Why Do Firms Need to Develop an It Strategy?

Why Do Firms Need To Develop an IT Strategy?

Introduction

IT strategy in business refers to a very detailed plan that professionals in information technology use to steer their organizations towards the desired outcomes. A strategy that is not strong usually proves too costly to an organization. A weak IT strategy would mean that an organization could not adapt fast to the changes in the IT sector, which occur regularly (Benson, R. J., Bugnitz, T. L., & Walton, W. 2004, 24). IT has become the central force in business strategy implementation. This fact explains the recent attention accorded to IT strategy in organizations. How organization uses its IT strategy determines how successful the organization would be in the end.

This would make an organization to react inefficiently, and may find itself in a constant activity of trying to adjust to changes happening in the information technology. Some organizations choose to have their strategy in a document; it should however maintain flexibility and respond fast to the circumstances within the organization and from outside. It should also be flexible to the changing business needs (Bilton, C., & Cummings, S. 2010, 35). IT strategy helps organizations answer some very important answers. Some of these questions include the following

  • Is the organization making maximum use of technology to address the needs of an organization?
  • Is the organization making the right IT investments?
  • Does the organization measure real value from the existing technologies with the organization?
  • Is the existing IT technology flexible and agile to provide continuous support to the organization?
  • Is the IT environment well managed, secured and maintained to support staff members, clients and other stakeholders? Is it affordable?
  • Can the IT strategy provide support to the currents needs of the organization and any other need that might arise in future?

From the above questions, it is now clear as why the role of IT in organization operations continues to be more important even despite the constant debates real value of IT in organizations (Griffiths, P. 2011, 47). IT professionals are facing pressure from the both inside and outside organization on the need to provide solution to both the technical and business problems facing organizations. Business and IT strategies should work together to support and complement each other.

IT strategy aims at ensuring that all aspects involved in the management of technology are all put into consideration the IT affairs of an organization(Bilton, C., & Cummings, S. 2010, 45). These aspects include the risk management, cost management, software management, human capital management, vendor management, and hardware management. For IT strategy to be effective, the officers in charge of IT must have strong leadership skills. It also requires close co-operation between IT professionals and other departments like the business, legal and budget departments of an organization.

The field of IT is so dynamic and IT team must ensure that they are ready and equipped to accommodate the emerging technologies in the IT strategies (Hua, G. B. 2013, 107). With regular changes in the field of IT, professionals need to find the best ways to endure that new technologies are adapted and included to work harmoniously with the existing technologies. This coexistence would ensure that the old materials and equipment are not rendered obsolete but are included in the organization’s strategy (Bilton, C., & Cummings, S. 2010, 52). The main alternatives available in ensuring that emerging technologies are well adapted to the existing strategy and materials are; management representation, interworking zones and functional abstraction.

In functional abstraction, similar technologies would be easily grouped together and considered as one same group. It would help the IT professionals to connect the new technologies with the older ones (Brown, A. 1992, 57). Data management visualization helps the professionals to synchronize the information held in the older equipment and materials with the emerging technologies. This would create a management connection between the old and the emerging technologies. Interworking zones means that the old technologies must be harmonized with the virtual elements of the emerging technology. These three measures would ensure that emerging technology is smoothly integrated into an organization’s IT strategies.

It is very important for managers of an organization to work closely with IT department to ensure that they all understand the direction, which the business is taking or is supposed to take. This close collaboration would make running the business more harmoniously because it helps in streamlining the business plan (Chew, E. K., & Gottschalk, P. 2013, 43). An effective IT strategy would ensure that the desires and needs of the company staffs are well catered for and it would help a great deal in creating an effective communication channels within the organization.

IT strategy should never be considered as just a supplement to the plans that the business has, this is because IT can really work well and help the managers shape the overall strategy of the business (Bilton, C., & Cummings, S. 2010, 55). IT capabilities of a business would help it mould all the plans it has for the future. Intergarting IT would therefore make the business plan more connected to the vision of the business and less chaotic as compared to the absence of IT strategy.

Properly aligned IT strategy gives a business a competitive edge in its marketing, production and other processes involved in business. IT strategy enable business and IT to move towards the same direction and this would ensure that the business use the best IT practices in attending to the needs of its customers. Consumption and production would go higher earning the business more profit. The clients and customers would be happy and this would mean a bright future for the business.

IT strategy clearly outlines the roles of IT managers. This would enable the managers to know how to fit with the overall business plan and makes it easy to understand what is required of them in ensuring the success of the business(Mazzucato, M. 2002, 42). The ability of employees to hold a clear communication with clients and colleagues helps a business achieve its goals smoothly. The work process and the streamlined communication channels are all possible with a well-structured IT strategy.

