IT Strategy Frameworks : Building For The Future

Mission and vision statements may influence your culture and be fun to stencil on the wall in your reception area; but developing the framework for an IT strategy that furthers your business goals and defines the resources and timeline needed to move toward those goals is the only way to ensure you’ll be in business long enough to even have a reception area.  

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Missions and visions are for style. IT strategy frameworks (or IT governance frameworks) are for structure and substance.

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An effective IT strategy framework helps those who are meant to execute it quickly understand their options, make informed decisions, and take action.

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Today we’re going to dive deep into creating an IT strategy framework that will prepare you with the tech, tools, people, and budget you’re going to need no matter how digital transformation changes as the fourth Industrial Revolution marches on.

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What is an IT strategy framework?

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At its core, an information technology strategy framework defines the essential elements of the IT department’s overall strategy and how those elements should interact and grow to produce continued value.

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Your IT strategy itself focuses on how IT will further the organization's business goals. Its framework is a conceptual structure that guides the implementation of that strategy while also tying in any outside relationships and resources that need to be managed so the strategy can function at its fullest.

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No two IT strategy frameworks will ever be exactly the same. What works at one time for a specific set of goals may never work again once the parameters change. That’s why it’s very important for IT leaders to understand the value of creating a strong framework that works smoothly even as new technology and business priorities are introduced.

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While a CIO will traditionally take ownership of creating the IT strategy framework, you’ll learn in this article how important it is to include other resources both within and outside the IT department to ensure the final strategy can hold its own as a business-leading element across the entire company.

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Why Do I Need An IT strategy framework?

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CIOIndex asks a powerful question that I’m sure many of us have pondered in the age of digital transformation:

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Bingo.

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That need to visualize IT’s effectiveness is exactly why you should focus on creating an information technology strategy framework.

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The vast majority of decision makers in the business realm think in one acronym—ROI. And when it comes to IT, non-technical business leaders are either trying to get rid of IT investments with low or invisible ROI or turn up the value on those IT investments where they are seeing return.

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(Psst... learn more about how IT fits into the business world during our webinar: "IT in the Modern Enterprise")

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Due to the nature of IT being a complex topic and having been relegated to performing only internal tasks in the near past, it can be really hard to understand how it’s moving the needle on business goals.

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That’s why the IT strategy frameworks we build today must have mechanisms that:

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• Tie each initiative to a business objective
• Understand investment and ROI before pursuing an initiative
• Quantify benefits of the initiative, especially when they aren’t explicitly monetary
• Assess the impact of decisions before sinking a bunch of money into them
• Continuously monitor an initiative’s impact on alignment and value to enable course correction before it’s too late

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An IT strategy framework that enables these checks and balances will help bring business and IT alignment to the forefront and result in benefits such as the following:

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• CIOIndex believes that over 10 percent of IT investments don’t actually benefit business initiatives at all. Eliminating these outliers could easily eliminate 10 percent of your IT expenses.
• By fine-tuning IT investments per your new alignment mechanisms, you’ll be able to make initiatives more efficient and create a better ROI.
• With an alignment-focused IT strategy framework, you’ll have a guide for making better decisions when it comes to IT budgeting, application life cycles, enterprise-wide architecture planning, staffing, outsourcing, and more.
• An organized and laser-focused framework gives you deep visibility into the current state of business and IT alignment to identify where value is being lost, root causes of misalignment, and the impact that management decisions have on alignment and value over time.

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Building Your Future: The 6 Foundational Elements of an IT strategy framework

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Despite the fact that IT’s role in the success of an organization is still often misunderstood, it’s important we remember that digital transformation is bringing with it a generation of business leaders who value information technology and are trying to bring it into the fold beyond just admin duties.

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That’s why now is the perfect time to get a jump on future proofing your business by developing a smart IT strategy framework that positions your IT capabilities as a differentiator among your peers.

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Shall we?

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1. Approved Business Strategy

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If you’re going to be able to align with your business’ strategy and goals you’re going to have to, well, know what they are.

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Simple, right?

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Unfortunately, even large enterprises don’t always have a crystal clear business strategy. And if they do, you might find it’s out of date considering rapid changes in tech-enabled business models. Or maybe it’s just dang near impossible to digest.

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In situations where the business strategy is unclear, a CIO will need to speak with key decision makers throughout the company and look at their track records of decisions to infer the direction of the company.

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An effective IT strategy framework aligns IT directives with overall business strategy. You’ve got to get on the same page when it comes to the goals, timeline, and boundaries of your organization’s strategy if you’re going to have any success making your IT program effective.

