How to Get Real About Strategic Planning

Oh, it must be nice to be the CIO of a FedEx or a GE or a Credit Suisse. Places where IT and the business are so tightly aligned you can barely tell the two apart. Where corporate leaders understand that IT is a strategic asset and support it as such. Where the CIO is encouraged to spend the majority of his time on the Big Picture. If one works in that kind of IT Wonderland, getting a good strategic plan down on paper is probably a snap.

But the vast majority of CIOs work in places where the business itself may not have a clearly articulated strategy. Where corporate leaders don't care too much for IT, much less value it strategically. Where the CIO's time is devoured by day-to-day operations and there's little time left to look beyond the next few months. If one lives with that kind of tactical IT reality, getting a good strategic plan down on paper is practically impossible.

Which is to say that for most CIOs, putting together an IT strategic plan - that annual road map to guide IT through the next 12 months and beyond - is dauntingly hard. (For more on what should go into it, see "Anatomy of an IT Strategic Plan", end of story)

But while the odds may be stacked against the average CIO, the truth is that those IT leaders who don't master the art of strategic planning won't last long. "The purpose of the IT strategic plan is to improve the business-IT relationship. A CIO needs it to communicate with the business, to tell them that he understands the company's needs and to set expectations," says Alex Cullen, Forrester Research vice president and research director. "A CIO can't succeed without it."

Michael Jones, CIO of the National Marrow Donor Program, calls it "the business case for IT". Here's how you can overcome the four most common obstacles to penning that increasingly critical document.

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Business Plan? What Business Plan?

The cardinal rule in developing an IT strategy is to connect it to the business strategy. "The business should have desired outcomes - market share gains, higher customer satisfaction levels, shortened cycle times," says independent IT analyst Laurie Orlov. "IT has to figure out where they factor into that."

But for all the whining CIOs have had to endure about how IT needs to be more strategic, the businesses they support are often in even more dire strategic straits. "Businesses very often don't have a strategy. Or they do, but it's very high-level and vague. Or they reserve the right to change it. Or they have some strategies, but they don't apply to all the business activities taking place," says Forrester's Cullen.

So CIOs operating in strategy-free organizations are off the hook, right? Wrong. "It's the ultimate cop-out for CIOs to say they can't do an IT strategy because the business doesn't have an articulated strategy," says Orlov. Fuzzy business goals present a challenge, but smart CIOs should see that as an opportunity. "People in the business are very focused on operations or other minutiae," says Dave Aron, vice president and research director for Gartner Executive Programs. "IT can help the business articulate what will help it win and how IT fits into that. Then you go from just being an order taker to actually influencing overall strategy."

Opportunity Knocks

Michael Hites knew the lack of vision at New Mexico State University (NMSU) would be a challenge. "If you don't have the highest level plan in place, even the best IT strategic plan won't work," explains Hites. "I've seen it; I've lived it." When he became CIO in 2003, NMSU's plan was no different from any other school's. So Hites's first IT strategic plan was standard and risk-averse. IT plodded along doing good work but nothing particularly strategic. In the absence of a more ambitious university plan, there was nothing to anchor a real IT strategy, says Hites. "If you stick your neck out [in that environment], the university may or may not be behind you," he notes.

But then a funny thing happened. After several years of bugging people about the lack of a strategic plan for the university, Hites last year was put in charge of strategic planning for the entire university and named vice president of planning and technology.

Hites and his team have lots of great ideas - about $US15 million worth of them, he says - but his organization is "funded to the tune of half a million a year". The question he's faced with each year is "how to spend that little bit to do something strategic. If the university has the 'mom-and-apple-pie' strategy of 'helping students succeed' or 'increasing research', anything you do is going to foster those objectives. And you can never be sure you're making the right choices. But if a university steps out on a limb and says: 'We will have the best online education program in criminal justice in the world', then that becomes the strategic focus."

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When IT Drives the Bus

"It can be appropriate for the CIO to help push business along in terms of strategy," says Forrester vice president and principal analyst Bobby Cameron. And that doesn't necessarily mean the CIO taking on a second full-time job. When Kelly Clark joined Exante Financial Services, a financial services provider for the health-care industry, he wanted to change the IT strategic planning process.

