Defining IT Strategy And Its Impact To Organizations
IT has become an invaluable asset to organizations throughout the world. Most business processes depend heavily on the use of technology to be successful. However, technology has been advancing at a rapid pace, causing older technologies to become quickly outdated. If your industry is adopting new technology, then you will need to do so as well just to stay competitive. Unfortunately, this can be quite a challenge for many companies, especially those who only have a limited IT budget to work with. It’s why you need to develop and implement a comprehensive IT strategy.
An IT strategy consists of a number of components: it’s a summary of existing IT systems and software and how it addresses your business needs, it’s an analysis of what technology is needed to better address your business goals, and it’s a roadmap for the future that provides guidance as to what kind of IT solutions and opportunities should be considered and invested in. Without a well developed IT strategy, there’s no way to prioritize what IT solutions should be invested in or to determine whether new technologies will result in an acceptable ROI.
Why Is It Important To An Organization’s Business Strategy?
Every department within your company helps to achieve your business goals in one way or another. These same departments are also dependent on the use of technology in various ways. Without the IT solutions you’ve implemented, the individual components of your company simply won’t function very effectively. Your company’s technology will have a direct impact on how well your business strategy is accomplished.
The Benefits Of Aligning Your Business Strategy And IT Strategy
The benefits of aligning your business strategy and IT strategy are significant. The most successful IT strategies are those that assess the changes required to achieve your business goals. When your business strategy succeeds, it’s a direct result of your IT strategy. For example, implementing certain IT solutions can help improve communication across your organization and streamline processes that help reduce costs and improve productivity, both of which can make the execution of your business strategy more effective.
It Shapes The Organization
When you align two strategies, the people working on each individual strategy will be working towards the same objectives. Your IT team will understand what your business goals are and therefore will be able to recommend solutions or address potential issues that will help your company achieve those goals. If they aren’t aligned, your IT department may implement solutions that don’t actually impact your business objectives or address critical issues because they aren’t able to identify them.
The same goes for the other side. If your business strategy isn’t aligned with your IT strategy, management may not understand how the need to invest in new IT solutions can end up helping them achieve their goals. They may assume that the existing systems are fine because they don’t know better when in fact they may be outdated and could be hurting the productivity of employees. When properly aligned, management will be more willing to support change to IT systems and software because they’ll understand that it will benefit their business strategy as well.
It Promotes a Proactive Approach
Part of putting together a comprehensive IT strategy involves not just identifying existing issues and challenges within your IT infrastructure, but also identifying potential IT needs in the future. You’ll be taking a more proactive approach that will be less time-consuming and more cost-effective than simply waiting until issues and needs come up before addressing them.
For example, say your company’s IT infrastructure is completely built and stored on-premises. By evaluating your existing IT needs and resources, you may realize that you won’t be able to scale your IT infrastructure at the rate your business is growing over the next few years. The solution may be to move everything to the cloud. This can be a very complex and costly process, which is why it needs to be carefully planned out.
If you’ve taken a proactive approach, then you’ll have time to migrate your IT systems and applications to the cloud since you won’t suddenly run out of resources. On the other hand, if your plan to migrate your IT infrastructure is a reactionary plan, meaning you’ve waited until you’ve run out of resources on-site, then you’re going to be in a rush. This can end up costing you a lot of money as mistakes are made and your organization begins facing more and more IT challenges through the lack of resources.
It Increases Market Share And Profitability
Creating an IT strategy will help minimize the number of IT issues that pop-up and can ensure that your IT infrastructure in general remains up-to-date. Along with proper alignment with your business strategy, business objectives and goals will become easier to meet. By significantly reducing IT issues and challenges as well as by increasing the efficiency of your business processes through proper alignment, you can get your product out into your customers’ hands much faster. The chances are good that you’ll increase your market share as well as your profitability.
It Improves Operational Efficiency
Addressing inefficiencies in your business processes by eliminating redundant applications and implementing more effective software solutions can greatly streamline your business processes. Then your employees become more productive, operational costs are reduced, and your overall operational efficiency improves.
It Enhances Competitive Advantage
It can be a real challenge to keep up with the competition if you’re always falling behind when it comes to adopting new tech. A comprehensive IT strategy will include opportunity analyses on trending and emerging IT solutions to determine whether they will address any of your organization’s IT needs or help improve your business processes in any way — and whether the solutions are cost-effective to implement.
Businesses that lack such an opportunity analysis component in their IT strategy often overlook technology that could’ve been helpful, or mistakenly invest in unnecessary technology. With an effective opportunity analysis process, you can enhance your competitive advantage.
How To Create An IT Strategy
You can see how important a good IT strategy is, one that’s properly aligned with your business strategy. But how do you go about developing and implementing a comprehensive IT strategy that suits the needs of your company? We’ve outlined the essential steps that you’ll need to follow to build an effective IT strategy.
