How to Create a Technology Strategy Which Gives You An Edge Over Your Competitors
Technology is everything. It doesn’t matter how big or small your company is, any hopes you have of surviving, growing, and succeeding are dependent on your ability to leverage existing technologies to the benefit of your organization. However, because of how fast technology is advancing, it can be difficult to keep up — and the last thing you want is to fail to keep pace with an evolving industry by not taking advantage of the latest technologies. It’s why you need to create a technology strategy. By creating a technology strategy, you’ll have a much better chance of not only keeping up with technology, but surpassing your competition through its use.
Defining Technology Strategy
Implementing new technology is a lot easier said than done. There’s a lot that goes into deciding what new technology to invest in. What technology is a good use of your budget? What technology can benefit your specific business needs? What technology are you currently lacking? This process can get quite muddled, which is why a technology strategy is so important. A technology strategy is a written plan that goes over the technology you currently have and outlines how any new technology that you invest in should be used to meet your specific IT and business goals.
As part of the technology strategy, the processes of acquiring, allocating, and managing IT resources will need to be outlined in detail. A technology strategy may also define who is responsible for making key technology decisions and who is responsible for directly managing the technologies you invest in.
Primary Focus
Your technology strategy should be comprehensive. Not only should it identify how your current technology helps address and achieve your organization’s mission, core values, and objectives, but it should also provide a basic idea of how your IT infrastructure should evolve over the next two to three years by addressing your specific IT needs. More specifically, your technology strategy should include the following:
- The costs – The strategy should outline your current IT budget and determine how efficiently you’ve been using your budget to invest in new technology.
- The value – The strategy should evaluate how the technology that your employees and customers use provides your company with value. This will give you something to compare the potential value of new technology with to determine if it’s worth investing in.
- The impact – You will need to determine how dependent you are on your existing technology to make business decisions (especially in regards to operation plans). This will give you an idea of how to identify new technologies that could potentially be vital to your business in the future.
Benefits of Formulating an IT Strategy
The following are some of the clear reasons why it’s in your best interests to formulate an IT strategy:
- An IT strategy will take account of what your organization’s IT needs are, allowing you to address those needs with investments in new technology.
- Creating an IT strategy requires that you analyze the industry you’re in. This includes analyzing your customers and your competitors to identify what technologies are being used or can be used to develop more innovative IT initiatives.
- Your IT strategy should identify opportunities that are more viable than other technologies on the market (or technologies that are currently implemented within your organization) and that will better suit your organization’s needs (and how they will better suit those needs).
- Any IT opportunities that you highlight in your strategy need to have their long-term potential estimated to ensure that they are worth the investment. You don’t want to put money towards short-term solutions that will become outdated too quickly or it will hurt your ROI as well as your general efficiency or your business processes. Constantly updating or replacing technology is not only expensive, it causes a lot of disruptions within your organization.
- Finally, your IT strategy should evaluate new technologies that could potentially benefit your company and determine whether or not they are worth investing in. While some new technologies may be incredibly beneficial, others may not be depending on various factors (cost, long-term effectiveness, overall impact, etc.)
There are many reasons why you should formulate an IT strategy. Without one, there won’t be any processes in place for identifying technologies that can be beneficial to your business. As a result, you either won’t invest in new technologies or you’ll end up investing in new technologies that may not have as big of an impact as you thought it would, thereby hurting your ROI. And this is exactly how you begin to fall behind in an industry that’s (probably) dependent on new technologies and that’s evolving at a fast rate (as almost all industries are at this point).
Elements of an Ideal IT Strategy
Now that you have a good idea of what an IT strategy is and how it can benefit your business, let’s take a look at how to create an IT strategy that will actually be effective in helping you make sound decisions about investing in new technology.
Assessment of Current State (Systems and Capabilities)
The first thing you will need to do is perform a thorough assessment of your company’s current use of technology. This includes going over your technical infrastructure, your end-to-end business processes, your internal IT processes and maturity, and your business application portfolio. Besides taking inventory of the various components of your existing IT infrastructure, evaluate how those components are meeting your organization’s objectives, benchmarks, and milestones. This can be done using various business analytics tools as well as by speaking directly with your current employees about the technology they’re using.
Strategic End State: What Systems And Capabilities Are Needed To Support Your Business Objectives?
You should have a general business strategy written out in the form of a business plan. This plan should outline your business objectives and strategies. Use this plan to determine what systems and capabilities you will need to support all of the objectives and strategies that you have outlined.
Gap Analysis: What Initiatives Are Needed To Move From The Current Environment To The Strategic End State
Once you’ve evaluated your existing IT infrastructure and you’ve determined your strategic end state, you should be able to perform a gap analysis. This involves identifying what systems and capabilities you’re lacking that are needed to support your business objectives and strategies. This will provide you with a clear understanding of what types of technology to invest in so that you can reach your strategic end state.
Your Organization as a Whole
Developing an effective IT strategy requires an assessment of your organization as a whole. This will require you to do the following:
- Perform an overview of your IT department – Describe the vision (desired future state) of your IT department. Based on this vision, outline the mission, which is how you plan to achieve that vision. An outline of all of your IT goals, values, and methods should also be included. This type of detailed overview will help to keep you on the right track as you determine what technologies you should invest in over the next few years.
- Create a budget – Your IT strategy should take into account the next two to three years. Many businesses make the mistake of creating an IT strategy that only covers a single year. Create an IT budget to determine what you can afford and help ensure that you don’t overspend on technologies you don’t necessarily need. When creating your budget, include a spending forecast to give you an idea of where you need to invest over the next few years.
