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4 Understand Costs and Resources
the lights-on budget and eliminating or
replacing poorly performing resources, 5 Focus on the Right Things
managers can achieve these goals. 6 Adopt Effective Process to Produce Action
When we talked to a CIO about 7 Tackle the Practical Problems
this, though, he remarked that “if all
8 Make the Right Decisions
we™re doing is prioritizing the same
old projects” and “if all we™re aligning ¤ 9 Plan for the Right Results
10 Keep Score
is the old set of application and infra-
structure portfolios” . . . well, that™s 11 Deal with Culture
not enough. “What we need is better 12 Char t the Path to Implementation
projects and better portfolios.” In short, 13 Define What™s Next
we need a new approach to effective
14 Answer the “So What?” Question
planning that creates realistic IT plans
(producing new projects and renewed
portfolios) strongly connected to and driven from real business requirements.
See Exhibit 9.1.
Two problems immediately confront us. The first is that connected business/
IT planning has two very different aspects: Strategic Demand/Supply Planning
and Innovation Planning. The problems to be addressed, the appropriate
processes to follow, and the outcomes to be reached are closely related but quite
different between the two. The second problem is that business and IT planning
are often disconnected in companies. This problem has to be addressed in order
to achieve better projects and portfolio line items.


EXHIBIT 9.1 Strategic Demand/Supply Planning and Innovation in the
Value Chain

Demand/Supply Planning


Strategic IT Planning Annual IT Planning
Business The Business Enterprise: Lines of Business, Departments
Plan Projects
(Strategic Budget
IT Agenda Strategic
Business Plan)
Proj- Projects
IT Require-
ects Plan
Assessed Strategic Lights-On
Portfolios IT Plan Budget
IT Plan
The IT Enterprise: Four “Lights-On” Asset Pools
Performance Measurement Metrics

There are two planning relationships between business strategic intentions and
IT. As shown in Exhibit 9.2,1 the first is where we want IT strategies, plans, and
actions to carry out the business™s strategic intentions, to enable them and the
required business changes to achieve the outcomes needed. This relationship is
the basis for Strategic Demand/Supply Planning. Demand represents what the
business requires from IT; supply defines how IT will satisfy that demand. Stra-
tegic Demand/Supply Planning assures that supply is consistent with demand.

EXHIBIT 9.2 Demand/Supply and Innovation
Planning Practices

Business Strategic
IT Capability
Plan (Demand)
(Potential for new
business directions)
(Strategic Intentions)

Business Units and
(Strategy for the
(Strategic Agenda
Supply of IT)
for use of IT)
Two Planning Processes

The second relationship is where IT can innovate and contribute new busi-
ness strategic intentions, as well as new means for achieving the business strategic
intentions. This relationship is the basis for Innovation Planning. Impact works
to change the demand because of new or different business opportunities cre-
ated through IT.
This chapter describes two NIE practices: Strategic Demand/Supply Plan-
ning and Innovation Planning. Both fit into the Strategy-to-Bottom-Line Value
Chain and produce the sort of plans that permit a company to control IT spend
while maximizing IT™s bottom-line impact.

The Business/IT Planning Disconnect
Although Exhibit 9.2 shows the clear relationship between demand and supply
(the demand is defined by strategic intentions and business unit process require-
ments), and the clear opportunity for innovation (where IT capabilities can
impact, or change, the company™s strategic intentions), in practice getting busi-
ness and IT together in a meaningful planning relationship is marred by dis-
Many companies find it very difficult to effectively connect business and IT
planning. By “effective,” we mean producing IT plans (better projects, renewed
portfolios) that the business believes in, supports, and carries through to action.
Planning disconnects exhibit several symptoms:.

1. IT is not directly engaged in the business planning processes.
2. IT and business strategic planning is essentially shelfware, reflected by the
fact that annual plans and budgets are not specifically linked to or driven
by the strategic plans.
3. IT and business planning are done separately, with weak or no interaction
or linkages. Business planning assumes IT can react and respond to require-
ments; it does not consider IT-enabled innovations. IT planning focuses on
4. IT planning itself is highly siloed, with little or no planning across silos and
with few company-wide initiatives. These silos are both technical (applica-
tions, infrastructures, and IT services are often planned independently) and
organizational (multiple business units plan for IT separately).