1. Make A List
Create a list outlining the goals and objectives of your IT department and describe its mission and vision. Everything on your list should align with and serve your business strategy. Making this list will help to keep your IT strategy on track.
2. Identify The Gaps
Perform a gap analysis of your existing IT infrastructure and systems. A gap analysis involves comparing how your existing IT systems and infrastructure are currently performing with the desired performance. Determine what it is that’s causing any “gaps” in performance, such as poorly implemented IT solutions, the inefficient use of existing IT, or IT solutions that your existing infrastructure is missing.
3.Itemize Current IT Systems
It can be surprisingly difficult to keep track of what hardware and software has been implemented through your organization, especially for larger companies with many different departments. Take an inventory of all of your current IT systems and hardware and their life expectancy. It’s only then that you can really evaluate what your IT capabilities are and what your IT needs are.
4. Assess IT Needs
Take into account your existing IT systems, your gap analysis, and the goals and objectives that you have established in order to assess what your IT needs are. For example, your gap analysis may help you identify a solution that you need to implement to address an inefficiency in your current processes.
However, don’t just address your current needs. Your IT strategy should also assess the IT needs of your business over the course of the next five years. This is a long-term strategy that will help you prioritize what your needs are and what they will be. For example, when assessing the life expectancy of your existing systems, you may have identified applications that are out-of-date or will soon be out-of-date that will need to be replaced.
5. Identify Technical Capabilities
Besides simply identifying the general IT needs of your business, take an in-depth look into what specific technical capabilities your business will need. This will allow you to align your architecture with your business strategy.
6. Allocate Budget
One of the reasons you will need to prioritize your IT needs over the course of the next five years is so that you can create a realistic budget. You may not have the budget needed to address all of your IT needs all at once because of limited resources. Proactively plan out how to allocate your IT budget in an effective manner.
7. Draw Implementation Plan
Identifying your IT needs and then addressing them is an important first step; but proper implementation is required to gain the benefit from any IT solutions you invest in. Draw up a plan to address the challenges of implementation, including a realistic timeline for implementing new IT solutions (such as installing and integrating new systems) or executing IT projects (such as migrating to the cloud). Your implementation plan should also include who is actually responsible for implementing the solution, whether it’s an individual or a team. Your implementation plan should also align with your business goals, especially if those goals are time-sensitive and depend on the implementation of certain IT solutions.
8. Create A Framework
You will need to create a framework that shows how your IT will be managed. This is done by addressing the structure, capabilities, and competencies of your IT. The framework should also show how your IT is improving, how your strategy will be executed, and how it will be aligned with your business strategy. Using your framework, you will want to challenge the company’s status quo (in terms of its IT capabilities) and you’ll want to develop a target operating model.
9. Have It Signed Off
At this point, your IT strategy should be fully developed. However, there are still a few steps involved in the execution of the strategy. Top level management should sign off on the strategy and to endorse it. Engage with management and communicate the strategy using broad and target messages so that they understand what the strategy is and why it’s important.
10. Convey Your New IT Strategy
Top level management aren’t the only ones you need to communicate your IT strategy to. While they have final say whether or not the strategy should be officially adopted by the company, it’s important that the strategy is also communicated to those it will affect, such as the department that will benefit from it. Obtaining an endorsement from upper management should help you gain support for your strategy across the organization.
11. Devise KPI Metrics
Your IT strategy should include measures of success so that you can track the progress and effectiveness of your strategy over time. Specifically, track how new IT systems and infrastructure are supporting your business strategy by monitoring actual business outcomes. This requires that you devise outcome-based KPIs (key performance indicators) to be measured and reported on a regular basis. By developing and monitoring these KPIs, you can judge how successful your strategy is. Because your IT strategy is a long-term strategy, this will allow you to make adjustments and to course correct if necessary so that you’re not wasting your IT budget on solutions that aren’t effective.
Building Effective IT Strategies For A Successful Organization
One of the most common challenges facing organizations today is that their IT is not aligned with their business goals. In fact, many companies aren’t even keeping track of what their IT consists of, which means there’s no way for them to effectively address what their IT needs are and whether trending or emerging technologies are cost-effective investments that can help them to achieve their business goals. It’s why creating and implementing a comprehensive IT strategy is critical.
With a comprehensive IT strategy, you’ll have a better understanding of your IT capabilities, how your IT can help you achieve your business goals, how to improve the effectiveness and efficiency of your existing systems and infrastructure, and how to identify new and emerging technologies that will align with your business strategy. Without a long-term IT strategy, you’ll find yourself quickly falling behind as your competitors successfully adapt to new technologies emerging within your industry.
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