"Generally, it's done at the end of the year," explains Clark. "You look at the budget, see you have X number of dollars and figure out what you can do. It's reactive." Clark wanted a proactive process, a "business overlay that said, here's what the market is looking for, here's what we have, here's what we need". Exante had a business road mapping process but no business and systems strategy, so Clark told his CEO and CFO they needed one. And they bought it. "So off we went," says Clark. "We created an enterprise strategic plan and IT became a piece of that."

Bethesda Lutheran Homes and Services (BLHS), a faith-based provider of services for individuals with developmental disabilities, was a couple of years into a five-year organizational strategic plan when Brian Tennant became its CIO. But the plan was strategic in name only. "It was generic: Be the best and grow by this amount," recalls Tennant. "But it was unclear why they picked the growth number or how they would measure it. And they hadn't paid much attention to whether it was on track. Nothing was grounded in reality." Frankly, that didn't matter much to Tennant at first. BLHS had acquired Orange County, California-based Good Shepherd Communities in 2005, which increased its size by two-thirds, and there was a "whole pile of modernization to do", recalls Hites, including adjusting the core ERP system. Even with an overarching business strategy, IT's mission was clear: Integrate and upgrade.

Now that all that work is wrapping up, Tennant knows it's time to create a plan to guide his department of 10 through the next three to five years. But Tennant's not waiting for the 105-year-old organization to come up with a new five-year plan specific enough to guide IT; he's helping shape it.

"I see myself as a member of the senior management team who just happens to be in charge of IT," says Tennant. "So I'm taking the opportunity to weigh in early and weigh in on all disciplines, not just my own."

Senior leaders, Tennant included, are vetting the new plan with the board, operating divisions, donors and families of those to whom they provide aid. The goal is to create what they're calling "strategic positioning statements", such as attracting a younger demographic as donors or expanding services or creating financial stability.

"I'm already starting to think about how IT will fit into those goals," says Tennant.

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Starting from Scratch

Ask Vicki Petit, vice president of information services for KI, a $US700 million office furniture manufacturer, what word she associates with IT strategic planning and she doesn't miss a beat: "Work," she answers, with a sigh.

Petit faced a double challenge when she became KI's CIO eight years ago. KI didn't have a business strategy and no one in IT had ever thought about creating one. Forrester's Cullen gets lots of calls from CIOs as mid-year approaches, and about half of them are just like Petit, starting from scratch. (The other half are dissatisfied with their current plan.) "[CIOs] all know they need one, but they're not sure what it is or what they want to achieve or where to start," says Cullen.

Petit spent her first few years on the job waiting for the business to decide what its strategic plan was. But what it delivered wasn't a plan; it was a tome. She waded through KI's 200-page "corporate strategy book" searching to find something that IT could align with. "The business strategy was communicated in mostly operational objectives," says Petit. She wanted to create a long-term road map that would guide IT beyond the next year but it was difficult to tie that to the nitty-gritty tactical goals that passed for business strategy.

Still, Petit knew she had to put some kind of stake in the ground, if only to make the following year's strategic plan a little easier. And every year since, she's put an IT strategic plan on paper, updating it and grading the IT department on its progress after six months, improving the process as she goes. And now her boss, the CFO, requires a similar strategic plan each year from all departments.

"Oh they love me," she jokes. But the plan has proven invaluable. "We can use what's in there to help us justify IT's direction or say no to a project instead of just reacting to what users want."

George Lin also had to go from zero to 60 on strategy. When he became CIO of Dolby Laboratories last April, he found a "fairly rudimentary" IT plan in place. But unlike Petit, he benefited from what he characterizes as a very strong business strategic planning process. Dolby has a multiphase "funnel" approach to strategic business planning. All the good ideas generated by the company's more than 1000 employees come in and the senior management has a governance process for narrowing them down to a manageable number of initiatives for the year.