- Outline current and future IT initiatives – Outline any current IT projects and initiatives as well as any future projects and initiatives that have been planned. Include timelines and milestones for every project and initiative currently in place. This will help you prioritize what technologies you should invest in throughout the next few years.
- Evaluate existing enterprise architecture – Evaluating your existing enterprise architecture will help you with performing a gap analysis. Assess the capacities of your existing IT department. Identifying what the strengths and weaknesses of your existing IT infrastructure are will allow you to outline and prioritize future requirements.
Current and Future External Forces
Any IT strategy you come up with should have some flexibility. Rigidly following your roadmap can be a mistake, especially in the face of external forces. Market and industry trends often dictate new requirements and innovations. Pay careful attention to your industry as a whole by researching not only the kind of new technologies your competitors are investing in, but also look into emerging technologies and how they can provide you with a competitive edge. In fact, you may find that you’ll have no choice but to invest in new technologies as a result of the immense advantage that they may provide companies that implement them against those that do not. By being able to forecast these potential external forces, you can avoid being blindsided by them.
Opportunity Analysis
Opportunity analysis refers to the research that you will need to do into specific technologies being used within your industry that you aren’t using. Analyze the opportunity that technology presents to your organization to determine whether, in the end, the technology presents an opportunity that’s worth investing in. Because new technologies will continue to emerge over the years, you will need to perform regular opportunity analysis.
Threat Analysis
One of the most important elements of an effective IT infrastructure and a successful IT strategy is a thorough threat analysis. This requires analyzing the security of your IT systems and identifying any potential vulnerabilities that could pose a threat. These threats can come in the form of data loss or theft caused by accident (computer malfunctions or lapse in judgement, memory, or protocol), natural disasters (destruction of systems), internal threats (theft or sabotage by an employee or ex-employee), or intentional threats (hacks).
By performing a threat analysis on your existing IT infrastructure you’ll be able to identify areas of immediate need. Technologies that help address these threats must be prioritized. And if you are looking at new or emerging technologies as potential opportunities, you’ll want to perform a threat analysis on these technologies as well. Implementing a new technology could result in new vulnerabilities that need to be addressed.
Approaches to Strategizing
While there are certain steps that you absolutely must take to create a successful IT strategy, there are several different approaches that you can take.
A Focus on Innovation
Focusing on innovation is what will allow your company to grow. Identifying new ideas will help you retain a competitive edge. If you don’t focus on innovative new technologies, you’ll find yourself constantly playing catchup with your industry’s adoption of new technology. Don’t just focus on finding ways to update your existing technology, find new technologies that can expand your organization’s capabilities in ways that weren’t possible before.
Integrated Roadmapping
Your technology roadmap outlines how you will meet short-term and long-term goals using technology solutions. Be sure to align your technology goals with your business goals when creating your roadmap. Otherwise, you may find yourself investing in technology that’s meeting short-term and long-term IT goals but that aren’t moving the needle in a significant way toward meeting your business goals.
Auditing Company’s Existing Resources
Reviewing the performance and capabilities of your existing resources is very important. Examine the management controls within your IT infrastructure and identify whether your systems are operating effectively and efficiently, maintaining data integrity, and safeguarding your assets. You may find that you’re implementing certain technologies effectively and that they don’t necessarily need replacing. Or there may be an overlap in the use of different applications across your organization. This allows you to eliminate redundant systems, which could potentially free up resources that can be invested into new technology.
A Focus on Capabilities Not Features
It’s easy to fall in love with new technology because of the features that they advertise. However, when you’re investing in new technology, be sure you’re not focusing on the features as the reasoning behind your decision to invest. Look beyond the features and analyze the capabilities of the technology you’re thinking about investing in.
For example, say you’ve got your eye on a new BI (business intelligence) solution. The vendor is advertising the ability to visualize your data in more ways than you can currently accomplish with your existing BI solution. What you need to do is to figure out if the visualizations you’re currently using are effective or not. If you have plenty of options and they are doing an effective job representing your data, then is there really a need to invest in more data visualizations? You’ll also want to look at the technology’s other capabilities. If your current solution offers a moderate amount of data visualizations, but allows you to customize numerous dashboards and automate your reports — and the new solution you’re looking at does not have these capabilities, then it’s probably not a wise investment. It would be like upgrading your car because the new car has seat warmers but doesn’t get nearly as many miles to the gallon as your existing car.
Developing the Ideal Strategy
Boiled down, the ideal IT strategy depends on how well you understand your organization’s existing IT capabilities and how they are aligned with your business goals. Without a thorough understanding of these facets of your company, you’ll have trouble identifying what IT capabilities you need and how new technologies can benefit your business.
A thorough assessment of your organization’s IT infrastructure and business goals is a must. In-depth research is a must — and you’ll want to speak with your IT leaders and management to get a grasp of how effective your current systems are. And many of the IT leaders within your company should be able to provide you with valuable insight into what kind of technology is missing and what areas of your IT infrastructure need improving. Collaboration will go a long way in helping you to develop an effective IT strategy.
Your Strategy Becomes the Backbone for all Technology decisions
Without an IT strategy, you’ll just be guessing what kind of technologies you need to invest in, whether new technologies can benefit your business, and how to invest your IT budget responsibly for the highest ROI possible. You’ll likely have trouble keeping up with the technology that’s being adopted throughout your industry and fall behind your competition. Additionally, if your IT strategy isn’t aligned with your business goals, it will hurt your ROI in the long run.
Of course, creating an in-depth IT strategy isn’t going to be of much use if you don’t stick to it. Your IT strategy is your roadmap and you should follow it. Just remember to remain flexible — you can’t always predict where your industry is headed or what new technologies will emerge in the future.
Want to gain an unfair advantage over your competitors through an integrated IT plan? Consult with our experts today!