Doing something about these disconnects can be difficult for a variety of
reasons, many of them political or cultural. Unless the senior executive team
believes that disconnects are a problem, the team is usually unresponsive to
making changes in the planning process. For example, a leading IT consulting
organization ” a firm where one would expect IT to loom large in planning
processes ” ignores IT as a factor in its strategic planning process. In another
example, a large financial services firm treats IT as a factor to be considered in
annual planning, but not in multiyear or strategic planning. In these cases, the

executive teams were surprised to learn that IT could be important to their plan-
ning; even then, they raised considerable resistance to IT™s participation.
Addressing disconnects should be based on the Strategy-to-Bottom-Line
Value Chain and the specific processes defined in the Strategic Demand/Supply
Planning and Innovation Planning practices. Briefly, we focus on the deliverables
in the Value Chain ” chiefly, the definition of the business strategic intentions.
The importance of a strategic planning process isn™t so much the establish-
ment of a strategic plan itself as it is the definition of the company™s strategic
intentions. This expression of what is important to management is the starting
point for establishing IT projects and plans and, ultimately, its spending and
budgets. In order to “control IT spending” and “improve IT™s bottom-line
impact,” we need to know the rules of the game ” that is, the basic directions
that management is setting for the business.

Connecting IT and Business Planning
The IT organization often does not help build connections to business planning
by the manner in which it conducts its own planning. Often, the term “IT strate-
gic plan” conveys a highly technical perspective, focusing on the infrastructure
and technical application developments thought to be needed. Any connection
to the business that exists in such plans is often a bland chapter listing the com-
pany™s public, high-level strategy statements, without identifying exactly what
IT could contribute to the success of those strategies. Reading such IT strategic
plans is an exercise in decoding acronyms and technical terms.
This problem ” the business/IT planning disconnect ” is complicated by the
common idea that business users are responsible for doing something about the
business plan, and IT is reduced to planning its own infrastructure requirements
and positioning itself to work through the business users. In other words, the
IT organization may believe its planning and actions cannot directly impact the
company™s strategies, because that is the responsibility of the business users. In
this view, commonly found in shared-service IT organizations, IT is “run like a
business,” by which they mean that IT responds to “user needs” as defined by the
business users. This approach to IT™s role is a great definition of the business/IT
planning disconnect.
Is this a problem? For some companies, maybe not. Perhaps the business
users are fully capable of translating IT opportunities into their own planning
processes and moving these opportunities forward in the development of the
company™s strategic planning. Perhaps IT isn™t a significant factor in the indus-
try, or perhaps IT™s role in the company is only supportive.
We believe that in most cases, it is a problem. Certainly, the disconnect com-
plicates the development of company strategic visioning about technology and
makes implementing company-wide initiatives across silos difficult. Perpetuat-
ing business/IT silos and intra-business silos reduces one of IT™s major contri-
butions: integrated and common information throughout the company, which
enables common processes and capabilities.
Two Planning Processes

Solving the disconnect starts by properly stating some of the objectives to
be addressed by an IT plan. Mostly simply, these include:

A clear statement of the strategic requirements for IT for the company as a
whole, and for each business unit.
A basis for prioritizing those strategic requirements based on support of
business strategic intentions.
Strategic direction for the IT organization for creating and maintaining the
necessary infrastructures, and the capabilities for developing, delivering,
and supporting the company™s applications.
Clear direction for effectively controlling the IT spend, at the same time as
improving, or maximizing, IT™s bottom-line impact.

These objectives cannot be met without clear connections between strate-
gic business and IT planning. Business and IT strategic planning has to occur
together, in sync.

Connecting Planning to Mission and Right Decisions
As noted in Chapter 5, the first goal we set for management is: “Translate enter-
prise mission, vision, and strategy into actionable, commonly understood strategic

EXHIBIT 9.3 Mission to Planning (Strategic
Intentions) to Right Decisions

and Vision

Strategic Business Intentions

Strategic Objectives for the Use of IT in
Planning the Business

Strategic Business Requirements for IT

Business/IT Programs and Projects

Decisions Business/IT Annual Plans

Business/IT Budgets

intentions.” By having good strategic intentions, management can define its
strategic objectives for the use of IT, which highlights how IT will directly sup-
port and enable each strategic intention. This is further defined into the busi-
ness capabilities required of IT, stated as strategic business requirements. This
then leads to business decisions and choices about programs and projects, plans,
and budgets. See Exhibit 9.3.
But it all begins with the definitions of the strategic intentions for the busi-
ness. As described in Chapter 5, these processes can be formal or informal. Ide-
ally, they are part of the management practices of the company.

Industry is awash in planning processes intended to provide “roadmaps” and
“blueprints” for “setting future directions” and “implementing mission state-
ments,” and so forth. Typically, these corporate strategic planning processes fail
to explicitly account for IT activities and strategies, either on the front end as
drivers for new business strategies or on the back end as enablers of strategic
intentions. See Exhibit 9.4.


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