10 Rules for Strategic Planning

The organization had had a very rough year in sales so the CIO froze all new projects for the upcoming planning period. During that period two new branches were opened, severely stressing e-mail, IM (instant messaging) and VPN systems already working at full capacity. Since one of the frozen projects was, in the way of these things, the communications infrastructure and services upgrade, the aftermath was two months of unreliable e-mail service and a huge blow to the credibility of IT’s capability to deliver services.

Then there was the multi-company group that shifted focus from EAI to a “one system to rule them all” approach. Regrettably, the IT strategist failed to recognize that the group’s companies belonged to several industries and that even within the same industry franchisers had differing requirements. The decision proved utterly contrary to the group’s outlined strategy calling for growth in the number of franchisers.

The point, says Titos Dragonas, assistant general manager at Competitive Global de Mexico, is that the more you know about your organization’s direction, the more you can help it get there, especially during turbulent times. The only way to succeed in IT strategic planning is to ensure all the information relevant to the organization’s goals is communicated efficiently in all directions, understood and agreed on, and that the IT strategy is developed to help the organization reach those goals and validated by stakeholders convinced of its value and committed to its success.

“This may sound a bit obvious but the most common failure in strategic IT planning is the lack of alignment to the organization’s own strategic planning and goals,” Dragonas says. “This is the breeding ground of all sorts of common IT problems such as added layers of complexity to compensate for the distance between the goals and strategies, added costs to support unneeded services, horrible last-minute solutions, or the lack of needed services not foreseen by the planner.”

A good way to avoid such nightmarish scenarios is to ensure you understand where the organization is going and at what pace. Only afterwards should you plan how to support or drive the organization in that direction, Dragonas says.

An effective IT strategy is a critical planning element for all IT organizations, a key communication mechanism with major stakeholders, and a means of ensuring the business and IT are integrated in their view of, and planning for, the future. It also provides, Gartner says, the ongoing “guardrails” that will keep the IT organization, and the technology it furnishes, positioned to offer the most value and support to the business. But as obvious as Dragonas’s points may seem, too many IT management teams still struggle with developing an effective IT strategy amidst confusion about its goals and components, the input required from the business and means of getting it, and ways to develop a strategy that will continue to evolve over a long-term planning horizon, especially in times of rapid change.

And Gartner finds most IT organizations can’t develop a business-strategy-driven IT strategic plan because they have started the planning process by asking business units only the bottom-up question: What projects do you need?, rather than integrating the IT team into the upfront, top-down business planning processes of the organization. Moreover, strategy isn’t something that can be done once and then executed over a five-year period, but instead must take the long-term view, and that many CIOs have difficulty in getting business input to their IT strategy initiatives because the business doesn’t have a clearly articulated business strategy or because the CIO doesn’t know how to plan for, and respond to, multiple business requirements from multiple shared-service business customers.

The result of all this, says Gartner Group research director John Roberts, is that far too often what organizations choose to call a strategic plan ends up as a 100-page document embracing “everything including the kitchen sink”, and making little distinction between the truly strategic and mere budgeting and planning.

In fact, there are numerous strategic planning sins. Fortunately, we don’t need a sermon on the mount to learn not to commit them. Follow these 10 commandments of better strategic planning and you’ll avoid karmic retribution.

1. Thou Shall Not Confuse Strategic with Tactical

There are many causes of strategic planning failure, but they start with the failure to distinguish that which is strategic from the merely tactical. Roberts says he often startles people by calling the word strategy the most abused in the English language.

“For instance people say: We need a strategy on upgrading to Microsoft Vista, and I say: No you don’t, you need a decision about it, but it’s not strategic,” Roberts says. “There’s a distinction between what is truly strategic and what’s just budgeting and planning.”

Roberts says when he meets with CIOs they will sometimes say after an hour or two of discussion: Thanks John, I know what my big three things are, now. And I say: Well write it down and there is your strategic plan.

“What you’re doing is distinguishing it from doing all the detailed work that’s necessary for next year’s budget, where you have to decide the details of: Can I get approval for two extra staffers, and oh, we’ve got to do this SAP software upgrade, and we’ve got to change the licences on this and we need to allow for a desktop refresh . . . you know 100 or more projects that have to go in funds. But that’s the tactical piece, not the strategic piece. People too often just try to merge those two together; trying to do a three-year plan with the same level of detail as they do that first year,” Roberts says.