Lastly, IT strategy offers the IT department and other departments a platform to talk about the visions and plans of the business (Brown, A. 1992, 67). This would enable them to know how the business operates and understand how well they can work together to ensure that business plan is achieved. The close communication would enable the departments to understand the resources available to them in terms of information technology and how to use these resources to achieve maximum progress within the company.

IT strategy depends on the size of business or an organization. It is also affected by the other factors in the industry. In large organization, IT strategy needs to be more structured to be able to cater for the large size of an organization, numerous operations, and the requirement that stakeholders are included in the management of the organization. IT managers are tasked with the responsibility of ensuring that the strategy is aligned with the various complex and dramatic processes that occur in an organization (Bilton, C., & Cummings, S. 2010, 42). Due to the high volume of operations within a large organization, IT strategy must have strict control systems included in the strategic planning for the business to be able to achieve its visions and to conform to its values and ideals.

Larger organizations require that the IT managers create a strategy that would cater to needs of various clients and staffs at its various locations. One strategy should not be applied to locations of different geographic areas. IT system must accommodate the various sourcing methods, regulations of the organization and the hiring standards of the organization. IT department must therefore construct an IT system and model that would help the organization to have easier control of all the important aspects of business operations (“Harvard Business Review Press,” 2011, 70.) The strategy should take into consideration, the aspect of quality control, localization, and reporting. Due to their economies of scale, larger firms are able to go for the low cost strategies. This therefore means that the IT department must have competent managers to effectively manage these strategies.

On the other hand, smaller organizations could use entrepreneurial approach in carrying out its IT strategy. This approach is because of the fewer resources at their disposal and small scope of their operations (Brown, A. 1992, 27). IT strategy should ensure that it makes a small organization flexible, agile, and adaptable to new opportunities. The flexibility is very important to a small organization because it makes it competitive to survive and succeed in the competitive industry. For a small organization to achieve this, its IT strategy must create multiple paths that are all directed towards achieving the same objectives. Due to the small size, IT strategy should ensure that it is focused on achieving efficiency and innovation for the organization.

 

Factors to Consider When Developing IT Strategy

There are seven aspects to consider when developing an IT strategy for any company. The first step that the management should do is to conduct interview with the staff members in order to establish the needs and requirements of an organization. Information should be collected on some of the problems that an organization faces. Discussions should then be held to find out how the organization can make good use of the resources set aside for IT investment come up with a system that would solve the identified problems(Bilton, C., & Cummings, S. 2010, 43). A committee should then be set to steer the IT project. The interview process would enable the management to identify the gaps between the current state of an organization and the desired state.

Some of the gaps that are likely to be identified from the interview include the growth goals of the organization not correctly aligned with IT investments that are currently used by the organization (“HBR’s 10 must reads on strategy,”2011, 35). It would also be possible to find out that the size of the staff does not properly support growth of the organization or it may not meet the current requirements. Gap may also arise due to software applications, which require updating or complete replacement. Staff members may not have the necessary skills to work with the IT system of an organization and therefore not make maximum use of the system.

The second step would involve identification of strategic goals of the organization and then aligning them with the requirements and the needs of the organization. The management should then outline the objectives of the project and ensure that they are clear and in line with the goals of the organization (Benson, R. J., Bugnitz, T. L., & Walton, W. 2004, 42). Mandatory activities should be listed down like updating of network structure, implementation of organization’s security measures and improving procurement process.

Step three includes management brainstorming on ways of keeping the cost of the project low and affordable. They should for ways of reducing the expenses that would be incurred in the course of implementing the IT project. Redundancy should be avoided by re-using information. For example, information on the customers address could also be used to improve customer service and analyze their buying behaviors.

Step four involves creation of portfolio of all the IT investments. This would include defining all, which is required for the various IT needs of the organization (Mazzucato, M. 2002, 47). The needs may range from process improvement, maximizing existing infrastructure, identify new ideas among others. The management should then decide on how to manage and operate information centers. The plan for the training for administrators and staff members should be established at this stage. Techniques of data management would be very valuable at this stage, as they would help in organizing and planning on how to deploy the IT project.

Step five requires the management to prioritize areas to invest in before deciding on the final business strategy. The management would do better by taking calculated risk to expand on what the project is able to achieve. This should be done while also ensuring that the project maintains its goal of improving situation of the business and solving problems.

In step six, management should allocate budget for the project on a rolling basis. With the regular changes in the IT sector, it would not be a wise idea to carry out an annual budget when dealing with an IT project (“Harvard Business Review Press,” 2011, 40). Step seven requires that the IT strategy be evaluated on a yearly basis. Accuracy of the data should be validated, customer satisfaction level should also be within an acceptable level, and the savings on time and cost recorded. If the management realizes that the goals of the project were not achieved then is expected that they should adjust the budget and invest more on the project because there is no need of having a project that does not deliver, all in the name of saving funds.

