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IT Strategy Development Guide

The document provides guidance on creating an effective IT strategy that is aligned with business objectives. It recommends first clarifying the overall business strategy using models like the Discipline Driver model and Hedgehog concept to identify the key strategic priorities. This allows the business and IT functions to work together on extending the strategy map and identifying which business systems and processes could be automated to help achieve the strategic goals around acquiring customers, lowering costs, improving operations, and more. The document also stresses the importance of infrastructure, security, and considering outsourcing the IT function.

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0% found this document useful (0 votes)
246 views15 pages

IT Strategy Development Guide

The document provides guidance on creating an effective IT strategy that is aligned with business objectives. It recommends first clarifying the overall business strategy using models like the Discipline Driver model and Hedgehog concept to identify the key strategic priorities. This allows the business and IT functions to work together on extending the strategy map and identifying which business systems and processes could be automated to help achieve the strategic goals around acquiring customers, lowering costs, improving operations, and more. The document also stresses the importance of infrastructure, security, and considering outsourcing the IT function.

Uploaded by

rameshkoutarapu
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
  • Summary
  • Creating an IT Strategy
  • The importance of a clear strategy
  • Creating a Balanced Score Card
  • Bringing ICT into the picture
  • Infrastructure and Technology
  • The strategic benefits of outsourcing the ICT function
  • Conclusions and Recommendations
  • Bibliography

Creating an IT Strategy

Mike Waterston
December 2008

Waterstons Ltd
Liddon House,
Belmont Business Park,
Durham,
DH1 1TW

Telephone: 0845 094 094 5
Website: [Link]


2
Contents

Summary ................................................................................................................................. 3
Creating an IT Strategy ........................................................................................................... 4
Introduction ............................................................................................................................. 4
1 The importance of a clear strategy ................................................................................... 5
1.1 Preparing a Strategy Map ......................................................................................... 6
1.2 Creating a Balanced Score Card ............................................................................... 8
2 Bringing ICT into the picture ............................................................................................. 9
2.1 Extending the Strategy Map ...................................................................................... 9
2.2 Business Systems Automation ................................................................................ 10
2.2.1 Acquiring and Retaining Customers ................................................................. 10
2.2.2 Raising quality and lowering costs ................................................................... 10
2.2.3 Improving worker effectiveness and instilling team work .................................. 11
2.2.4 Providing accurate and timely management and control information ................ 11
2.2.5 Reducing business risk and protecting information and data ............................ 11
2.3 Creating a strategic balance .................................................................................... 11
2.4 Infrastructure and Technology ................................................................................. 12
2.4.1 Well matched to need ...................................................................................... 12
2.4.2 Best value ........................................................................................................ 12
2.4.3 Resilience and reliability; low total cost of ownership ....................................... 12
2.4.4 Security ............................................................................................................ 13
3 The strategic benefits of outsourcing the ICT function .................................................... 13
4 Conclusions and Recommendations .............................................................................. 14
Bibliography .......................................................................................................................... 15


3
Summary
The following white paper describes the essential steps required to identify and justify
Information and Communications Technology (ICT) projects. The essence of this paper is the
assertion that an effective ICT strategy and valued ICT projects can only be delivered if the
business strategy is clear and widely understood by everyone, including the organisations ICT
and business process professionals.

The paper describes several techniques with which an organisation, or its ICT staff, can use to
capture a strategy and then break it out into components which can be assessed as suitable
for automation. The sequence of techniques presented has been developed by recognised
experts and are well understood, proven and simple to use. Here they are brought
together, enhanced and developed to provide a complete road map for identifying a family of
ICT and business system projects, wholly aligned with an organisations business strategy.
The paper also includes a discussion on the criteria that should be used when designing and
installing wide and local area infrastructure and comments on the need to build in resilience
and low total cost of ownership. The final section addresses the strategic benefits of
outsourcing the ICT function to a competent partner company.

