Strategic Planning For Information Technology

Strategic Planning for Information Technology

Executive Summary

Strategic planning for information technology is one component of an overall company vision for success. This analysis enables IT professionals to successfully define short and long-term goals and discover the resources necessary to realize such goals. To ensure success, the strategic plan should be developed in a thorough but rapid manner, consist of a brief, succinct compilation of analyzed data, and provide opportunities by which additional planning and analysis can occur.

Several important benefits occur as the result of a successful strategic IT plan. First, employees are provided with an understanding of how their role fits in with the overall company structure. Also, this planning allows managers to realize additional opportunities for growth and success. Finally, important relationships between technology investment and positive outcomes, such as increased market share, are revealed.

In spite of these benefits, shortcomings of strategic planning do exist, involving the difficulties in implementing a new technology in a timely manner before other newer technologies reach the market place, the lack of qualitative information contained in the plan, and the sometimes overlooked component of human creativity. However, strategic planning remains an integral factor in any company's success and the lack of a strategy can result in hidden costs such as decreased revenue potential.

A number of tools exist to facilitate strategic planning, including a Return on Investment (ROI) Analysis. This tool allows managers to assess the value of an investment over time, taking into consideration factors such as the strategic objectives of the analysis itself, measurement of costs and returns, the ways in which the analysis fits into overall business process and external environment, and political and organizational risk factors.

Strategic Planning for IT

Strategic planning is more a vision than a concrete plan. It encompasses what the company hopes to become and prioritizes the ways in which that vision will be realized. Strategic planning for information technology does not exist in a vacuum. It is but one part of an overall plan and should exist as an extension of business plan information technology fundamentals. This paper will discuss factors contributing to the success of strategic IT planning, the benefits and shortcomings of such a plan, reasons why some IT professionals may choose not to implement a plan and potential hidden costs associated with such a decision, and a model by which strategic planning can occur. In addition, Return on Investment analysis, an important tool in developing a strategic plan, will be discussed.

The successful IT strategic plan is a combination of a vision for the future with a strategy for decision making that incorporates long and short-term goals, architecture necessary to achieve these goals, and any other hardware, software, communications equipment or applications needed (Lucas, 2004). An implementation schedule is developed for the new technologies under consideration, and resources needed, such as money, time, and staff are carefully analyzed. The successful strategic IT plan facilitates the management of requests for the CIO and the IT team, allowing those involved to quickly evaluate technologies against the plan and eliminate those not appropriate.

Successful and effective strategic IT plans must also meet three criteria. First, development of a strategic plan should be a rapid process. Professionals should prioritize needs and outline key strategic questions to be answered. Typically a very small team comprised of the CIO and a few senior IT management personnel accomplishes this. Once the priorities are established, a larger team is formed of member representing the various IT departments and interests within the organization. The second criteria, completed by this larger team, is the condensing of detailed, complex material developed over a relatively short period of time into a brief, succinct output that can be effectively utilized by each IT department. Finally, this document should meet the third criteria in that it provides the framework by which additional planning can occur (Strategic Planning for IT: Information Technology Strategies, 2001).

The benefits of a successful and effective IT strategic plan have a significant impact upon a company. Three primary benefits are realized. First, strategic planning gives IT employees a picture of how their role in the company is linked to the overall objectives. This facilitates cooperation and coordination of efforts towards common goals. Second, planning allows managers to realize opportunities for growth and success. It encourages clear revenue growth goals, promotes understanding of the markets in which growth can occur, and provides clear insight into specific investments needed to generate overall company growth. Additionally, strategic planning and analysis also reveal the cause-and-effect relationship between technology investment and implementation and the desired outcomes, such as increased profits, enhanced workflow, or increased market share (Kaplan and Norton, 2000).

However, in spite of these benefits, several shortcomings of the overall process can exist. It is difficult, if not impossible, to accurately predict the time course of technological advances (Mintzberg, 1994). While a company devotes time and resources to planning, analyzing, and implementing new technology, the technology itself may be rapidly changing. Strategic IT planning can often take four to six months to generate a comprehensive document detailing projects and timetables (Kern, 2004). The world will not stand still to wait for completion of the planning process. Companies need to balance time invested in strategic planning with the pace of their competitors in the market place.

While the end result of strategic planning may be a succinct document based upon hard, quantitative data, the creation of this may actually exclude important details. Qualitative information and subtle nuances experienced only by those immersed in the daily and sometimes seemingly mundane details of the business, and typically not by senior level management, can provide rich and invaluable contributions to the real-life success of the plan. However, since time is a critical factor in the implementation of any new technology, these details must often be overlooked.

A third shortcoming of strategic planning lies in the formalization of the process itself. While formally developed systems provide the means to process hard