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(Psst... learn more about how IT fits into the business world during our webinar: "IT in the Modern Enterprise")

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2. Plan for Application Portfolio Change and Management

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Many functions of a well-oiled business can be boiled down to a set of processes running in harmony.

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Today, digital applications power a good many of those processes. That makes them very important to savvy business leaders. Because it brings together what can be two disparate departments, application portfolio change and management is a delicate area where an understanding and balance must be struck.

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Application changes are dictated by business strategy, but it’s the responsibility of the IT department to prove its effectiveness by managing these changes in the company’s best interest—even when that means having some teaching sessions and hard conversations with the C-suite.

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Especially if you find your business undergoing a digital transformation that requires revamping much of its business model, having a plan for application change and management in your IT strategy framework will prove vital.

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3. Focus on Efficient Service and Ops  

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The functions IT performs to make workers able to complete their wide variety of daily tasks are known as “operations.”

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If you’re immersed in the depths of IT you might not consider operations a huge priority—but your coworkers do. Investments in IT are measured daily by how usable and efficient operations are.

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Operations fall under service, which IT departments are expected to provide their organizations. The dimensions of this agreement may be formally stated in a service-level agreements or inferred from a section of the business strategy.

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Service, and therefore operations, may go beyond internal users to external systems and the parties that use them—including customers and vendors. The higher the level of service; the more money it will cost the company, the more time it will take the IT department to execute, and the more important it will be that the service aligns with the overarching goals the company wants to achieve.

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Operations and services can mean different things and have everywhere from a minor to a major role from organization to organization. That’s why it’s important to leave room to consider them when developing an IT strategy framework.

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4. Teachable Architecture

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Accounting for architecture in your IT strategy framework is a pretty big deal because it outlines the building blocks you’ll need when developing your actual IT strategy.

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While you yourself of course need to (and probably already do) understand your current and proposed IT architecture like the back of your hand, this is about finding a way to explain just enough of it to keep key decision makers informed and encouraged about your IT strategy.  

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Ultimately, IT architecture is the most technical aspect your low-tech business partners will need to have a firm grasp on. It represents your hardware, software, operating systems, and the networks that tie it all together. Architecture is vital to essentially “delivering” IT end products to your company and its customers. That’s why it can make up one of the largest costs in your IT budget—another reason you’ll want to make sure its impact is understood.

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In Gartner’s model of an architectural structure, the top two layers—Power Grid and Value Chain—represent online services, applications, business processes, and other elements of IT architecture that are vital to business strategy execution.

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During the development of your IT strategy framework, it is this upper half of your architectural structure you must emphasize and explain when it comes to focusing on ROI and IT-business alignment.

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5. Collaboration On The Right Financial Tools

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We warned you that creating an effective IT strategy framework would involve collaborating with new departments!

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Financial tools help facilitate decision making. And because both decision making and financial resource allocation are key elements of a nimble, modern IT strategy—IT professionals gotta get familiar with them fast.

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A CIO and other IT leaders need to collaborate with their coworkers over in finance to understand which financial tools are available and how to best use them when it comes to making strategic decisions. Not only that, IT professionals should be on good enough terms that they get a say in which financial tools the organization chooses to adopt or leave behind in the future.

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Financial tools provide a consistent guide by which to make decisions  such as which projects to pursue and when throughout the implementation of your IT strategy. They provide a universal language in which any member of your team can understand why you made a certain call and what IT actions are doing to move the needle on the bottom line.

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There are tons of options for financial tools. What’s important to remember is that all you’re really trying to do with them is estimate as close as possible what an initiative is going to cost, the value it’s going to return, and when.

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Traditional financial tools may include payback period, discounted cash flow, internal rate of return, return on investment, economic value added, and free cash flow.

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More modern finance tools consist of total value opportunity, intangible components, and real option valuation.  

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6. Skilled and Talented Folks

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No matter how technical the details get, putting the right people in the right roles will probably always be the most challenging building block of creating an IT strategy framework for the future.  

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As long as humans are still playing key roles in business and IT strategizing and implementation, managing the skills inventory is a vital responsibility in creating successful outcomes.

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Putting people in the right roles is actually quite a unique skill in itself as it requires identifying a metric that’s hard to define: Talent.

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Talent is an instinct that influences the way people act. It can’t be taught nor changed. It dictates why some people in your IT department can create brilliant technology that they struggle to describe and others shine in cross-functional management roles where they have to convey technical terms all day.

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Both skills and talent are required at the upper levels of IT. The ability for CIOs and other IT leaders to recognize and use them effectively is vital in an effective IT strategy framework.    

