viewing IT as a mere function of the organization.
Key Considerations for Moving from IT Strategy to Digital Strategy
Not business strategy driving IT but IT driving business strategy
In the traditional sense, IT was always considered as a business enabler which implicitly meant it would require business clarity that comes from business strategy. In other words, IT would trail business specifications. Well-defined processes and associated business rules were considered as pre-requisites for large IT investments such as ERP and CRM. A time delay in bringing appropriate IT was inevitable had its share of issues.
Digital strategy premise is that the boundaries between business and IT strategies have blurred. They go in tandem and think of Uber or Airbnb, technology may define the business strategy. Business specifications are not mandatory to select IT. Organizations may choose to follow processes defined by a business application or depend on a cloud service provider who provides business services built on strong technology.
Not long term hard coded but short cycle and dynamic
IT strategy would typically cover a 2-3 year plan providing a roadmap for IT investments with a provision to review on a frequent basis and re-word the strategy where required. It was easier for the CIOs to follow the plan, make suitable budget provisions and go through a justification and approval process. To a large extent, the plan remained static and execution would have the plan as the basis.
In the changing circumstances, a long term plan that is hard coded will have no meaning to organizations. While the planning will still have a multi-year visibility, CIOs need to be pro-active or react with agility to unforeseen business situations. Towards this, they may need to plan and execute for the short term and ensure that such plans all tie-up to provide long-term benefits. Such situations would correspond more to market actions – either providing an additional service to customers or quelling a competitor’s actions and may span tactical and transaction levels. For instance, a bank may completely overhaul customer on-boarding process not envisaged initially, taking care that such unplanned programs tie-up to the overall customer engagement process.
Not prove and adopt but adopt and prove
IT initiatives typically would follow a pilot implementation and a larger roll-out taking lessons from the pilot. The IT plan would cater to such a flow.
In the attempt to stay ahead in the existing business environment, businesses cannot afford a time consuming pilot-prove-roll-out flow, instead they need to develop and implement applications on the fly and link up such applications to provide a seamless experience to the users.
Not comprehensive bulky but focused lean
Traditional IT strategy would cover all aspects of IT – applications, hardware, other infrastructure like networks and IT teams – that would be required to enable all areas of businesses, tied up vertically and horizontally to present a comprehensive plan. The dependencies would be laid out and hence investment decisions would cover all the dependencies.
Digital strategy is aimed at focused aspects of business such as customer services or backend logistics or regulatory compliance. These business areas can be seen as independent components and decisions taken as per the demands of these business components.
Not CIO centric but business centric
The custodian of an IT strategy would be the CIO in most organizations. He would own the plan and initiate changes when required. The requirements from the business would queue up in the CIO’s office and prioritized as per the plan document.
The digital strategy need to follow a more inclusive approach where the plans would be drawn up in close coordination with business and even customers or vendors. In progressive organizations, the involvement of business would also extend to execution where they may be allowed to take investment decisions (operating under an overall governance structure) that may span selection of applications, infrastructure and service providers. We see this change already in effect. In a survey conducted by McKinsey on IT strategy, more than 83% of IT executives indicated that their company’s IT strategy was developed collaboratively between IT and business.
A shift from older methods of IT strategy to a radically different approach of Digital is vital to the organizations operating in the ever changing markets to take full advantage of the advancements in IT. The change impacts all areas of organizations and need to be initiated at the top. CIOs need to work towards getting the buy-in of the businesses through their close involvement and ownership in key IT decisions.