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Goals for the
Alignment Alignment
Use of IT by the
Business




Strategies and Innovation Strategies and
Goals for the
Goals for IT
Business




What are How will IT deliver,
the Business to respond to
Drivers? the Business Drivers?




We look to answer three fundamental questions.

1. What are the business drivers? We use strategic intentions, objectives, and
initiatives to answer this question. It is critical to get down to understand-
ing what the business organizations intend to do to achieve their strategic
intentions.
Note that our purpose is not to do business planning here. We use the
three-level structure to identify and communicate the business drivers, not
define them. In practical terms, many companies will find that this struc-
ture will cause some additional insights into their own plans. But we are not
holding ourselves out as performing business planning for them.
The Innovation Planning practice, however, does provide some oppor-
tunity for changing the business strategic intentions and providing addi-
tional strategic objectives and initiatives. We provide for this in Step Two
of the process (described below).
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The Strategic Demand/Supply Planning Practice


2. What is the role for IT in responding to the business drivers? This is the key
innovation of the Strategic Agenda for the Use of IT: the formal expression
of exactly what IT can and should do for each of the strategic intentions.
This is also a two-edged sword in that the business units find that the state-
ment of intentions for the use of IT also places a burden on them to actu-
ally plan for and use IT as specified. We find that this fills a critical gap in
strategic planning. Rather than placing all attention on what IT must do,
this process places equal attention on what the business organizations must
do to employ IT to achieve their objectives.
3. How will IT deliver, to respond to the business drivers? This is IT™s tech-
nology strategy, built to satisfy the role IT needs to play, as defined in the
Strategic Agenda.
The answers, in terms of IT strategic intentions, IT strategic objectives,
and IT initiatives, focus the IT organization on achieving the business goals.
This also serves to differentiate between IT delivery strategies (e.g., data
warehouses, WANs, wireless) from IT use strategies (e.g., availability of
information to business, access to business information throughout the com-
pany, untethered access).

The process occurs at two (or more) levels: at a business unit level and at
the enterprise level across all business units. Within both of these levels, the IT
portfolios play an important role because they describe the full range of IT
applications, resources, and services across the enterprise. This means that, at
the first level, business unit managers can see how other business units are suc-
cessfully using IT resources to achieve strategic goals. This can trigger a new set
of ideas about how those same resources can be applied in a similar fashion
within their business unit.
The planning process itself is a set of management processes that develop
the content of the three-level framework. The objective is to describe doable
processes that any executive team can conduct. The management processes are
organized into seven steps, moving from business strategies and plans and result-
ing in IT strategies and plans.
In practical terms, the specific planning process is very dependent on the
company circumstances, the relationships between IT planning and business
planning staff, and the level of maturity in planning. (See Chapter 12 for a dis-
cussion of maturity and process.) The planning process is also dependent on the
perception of business and IT management as to the specific goals to be achieved
through the planning process. The process steps are shown in Exhibit 9.13.
Note that most other IT strategic planning processes begin with “Define
business objectives.” Their purpose is to assure that business completely drives
the IT planning process. We certainly agree with having business drive IT plan-
ning, but we find that business planning needs to have some idea of the possi-
ble contributions IT can make to the success of its strategic intentions and,
perhaps, in the contribution of new strategic intentions.
184 PLAN FOR THE RIGHT RESULTS


EXHIBIT 9.13 Step-by-Step Planning Process

General Process Step Primary Purpose

Provide IT Strategic Step 1 Identify business mission and key management team
Input into Business objectives.
Strategies and Plans
Step 2 Visioning and Innovation: Awareness of IT potential
for contributing to new and existing business strategy.

Identify Business Step 3 Establish or identify business strategic intentions at a
Strategies and Plans company level.

Step 4 Establish or identify, for each key business
organization, strategic objectives, and initiatives.

Establish IT Role in Step 5 Define the Strategic Agenda for the use of IT; identify
Meeting Business strategic intentions for the use of IT in the company.
Strategies and Plans
Step 6 Define the Strategic Objectives and Initiatives for the
use of IT in each key business organization.

Prepare IT Strategies Step 7 Define the Strategic IT Plan for the IT organization;
and Plans define the strategic intentions, objectives, and
initiatives for the delivery of IT.




Result
The purpose of the Strategic Demand/Supply Planning practice is to produce an
actionable strategic plan for IT, consisting of a statement of business strategic
requirements (demand) and IT strategic response (supply). However, given that
other parts of the NIE practices also produce potential IT initiatives and resource
decisions (Innovation and Alignment), the strategic plan from this phase is a
beginning framework for further IT planning at a detailed level.
Consequently, there are two outputs from the Planning practice: the Strate-
gic Agenda and the Strategic Plan.
The Strategic Agenda builds on the company™s strategic intentions, and adds
clear statements about how the company intends to use IT to achieve the goals
of the strategic intentions. The Strategic Agenda is a bridge between the over-
all corporate strategic plan and the IT strategic plan. It is a high-level directional
statement, explicitly tied to strategic intentions, that tells both business and IT
management what the company expects IT to do to promote the company™s
business strategies.
The strategic plan builds on the strategic agenda. Taking a portfolio view,
the strategic plan expresses what actions and initiatives IT will undertake, in
each of the portfolio areas, to fulfill the objectives of the strategic agenda. Note
a major difference between the NIE strategic plan and many traditional IT
strategic plans: this plan does not include individual projects. The strategic plan
focuses on high level technology-oriented strategies and objectives, and states
185
The Strategic Demand/Supply Planning Practice


in broad-brush terms what IT will do, from the technology perspective, to sup-
port the strategic agenda. It includes programs and initiatives that IT may under-
take in each of the four portfolio areas, but it stops short of articulating specific
projects that IT may do as part of those programs.
Beyond the deliverables, the Strategic Demand/Supply Planning practice has
a wide impact on the company™s planning processes and cultural view of IT and
its role in the company. By involving business management in crafting the strate-
gic intentions and strategic agenda for IT, the practice creates two-way under-
standing between business and IT of the role that IT must play for the company.
Clear strategic statements produce clear communication, and communication is
the basis for effective IT actions.


