Over the course of a series of articles, I plan to address strategic planning and why it’s becoming more important in the technology fuelled world we live in. It’s critical an organisation’s response to shifting external events is measured & appropriate. The flow on effects of change to the nature and structure of the IT department has to be addressed. Is a defensive or attack formation needed for what lies ahead?
In this first post, I’ll introduce what is meant by strategy and provide a practical planning process. In future posts, I’ll aim to address subsets of the processes presented in this post.
Operational vs Strategic
I often see technology departments so focussed on operations, they begin to lose sight of what’s coming on the horizon & how their business will change as a result. What’s happening in the industry? What are competitors up to? What new technologies are relevant? These questions are typically answered through strategic planning.
This can, however, be quite challenging for an IT function with an operational mindset (focussing on the now with some short-term planning). This typically stems from IT being viewed as an operational cost i.e. used to improve internal processes that don’t explicitly improve the organisation’s competitive position or bring it closer to fulfilling its strategic vision.
So, what exactly is “strategy”? A quick crash course suggests it aims to answer four key questions;
- Where are we now? Analyse the current position and likely future scenarios.
- Where are we going? Develop a plausible and sustainable desired future state (goals & objectives)
- How will we get there? Develop strategies and programs to get there
- How will we know we are on track? Develop KPI’s, monitoring and review processes to make sure you get where you intended in the most effective and efficient way
Strategy has plagued influential minds throughout history. It’s interesting to note this style of thinking developed through war-times as it answers similar questions e.g. How are we going to win the war?
While it is sometimes hard to see the distinction, an organisation that confuses operational applications for strategic uses will be trapped into simply becoming more efficient at the same things it does now.
Why does IT need to think strategically?
The Menzies Research Centre has released a Statement of National Challenges1 citing the need for Australian organisations to embrace digital disruption. The report highlights that Australia has been fortunate with having 25 years of continued economic growth which has caused complacency with regards to organisations capability to explore new value creating opportunities, constantly.
“Australian businesses cannot wish these disruptive technologies away, and nor should they do so, as they represent an opportunity to be part of a reshaping of the global economy and should be embraced.” – Mr Tony Shepherd, Commission of Audit Chair 2014 & Shepherd Review Author 2017
We also see The Australia Innovation System Report 20162 providing a comparison of “innovation active” business versus “non-innovation actives” business and provides some interesting insights;
Australia’s Chief Economist, Mark Cully is calling for organisations to look at ways to reinvent themselves through the application of new technologies. He argues persistent innovators significantly outgrow other businesses in terms of sales, value added, employment and profit growth.
Here comes the problem – in a technology fuelled world, organisations will struggle to innovate with an operationally focussed technology department. We believe there’s a relationship between an organisation’s ability to compete & it’s strategic use of technology. Operational IT departments are typically challenged with lack of agility, not able to influence enterprise strategy & not having clear sense of purpose; all of which are required to innovate, adapt & remain relevant.
I want to be clear that technology isn’t the only prerequisite for innovation; other elements include culture, creativity & leadership. These aren’t addressed in this post, perhaps topics for another blog.
What does a strategic planning process look like?
In today’s rapidly evolving landscape, a technology focussed strategic planning activity should be short, sharp & deliver high value. This approach helps ensure the impact of internal and external forces are properly accounted for in the planning and estimation of ICT activity over the planning period, typically 3-5 years. Below is our approach;
- Looking out involves checking the industry, what competitors are doing and what technology is relevant.
- Looking in focusses on understanding the current environment, the business context & what investments have already been made.
- These two areas are then aligned to the organisation’s strategy and relevant business unit plans which then informs the Technology Areas of focus include architecture, operating model & governance.
- From an execution perspective, investment portfolios are established from which business cases are established. Risk is also factored in.
- Measure & monitoring will ensure the strategy is being executed correctly and gives the intelligence & data to base strategic revisions as needed.
There’s value in hiring external assistance to guide you through the process. They’ll inject new thinking, approach your challenges from new perspectives and give a measured assessment of the status-quo. This is a result from being immersed in this stuff on a daily basis, just like you are with your organisation. When these two areas are combined, the timing & sequence of the plans is laid down to ensure your tech department is ‘combat ready’!
1 The Shepherd Review 2017: Statement of National Challenges – https://www.menziesrc.org/images/PDF/TheShepherdReview_StatementOfNationalChallenges_March2017web.pdf
2 Australian Innovation System Report 2016 – https://industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/Australian-Innovation-System/2016-AIS-Report.pdf