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Putting it All Together: 5 Steps to Creating an Effective IT strategy framework

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Even though a “framework” is often used to refer to a solid thing, an information technology strategy framework in the age of digital transformation should be flexible and fluid to keep up with ever-more-rapid demands. That’s lucky for us because it also means we should take special care to keep our frameworks as simple as they can be while still being effective.

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More complexity leads to more expense and more errors over time. Save your energy for the implementation stage you’re sure to enter swifty after using these five steps to deliver an IT strategy framework your C-suite loves.

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1. Understand IT’s Role in Overall Business Strategy

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It’s time to bust out your business analyst hat because you’re diving in deep.

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Even if your company is one of the rare few with a digestible business strategy, you still can’t take it at face value. Step out of your tech bubble and make sure you really understand exactly what business you’re in so you know you can deliver on the capabilities your organization needs (and even the ones it doesn’t know it needs) now and in the future.

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Read the budgets. Interview the managers and leaders. Understand where you are and where you’re heading—whether that’s into new markets, new countries, or new mergers.

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Not only will a deep dive into business strategy help you create a more informed and future-proofed IT strategy framework—you might even find ways where your IT department can enhance the current business plan.

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(Psst... learn more about how IT fits into the business world during our webinar: "IT in the Modern Enterprise")

2. Define the Capabilities You Need for the Goals You Want to Achieve

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Great, you’ve got a solid grasp on the plan. But does your company realistically have the tech capabilities it needs if this plan were to go into action exactly as described?

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Develop a map of your current capabilities to make sure you’ve got the tech chops you’ll need if everything goes according to the timeline.

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That doesn’t just mean making sure your own IT department is building out the apps and making the right hires right now. Consider future capabilities that could crop up thanks to rapidly-changing technology, the vendors and contractors new tech could require, and so on.  

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Challenge your finished capability map by collaborating with experts both inside and outside of your IT department to look for holes in the “business nervous system” you’re developing.

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3. Establish a Baseline

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I hope you’re feeling really solid on your capabilities map—because it’s about to be put to the test.

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To understand where your current capabilities lie, simply overlay your current map of capabilities on top of the structure you’re gunning for.

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It’s as easy as that to develop the first blush of the gap analysis you’ll be examining more closely in the following step.

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4. Identify Gaps and Choose Which Ones to Close

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Outdated. Poor delivery. Just totally missing. There are a host of reasons for gaps in your capabilities, but right now is not the time to worry about that.

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Focus on identifying major gaps that need to be addressed in order to achieve your target capabilities. Nothing less and nothing more. We’re keeping it simple, remember?

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And good thing, because here comes the hard part: Decision making.

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You’ve got to choose exactly which gaps to focus on and put together solution teams who will report back on how to close these gaps. Plan to spend a good chunk of time wading through the  tons of information, opinions, and solutions that are about to come your way.

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Similar to many of the steps you’ve already taken to develop a future-proof IT strategy framework, this phase practically requires some outside help if you’re going to make solution recommendations in this century.

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Bring together experts from around your IT department, your company, and even outside your organization to ensure you understand not just the technical details but the cost and dependencies attached to each solution.

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Going into the implementation phase will be a lot less scary and more productive if you can already speak to the nominal cost and general scope of each solution to close the most important gaps.

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5. Align Implementation and Value with Business Needs

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Before you even step foot into defining implementation and unleashing your plan upon your leadership team, we strongly encourage you revisit step one for as long as it takes to make sure you’re rock solid on business strategy.

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Armed with a crystal clear idea of where business demand is now and where it’s likely heading in the future, you’ll be equipped to present an IT strategy framework where each project deliverable hits at the perfect time to provide value for the business stage you’re in.

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And instead of dropping a large, unexplained cost bomb, each of your planned releases will have value projections associated with them.

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To make sure your presentation goes off without a hitch, go back to those finance friends you made before to build out these value statements for each release. They might read something like this: “We predict $XXX,XXX ROI in quarter 4 of this year if we are enabled to spend $XX,XXX in the first half of quarter 1 to build out this vital IT capability by the end of quarter 2.”  

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Hold on to that financial whiz. Because you’ve refused to speak in terms of long-term budget absolutes (right?!), your budget and value assessments will have to stand the test of time as each IT implementation is scrutinized against the numbers to ensure it’s moving the needle on overall business strategy.

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An IT strategy framework isn’t nearly as scary as its name suggests. But it is becoming a more important business element than ever before now that digital transformation is giving IT a starring role in both internal operations and consumer-facing business models.

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By creating a foundation upon our common-sense building blocks and following our no-nonsense steps to develop your IT governance framework—your IT and business strategies will be aligned against whatever challenges, changes, and competitors the future throws your way.