Critical Success Factors: Right Decisions/Right Results Principles
in Strategic Demand/Supply Planning
Actionable Strategic Intentions. The Planning practice serves to crystallize
the business strategies and visions into strategic intentions that IT can act
upon. The process explicitly requires business management to “translate”
traditional strategy, mission, and vision statements into strategic intentions
that communicate to IT, and the business, exactly what management intends
to do to improve business performance.
Actions Tied to Strategy. Most top-down planning processes result in
planned actions that are driven by the strategic inputs. However, that leaves
the existing activities potentially unconnected to new strategies. Strategic
Demand/Supply Planning combines both, by driving new programs, initia-
tives, and strategies from business strategies, but also reexamining all ongo-
ing activities in the context of the company™s strategic agenda. In this way,
all new and existing activities are directly connected to the strategic agenda.
Common Understanding of Strategic Intentions. In many companies, IT
managers must interpret business strategies and translate them to IT strate-
gies and actions, often times only approximating the intent of business man-
agement. The Planning practice is a way to synthesize business strategic
planning results from traditional planning processes into defined strategic
intents, eliminating the need for IT to interpret management strategies. The
practice requires business and IT management to understand and agree on
the strategic and operational meanings of the business strategies, allowing
IT to take actions with the explicit understanding of where the business is
headed. See Exhibit 9.14.
Value-Based Resource Allocation. Consensus-driven strategic intents are the
bedrock for assessing the bottom-line impact of IT activities. Through Pri-
oritization and Alignment practices, strategic intentions that come from the
Planning practice drive all resource allocation decisions in each of the IT
portfolio areas. Without strategic intentions, there is no basis for making
value assessments; without Planning, there are no clear strategic intentions.
186 PLAN FOR THE RIGHT RESULTS


EXHIBIT 9.14 Goals and Practice Principles
Goals Practice Principles
Actionable, 1. Actionable Strategic Intentions
Commonly 2. Actions Tied to Strategy
Understood Strategic
3. Common Understanding of
Intentions
Strategic Intentions
The Right Business 4. Business-Focused Outcomes
Results from IT 5. Value-Based Resource
Allocation
Management Culture 6. Role-Based Culture
and Consensus View Management
Portfolios and 7. Value/Portfolio-Based
Portfolio Management Resource Management
The Right Actions 8. Responsive to Change
and Results




Portfolio-Based Resource Management. The Strategic Demand/Supply Plan-
ning practice uses four IT portfolios as the basis for planning analysis. By
assessing existing and proposed portfolio elements against the strategic
intentions that result from planning, IT and business management can allo-
cate resources to those portfolios based on their existing and potential con-
tribution to the business. There are no anecdotal assessments in this process;
all assessments are made by looking at the total portfolio in each area, and
acting to maximize the impact of the entire portfolio.
Business Outcomes. Again, strategic intentions that result from the Strategic
Demand/Supply Planning practice are the basis for cause-and-effect analy-
sis for IT initiatives. Without this type of strategic intent definition, there
is no clear basis for assessing an IT initiatives impact on business initiatives
and strategic intentions. Planning again provides the clear context for mak-
ing these assessments.
Responsive to Change. By splitting the Demand and Supply components of
the IT strategy, the strategic agenda and strategic plan are allowed to quickly
adjust to changes in the business strategic IT requirements. Changes are
easily driven from new strategic requirements into the strategic agenda,
driving in turn new programs and initiatives for IT.
Role-Based Culture Management. Strategic Demand/Supply Planning requires
that business and IT managers participate in very specific ways to develop
the strategic IT requirements, and that IT work closely with business man-
agers to develop the corresponding IT Strategic Agenda. This planning
process, by forcing the interaction between these management groups and
delineating the roles of each in producing the IT Strategic Plan, begins the
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The Innovation Planning Practice


overall process of changing the way business and IT interact, and hence
the culture of how business will use IT to achieve its strategies.

Summary ” Strategic Demand/Supply Planning
The Strategic Demand/Supply Planning practice bridges the gap between busi-
ness strategic planning and actionable IT strategic plans. By focusing on strate-
gic intentions and the IT strategic agendas needed to accomplish them, the
practice builds a consensus view on exactly how IT will be used, and how IT
can impact the company™s strategies, both tactically and as an influencer of new
strategies.
By incorporating a portfolio management perspective into the planning
process, the Planning practice ensures that all aspects of IT are considered, and
resources are allocated to high-value initiatives, across and within the portfolio


THE INNOVATION PLANNING PRACTICE

Introduction
Historically, IT has been, and still is, primarily a support organization. (See
Exhibit 9.15.) Its goals and its criteria for success have been related to its abil-
ity to respond to the needs of the business through business applications, infra-
structure capabilities, and related support services. A key word used to describe
IT™s role as a support organization has been automation ” to take an existing
business process or function and replace the human processing elements with
those of a computer. IT has been judged by its ability to align its resources with
the needs of the business and to reduce costs, both its own unit costs and those
of the business processes that it has automated.


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