Lin plans to introduce a similar process within IT, inviting broad input into the strategic plan and putting in place a "business infrastructure steering committee" to select those with the most promise. "It's what I've done everywhere I've been," says Lin, who previously held IT leadership roles at Advent Software, Documentum and EMC. "The IT strategic planning process should tie into the existing business strategic planning process. That creates buy-in from the business."

Without that, Lin says IT suffers. "Before I became a CIO, I saw the downside of an IT organization whose strategic plan was not aligned," says Lin. "IT was putting a lot of good effort into projects the business didn't want or appreciate. It becomes a morale issue," he says.

Tennant plans to mirror BLHS's new business strategy process when he creates the organization's first-ever IT strategic plan this year. Those "strategic positioning statements" the corporate team was developing? IT will have some, too. "They won't be, 'We're going to grow our staff 25 percent' or 'We'll upgrade to Watson version 9.0' like it has been'," says Tennant. "It could be, 'We're going to move in the direction of self-service', which could apply to our staff or the people we serve or our vendors. Or 'We're going to leverage adaptive technology to improve the lives of the people we serve'."

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The Dangers of Going It Alone

KI's Petit was happy to have created her first IT strategic plan in 2003 but she knew it wasn't ideal. She had come up with her own idea of what IT should focus on, with little business input.

"The first pass was really just internal to IS in order to create some principles for how we wanted to operate and specific objectives," says Petit.

But, as Orlov warns, "IT strategic planning can't be done in a vacuum. The CIO can't just have an offsite and brainstorm what to do." Petit understood that and has been trying to tie IT's strategic plan to business goals, such as they are. "It was a tough transition to make," admits Petit. "But the IT strategic plan is more or less the only vehicle we have to communicate the value we provide to the company so we don't want to be seen as off there on our own island doing our own thing.

"A better model would be to work with functional leaders and get their take on what we should be doing," Petit acknowledges.

Petit's not involved in crafting business strategy, but she's got a way around that. "We've built a stakeholders' chart and we've starting meeting with them. We ask them: What are you measured on? What affects your business? We're getting more two-way communication going." Contrary to popular belief, a CIO doesn't have to have the proverbial "seat at the table" to involve the business in IT planning. In fact, says Cullen, involving the business in IT strategic planning "is a way to earn that seat".

"One of the big mistakes made when it comes to creating an IT strategic plan is that people model it after a kid who goes off into his bedroom to do his homework and then shows it to his teacher the next day," says Gartner's Aron. "You have to engage the business throughout the process of creating the plan."

Lin has created IT-business partner roles at Dolby to get input on strategy year-round. "It happens not just on the executive levels but throughout the company. And not just once a year at budget time," says Lin. This year IT wanted to set IT infrastructure standards for the company as part of the annual plan. "Instead of IT making the decision, we asked the business infrastructure steering committee to delegate people to a standards subcommittee," Lin says. With that kind of model, Lin no longer has to sell his strategic plan to the business. "Now, the committee we present it to is actually involved in creating it," he says.

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If the business isn't involved, the most well-intentioned, well-conceived IT strategic plan can go south in a hurry. "You show the plan to the business, they nod their head, say: 'Sounds like a good plan you've got there, go do it'," says Forrester's Cullen. "Meanwhile they're thinking: 'Why'd you tell me this? It doesn't involve me at all. And don't ask me for money for it because it's not linked to business needs.'" Devoting 10 pages of the strategic plan to IT's goals for Web 2.0 might seem like a good idea within the IT department. Problem is, the CFO you're presenting it to is upset that his e-mail box is restricted to 100 megs and "you end up with the thing CIOs are most afraid of when they present their plan: people scratching their heads", says Cullen.

Hites now holds an annual IT planning conference at New Mexico State every October, meeting with a crowd of about 100 IT and university leaders. Last US autumn, they spent a lot of time talking about what Facebook and MySpace meant for the school and whether the curriculum should be integrated with such social networking sites. The conferences are something he started at the Illinois Institute of Technology.

"Before that, we did planning only internally," says Hites, "but that generated some tension. It was interpreted as, central IT wants us to do this while we want to do this other thing," says Hites. "It was ineffective."