Likewise problems inevitably arise when strategic plans are too long in the formulation, Roberts says. Give someone a six or nine or 12-month assignment to write an IT strategic plan that is meant to cover the next three years and you’re effectively writing a plan for the sake of writing a plan, rather than developing a road map that will actively assist in making IT decisions.

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2. Thou Shall Not Let the Wrong People Make the Decision

When it comes to differentiating the strategic from the merely tactical, who makes the decision counts for everything. Things typically go badly off target when the wrong people are left to distinguish strategic projects from tactical ones, notes D Kate Forbes, director, Internet and database marketing at Philadelphia-based financial services software company Sungard. Like Roberts, Forbes says she continues to be surprised at how many people in strategic planning can’t tell the difference between the two.

The answer is better training, and plenty of open discussion with third parties aimed at keeping egos and politics out of the discussion.

Strategic plans can also be derailed by the failure to recognize when a strategic project has failed and should be killed, or by leaving that decision in the wrong hands. Many managers simply can’t bring themselves to call a project when it needs to be called, Forbes says. Sunk costs are sunk and cannot be considered in the equation, but repeatedly, companies continue to throw good money after bad in hopes of resurrecting a dead project. This is especially the case when a project spans over multiple years.

“This one is perhaps the toughest error to overcome,” Forbes says. “Human nature notwithstanding, companies do not traditionally accept failure, which is in my opinion why this practice lives on. A company culture that views non-successes as learning opportunities would go a long way to helping with this phenomenon. Multi-year projects need to go before review each year to ensure the most appropriate allocation of company funds.”

Strategic planning also suffers when the manager with the best presentation and marketing skills is able to win a project at the expense of a more suitable project for the company.

“Even the playing field somewhat by standardizing the deliverables,” Forbes suggests. “Make resources available for proper information-gathering across the board. Expectations of the due diligence for cost estimates must be documented for some level of accountability — partnering with IT and finance would give more accurate estimates.”

3. Thou Shall Not Be Inconsistent

A lack of consistency on approaches to strategic planning can be a recipe for trouble.

“Failure comes about because organizations do not plan their business movements strategically until they reach a certain size, then they do it diligently and apply the approach with success for a duration. Then they grow to such a size and the strategic plan is so overwhelming that to achieve it they start the ‘tick the box’ method to strategic planning and execution rather than the original ‘get in and get it done professionally’ approach that was so successful in the early days,” says Shayne Phillips (PMP), director ICT strategic programs, investment & assurance at South Australian government.

“The business strategy becomes unclear and as such they feel that the combination of a series of interrelated ICT projects, initiated to serve their own specific techno need by a funded sponsor, comprise the ICT strategy, rather than planning from the strategic requirements of the business. This is how we end up with technology-led change rather than business change.”

The strategic planning process encompasses both strategy formulation and implementation, Phillips says. Every endeavour or enterprise already has a strategy. These range from some vague sense of the desires of the owner to massive, overly sophisticated master plans. “The question is not whether every company needs a strategy, but rather whether the company’s strategy needs to be well-thought-out, sound, appropriate and doable. The answer is self-evident.” Phillips says.

There is sometimes the feeling that forward planning is futile because it will be overwhelmed by unanticipated events and developments. “Uncertainty is, indeed, a major problem in forward planning,” Phillips says. “However, to conclude that the best way to deal with the problem is to not plan is an ostrich-like response. If anything, the greater the uncertainty, the greater the need is for good strategic planning.”

4. Thou Shall Not Use the Wrong Timeframes

The most common failure in strategic IT planning is that it isn’t truly strategic, according to Commsworld president and CEO Michael Ackerman. Most large companies perform their strategic planning once a year during a scheduled session. They get everyone in the room, and say: Now is the time for us to prepare our strategic road map from an IT perspective for the company. It’s a very bad idea, Ackerman says. A mentor once told him strategic planning is a way of thinking all the time, not a once a year event.

“If you wait to perform strategic planning at an annual session, the plan is already doomed to fail. To use an old cliché: Rome wasn’t built in a day and neither is a good strategic plan, whether it is for the business or IT. Strategic planning is best performed during day-to-day IT life,” Ackerman says.

“Good thought leaders are always looking at what needs to be done to continue to refine the organization’s capabilities — whether it’s more automation, virtualization or faster, more agile processes — and routinely make senior management aware of what can be done. A good strategist will not wait until the yearly session to recommend a change to the road map. A good strategist recognizes the need for change when the opportunity presents itself and will urge the organization to move in the right direction sooner rather than later to help the business achieve its goals.”