Successful IT strategy should be understandable, brief, and compelling, but in most cases, achieving such a strategy is not always easy. IT strategy aims at ensuring that an organization is able to improve on its future capabilities to handle challenges like the costs, risks and to improve on the agility. For an IT strategy to succeed, it must reduce the number of portfolios within its business applications. Infrastructure of the IT system should be simple and should involve fewer fragmentations. The data and the proposed solutions should be simple and duplications must be avoided at all costs (Mazzucato, M. 2002, 60). The strategy document needs to be relevant to the business so that it can be able to use it in navigating IT and the involved investments.

Successful IT strategy would ensure that there is a clear alignment between its objectives and the goals of the business. Focus should be on both the applications used and the business needs. The management need to carryout detailed analysis of the state of the business and the problems identified (Gong, Y. 2013, 62). IT strategy should identify the capabilities of the existing infrastructure before identifying areas that need investments. The objectives should then be created to be aligned to the needs (Problems) of the organization.

The technologies used in a strategy should be extensively assessed to determine their technical and functional qualities. Successful strategy should also aim at strengthening the capability of an organization to achieve its targets and to solve the identified problems within the organization. All these therefore point to the strategy planning (Bilton, C., & Cummings, S. 2010, 85). Effective planning would ensure that all these factors are put into consideration. The information generated during planning stage would enable decision makers to all the relevant information to make cost effective decisions, which help organization address all its needs effectively.

Importance of Aligning IT with the Business Strategy

Every organization recognizes the importance of having working IT system within an organization. Information system has become one of the fundamental areas in every organization (“HBR’s 10 must reads on strategy,”2011, 15). IT helps organizations achieve objectives and reduces hurdles faced in the process of achieving the desired goals. The use of IT would help business reduce it s cost of operation. It would also help to standardize all the business processes and create a feeling of uniformity in all the processes. Using an IT in an organization helps to enhance its productivity and to harmonize communications within the organization and improve the workflow.

Use of IT would ensure that the organization maintains good service levels, which repeated regularly. Risk control mechanisms within the organization would be more efficient and effective due to the incorporation of IT strategy. New strategies of the organization are smoothly implemented because of IT. Both the acquisition-driven and organic growth is facilitated through information technology strategy (Bilton, C., & Cummings, S. 2010, 56). All these advantages play very critical role in making the organization more competitive since IT makes organizations gain competitive over other organizations in the industry.

It is therefore the duty of the management to strive and ensure that the organization’s IT strategy is shared by all the partners, suppliers and the customers so that they are aware of the organization’s IT state. The management should also employ the use of models to explain plans included in the strategy. This is important because it eliminates abstract thing among the staff members and improves on the discussions and sharing with other members inside the organization.

Having an aligned IT strategy with the goals of an organization would help a great deal because it would enable the management and other staffs to understand how an organization operates (Dubey, S. 2011, 24). IT strategy also makes them aware of the direction, which the organization is headed. All members of the organization, who are involved in the strategic implementation, are made aware of what they can do to help an organization reach its desired state. The strategy makes evaluation of the IT projects simple and understandable (Mazzucato, M. 2002, 40).  IT strategy also enables organizations to decide on what they would wish to change and do differently in future. The staff members would learn how to do things effectively using the IT system put in place. The organization would be able to make better decisions; both the technical and business decisions.

Conclusion

The modern world demands that organizations have effective IT strategies. It is advisable that organizations learn ways in which they can develop IT strategies and know how to integrate them with business strategy. A well-balanced strategy can create big improvements in the capabilities of an organization. Strategy should aim to achieve the correct balance between conflicting forces. There is no one laid- out procedure for developing IT strategy, but there are some elements and factors that are considered components of IT strategy.

 

 

 

 

References

Benson, R. J., Bugnitz, T. L., & Walton, W., 2004. From business strategy to IT action right decisions for a better bottom line. Hoboken, N.J., Wiley.

Bilton, C., & Cummings, S., 2010. Creative strategy: reconnecting business and innovation. Chichester, West Sussex [England], Wiley.

Brown, A., 1992. Creating a business-based IT strategy. London, Chapman & Hall.

Harvard Business Review Press. (2011). Harvard business review on aligning technology with strategy.

Chew, E. K., & Gottschalk, P., 2013. Knowledge driven service innovation and management: IT strategies for business alignment and value creation. Hershey, PA, Business Science Reference

Dubey, S., 2011. IT strategy and management. New Delhi, India, PHI Learning.

Gong, Y., 2013. Global operations strategy fundamentals and practice. Berlin, Springer.

Griffiths, P., 2011. Strategy-technology alignment: deriving business value from ict projects. Academic Pub.

Hua, G. B., 2013. Implementing IT business strategy in the construction industry. Hershey, PA, Business Science Reference

Mazzucato, M., 2002. Strategy for business: a reader. London, Sage

(2011). HBR’s 10 must read on strategy. Boston, Mass, Harvard Business Review Press.