Bringing the business into the strategic planning process doesn't have to be as formal a process as Hites's. Jones of the National Marrow Donor Program does it by having conversations with stakeholders. "I talk to people from the C level on down to the basement. I ask them how things are operating, what works well, what doesn't work well," he says. He then asks people in IT the same questions, which either validates his accumulated information or reveals disconnects that need to be explored.

These conversations help Jones "connect what's in the IT plan to the everyday needs of people in business terms".

"The CIO can go to peers and say: 'What do you expect from IT?' 'What's the importance of technology?'" says Cullen. "If the answer is: 'I don't know what I want because I don't know what you're capable of', then that may be the focus on the IT strategic plan this year: defining the role of IT."

"If you walk in with a blank sheet of paper, you may walk out with a blank sheet of paper," says Aron. "Instead say: 'We think you're in this kind of business, this is what it will take for you to win and this is what IT can do to help you. Is that right?'

"It's not bad to get it wrong," Aron adds. "Sometimes a wrong or controversial hypothesis will get them talking." For example, a bank CIO could walk in to the VP of customer service and say; "From what I understand, the bank is going to succeed based on its superior understanding of the customer so we think IT should focus on analytical customer relationship management." That VP may say: "No, we're going to win those customers by being low-cost." Now the CIO has something solid around which to build an IT strategic plan.

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Excuses, Excuses

Given the choice between creating an IT strategic plan and having a root canal, many CIOs would choose the periodontist. "No one would say they love doing it," says Orlov. "[But] it's a pause for thinking and a divergence from reacting and responding."

However, many CIOs find it impossible to pause. "I hear that a lot: 'I'm too busy with the day-to-day; spent time on that last year and it was pointless'," says Forrester's Cameron. And with the increasing complexity in IT, the dread surrounding strategic planning has grown. "At the moment, you have these three tectonic plates converging in IT: the need for growth and innovation, continued cost discipline as a result of the credit crunch and IT's changing role in the business," says Aron. "With those three things pushing against each other, strategic planning can get very complicated."

But if strategic planning is like getting a root canal, remember: You endure the pain now in order to prevent a greater agony later on.

"[Strategic planning is] the one tool CIOs can use to communicate the value of IT," says Orlov. "It's something that can shore them up and arm them when people challenge them about what IT is doing. So you have to set aside some quality time for that." During her last six-month evaluation of IT's progress, Petit gave her department an A for being a low-cost, high-value provider of IT services but a D on working with the product development team to incorporate technology into KI's furniture products. "We had a goal to have an innovation group within the IT department and that hasn't happened," says Petit. "We spend a lot of time operationally and less time looking into the future."

Not surprisingly, Petit has trouble making time for planning. "It's a struggle," she says. "It's so easy to get dragged back into daily operations because we're staffed so lean and mean."

To fight that pull, Petit keeps a bar chart taped to her computer screen tracking how much time she's spending with other managers, talking to external peers, meeting with vendors. Anything not project- or operations-related counts. The goal is to hit 32 hours a month, or 20 percent of her time (although she tracks it in minutes, 1920 of them) spent planning. "In bigger companies, where the CIO role is more strategically focused and people wear one hat, strategic planning is probably a lot easier," she guesses. "But in small to mid-sized companies, we have to wear a lot of hats."

Her boss, in theory, supports her efforts to spend more time thinking strategically. "But when it comes down to whether you're going to do something about strategic planning or the network is down," she says, "you're going to take care of the network."

Exante's Kelly says that if strategic planning is important, IT needs to put its money where its mouth is. "Often the problem is financial," Kelly says. "Everything is focused on capital expenses."

Kelly says he has invested in people and processes to make sure the IT strategic plan remains a priority. "You need a dedicated team," he says. "Most organizations don't assign IT strategic planning to someone as a full-time job. Hence it doesn't become a discipline; it becomes a burden." But Kelly made strategic planning the full-time responsibility of his directors. "Once the positions were open," he says, "we found people were itching to do it."

"Someone in IT should be thinking about IT strategy most of the time," agrees Orlov. "And their job the rest of the time should be making sure they're connected to everything that's going on in the business."

