Anatomy of an IT strategic plan in the era of digital disruption

IT’s role in the development and execution of business strategy has grown significantly in the era of digital transformation. But as the rate of business and technology change has accelerated, some of the past static, rigid, and disjointed approaches to IT strategic planning fail to keep pace. 

That’s not to say CIOs should skip IT strategic planning altogether — quite the contrary. Developing and executing a business-aligned IT roadmap is more important than ever. “Given the growing importance of technology in every business, technology organizations must have clear strategic direction and priorities that are closely linked to the business strategy,” says Brad Strock, CIO of PayPal. 

Yet just 29 percent of IT leaders say their organizations are effective or very effective at IT strategy and planning, according to Gartner’s 2017 CIO Survey. Even fewer (23%) rated their organization as effective or very effective at business strategy and planning. “The biggest challenge for IT leadership is whether or not the CIO feels comfortable with business strategy and can lead and shape discussion around that,” says Nigel Fenwick, vice president and principal analyst at Forrester Research. “CIOs must have a strong understanding of the levers of business in order to lead and drive revenue.” 

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Experts and CIOs agree that effective IT strategy begins with an IT-informed business strategy. CIOs must be intimately involved in the creation of those documents and other artifacts that provide direction about what the enterprise needs to do, why it needs to do it, and how it will accomplish that. Only then can IT leaders build their own functional plans to support business strategy. “The plan is about understanding where to make investments and what capabilities the company will need — the people, partners, processes, and systems required — to do that,” says Fenwick. 

When done well, IT strategic planning can be a powerful tool, setting the company up to realize key business goals and outcomes. But CIOs must be willing to embrace new approaches to planning that are more business-driven, flexible, and frequently revisited. Unfortunately, says Fenwick, strategic planning practices tend to evolve slowly. But IT leaders today don’t have time to waste. 

Following are some emerging best practices for developing an effective IT strategic plan today. 

Start with business strategy

IT strategic planning must be firmly rooted in the business strategic plan — period. If the business strategy is to invest in digital transformation, for example, IT must extrapolate what that means for existing architecture, operating processes, skills, sourcing, governance, and culture. For IT veteran Laura Smith, CIO of UnityPoint Health, the IT strategic plan for the 30,000-employee healthcare system is focused on helping the organization make the shift to being reimbursed based on quality rather than service volume. As a result, her plan includes a roadmap to maximize reimbursement, transforming the culture of the IT department to support the organization more effectively, and engaging customers and other stakeholders more directly in large-scale technological change. 

The best IT plan is no longer simply a rundown of the financial investment required or a list of technologies to implement. Rather, it is an assessment of the changes demanded to achieve business goals. “While the financials are still important, the starting point needs to be the business strategy,” says Strock of Paypal. “[There has to be] a much more significant focus on the business and customer dimensions of the plan.”  

The line between business strategy and technology strategy has disappeared, says ServiceNow’s CTO Chris Bedi. “They are one and the same.” Fenwick goes so far as to suggest there should be no IT strategy separate from the business strategy, preferring to call the IT-specific component an operating plan. 

Plan the planning process

At the outset, IT leaders should establish a plan to develop the plan. Gartner advises creating a “clear and achievable” process for developing the strategic plan, using any existing or previously used plan as a starting point.

Strategize swiftly

While IT strategic planning is important, spending too much time to develop it can also be dangerous.

“I am a big believer in fast and mostly right versus slow and perfect,” says Bedi. “I don't think there is a magic number of weeks it should take, but the key is that it is well thought through, tied to business outcomes, and avoids incrementalism.”

Gartner advocates swift and focused strategic plan development in order to prevent loss of focus, scope creep, or diminished currency and relevance.

Focus on the mid-term horizon

Long-term roadmaps still have their place, but they have largely fallen out of favor, given today’s era of rapid technology and business shifts. While IT leaders must ensure that their choices are flexible enough adapt to longer-term technology change, the IT strategic plan should largely focus on the mid-term horizon, typically 12 to 18 months ahead. It can also address, in less granularity, plans in the two- to three-year range and five-plus years.

“The 5-plus-year bucket should force you to think about the future in broad terms [rather than] incremental improvements,” says Strock. Whatever time period IT leaders decide to cover, they should be sure to clarify the difference between the more tactical operating portion of the plan, mid-term strategy, and long-term goals.

Nail the key components

An effective IT plan will include information on the people, staffing, partnerships, organizational changes, and governance required to achieve business outcomes. It can also include an investment portfolio roadmap, timeframes, goals, and a discussion of risks and other issues.

“A strategy that is not comprehensive, lacks clear goals, and is void of timeframes isn't much of a strategy,” says Bedi, adding the caveat that IT leaders should not delay IT strategic plan if they are struggling with one area of it. “One can always iterate and fill a specific gap.”

Build in metrics for success

The best IT strategic plans include measures of success that will serve as mile markers for progress over time. In today’s technology-driven marketplace, however, those metrics should focus less on the inputs or outputs IT may have used as guideposts in the past and more on actual business outcomes. “Having clear, outcome-based key performance indicators [KPIs] is essential,” says Strock. “It is important to ensure tight integration with the business strategy.”

Those KPIs should be measured and reported at least monthly, although some should be tracked more frequently. “Without defined measurable goals and measurement against them, a strategy can quickly become a pretty set of charts that get looked at once and filed away,” Bedi says. “I think measurement along the way is critical to ensure one is tracking to plan and can course correct, if needed.”

Tie guiding principles into the corporate vision

Many IT leaders will include a set of guiding principles or other explanations that guide IT’s decision making. Those guiding principles should tie into the overall corporate vision, says Fenwick. Strock calls these guides strategic pillars and foundations. But CIOs should avoid tired or trite explanations. “Too many times, I have seen department mission statements that are so generic that they are useless,” says Bedi. “If one is going to articulate a statement of purpose, try to make it one that inspires action or provides needed clarity.”  

Match planning frequency to the cadence of the business

Most IT organizations will create a full IT strategic plan at least once a year, but the fast-changing business environment demands that most update their approaches more frequently. The best rule of thumb is to adjust the frequency of IT planning to the cadence of the business. For most companies, quarterly updates (at a minimum) will make the most sense. IT leaders in consumer-focused businesses, for example, will want to make changes more frequently. “Every time IT makes a new choice it can have an impact [on the plan],” says Fenwick. “You have to reassess whether your assumptions remain valid. That’s something historically not a lot of companies have done.” 

Ultimately, there is much to be gained from putting the necessary effort into creating a well-thought out IT strategic plan, even when it changes significantly on review. “There is sometimes more value in the process of developing your final strategy than the actual strategy [itself],” says Besi. “It will force the IT — and non-IT — leadership teams to think through the impacts of digitization on a longer time horizon and answer some tough questions.”

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