If an IT leader (or his reports) can set aside extra time for strategic planning now, the theory is that it will become an organic part of their lives and interactions, less like a series of appointments that you'd just as soon cancel.

And it will get easier.

"If you did a strategic plan for the first time last year, you'll find that this year it takes less time. And next year will be even better," says Cullen. "You can focus more time on discussions with people and less time on the mechanics of putting it together.

"It could even become the part you like best about your job because that's where you can talk about what you want to do and why it matters to the organization."

And that's fun. Which is why strategic planning isn't really like a root canal. Root canals have no fun parts.

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Anatomy of an IT Strategic Plan

Ten steps to improving your strategic planning

Your strategic plan should focus on business needs, the ability of IT to meet those needs, how to close any gaps, how decisions will be made and how to measure progress.

Timing: Most IT leaders will want to start thinking about the IT strategic plan in the spring to best position themselves for the budgeting cycle. An IT organization's first strategic plan can take anywhere from three months to a year to write.

Time Frame: The plan should cover three to five years, with the most focus on the next 12 to 18 months unless there is a longer-term project on the table.

Medium: Word document and/or PowerPoint presentation. Create an abbreviated version that you can turn to anytime someone has an issue or question. (Novel idea: Consider a podcast if you're operating in a distributed or global organization.)

Length: 15 pages. Or less. If using PowerPoint, 25 slides. Or fewer.

Executive Summary: The plan should begin with a summary targeted for the business audience.

Scope: High-level goals and plans for all areas of information technology that affect the business, not just the infrastructure. A road map for IT is useful in illustrating overall strategy.

Business Context: Lay out the specific business drivers, assumptions and plans that informed the IT strategic plan. (For example, the business is planning to acquire smaller companies so IT's plan is to focus on integration technologies.)

IT Principles: Short statements of purpose that will guide IT decision making and implementation.

Metrics: Put measurements of progress in place when you create the strategic plan instead of waiting for review time to figure it all out. The goal is not precision but the ability to measure appropriate progress toward goals.

Review: You should review the plan and revise it as necessary at least once during the fiscal year. A full review should happen in the spring.

- S OVERBY

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Sidebar: 4 Strategic Planning Myths Debunked

Myth 1: Technology changes so fast, planning no longer makes sense.

"The IT strategic plan has the same value it always has," says IT consultant Laurie Orlov. "Planning never goes out of style." If your strategic plan were simply a laundry list of projects, yes, you'd be in trouble. "However, if a strategic plan operates in support of the business, it will never go out of date," says Forrester VP and research director Alex Cullen. "And the faster business moves, the more important it is."

Myth 2: A strategic plan should be good for five years.

"A few years ago, people approached the IT strategic plan the way old communist China did its five-year plans. Five years later, it's time to do another one," says Cullen. But no matter how good your crystal ball, it's awfully hard to be accurate when you're looking five years into the future. Another problem: You never get really skilled at strategic planning because you do it only twice a decade. A strategic plan can cover a five-year span but the focus should be on the first few years and the plan should be revisited at least twice a year. "It should be a process," says Cullen, "not an event."

Myth 3: The smaller your IT budget, the less you need a strategic plan.

How hard can it be to figure out how to spend $500,000 a year? Pretty hard if you want to make sure you're focusing on initiatives that will support the business. "If you're on a limited budget with limited resources and you don't have a plan, you're not going to succeed," says Michael Hites, CIO of New Mexico State University and a man with a half-million-dollar IT budget. "You won't be able to keep up with technology change because you'll never know which changes to follow."

Myth 4: You can't create a strategic plan for IT because your business doesn't have a strategic plan.

The business can float along without a clear strategy (or one that covers all areas of its operations) but IT can't. Fuzzy business goals present a challenge but smart CIOs can use that as an opportunity to help the business define itself. Some, like Hites, have taken on corporate strategist roles as a result. Even if the business is in the midst of change, you're still not off the hook. "A business can be in a state of flux but it's never stalled completely," says Orlov. "If you're observant, there are probably things right in front of you that are business objectives that can't be achieved without IT."

- S Overby