4
Creating an IT Strategy
Introduction
Before the introduction of Information Technology, there were many organisations that have
clearly been more commercially successful than others. These companies will have had a
better product or service offering, a positive customer focus, and very probably close
employee involvement in its development. Today, these qualities need to be fused with a
complete understanding of the value of Information and Communications Technology (ICT) to
maintain or repeat this level of success.
Organisations that fail to capitalise on the strategic value of ICT, often stemming from the
boardroom, are those that have failed to fully appreciate its ability to create competitive
advantage. This problem can be further compounded by the absence of a well communicated
and clearly defined business strategy, and the consequent failure to correctly align a
companys resources - including its ICT - with the strategic objectives of the organisation. The
consequences of this can be huge and will often result in missed opportunities to use ICT to
accelerate and achieve critical business performance improvements.
A further consequence, stemming from a lack of senior management interest in technology, is
the creation of an ICT department that lacks knowledge of business strategy, resulting in an
inability to align ICT resources with the business objectives of the organisation that employs
them.
The image of ICT as a value adding service can also suffer heavily from technologies
becoming an end in their own right and being incorrectly used as a change agent to try and
drive changes in business and corporate practices. Here, the issues are associated with a
failure to define essential people, management and business processes before a new
computer based automation project is imposed; often with drastic and expensive
consequences.
A combination of technically disengaged business management and a technology focussed IT
department will effectively block any chance of a company leveraging ICT for real commercial
gain.
The following white paper presents a methodology to help both senior business and ICT
executives establish the correct place for ICT in their business strategy whilst also touching on
the need to make sure that a business other intangible assets are also properly aligned with
the declared strategy. The starting point of the exercise is to clarify or understand the
organisations corporate strategy as no ICT project has relevance unless its origins are rooted
in the organisations strategy for achieving success.

5
Strategy
Types
Product Leadership
Customer Intimacy Operational Excellence
Customer driven & Proactive
Unique product to each customer
Emphasis on data collection
Constant monitoring
Professional Services Companies
Waterstons
Differentiate products
Design & Innovation
R&D, Vision, Risk, Aggression
Product LC Profitability
Nike, Sony, Apple
Operational Competence
Lowest cost
High Quality reliable products
Excellent Customer Service
Macdonalds, Dell,
BMW, Nissan

Figure 1: Discipline Driver model

Figure 2: Hedgehog concept
1 The importance of a clear strategy
Any ICT project must have its roots in a focussed and well communicated business strategy.
The business or organisation must
have a clear idea of what financial
targets it is aiming to achieve and
what customer centred initiatives it
aims to take to reach the targeted
level of turnover, profit, dividend,
balance sheet value etc. Above all it
needs to be clear as to what the
companys prime driver is. A couple
of useful models have been
developed which provide a simple
basis for doing this and which can be used in sequence to derive a practical strategy. The first
of these is the Discipline Driver model of Treacey and Wiersema
(1)
(see figure 1). A debate
focussed on agreeing which discipline driver best describes the strategy of the business or
organisation can be amazingly illuminating. An important factor in a discipline driver exercise
is to recognise that a company can employ all three to varying degrees but only one should be
dominant. A good example of all three drivers at work is BMW, where elements of product
leadership and customer service are important but where the primary driver has to be the
manufacture of cars at the lowest cost and highest quality. BMW has a clear operationally
excellent discipline driver.
Another useful technique which is a powerful complement to the Discipline Driver exercise is
the Hedgehog concept derived by Collins
(2)
. This set of strategic priorities was identified
following a comprehensive research exercise into
companies that transformed themselves from
acceptable, if pedestrian, performers to stellar
achievers. An example of the Hedgehog concept
is shown in Figure 2. This addresses the four key
questions identified by Collins and his
researchers as essential to an empowering
strategy.
a) What ambitious goal has the organisation
set for itself?
b) What can it be best in the world at?
c) What is it passionate about?

6
d) What is the single parameter that best describes the financial performance of the
business (e.g profit/x)
Companies that have shown all of the focussed characteristics captured by the Hedgehog
concept include Gillette, Kimberly Clark and Walgreens and all have prospered and grown to
prominence.
The outcome, when discussing the appropriate discipline driver, should be translated into a
complimentary set of Hedgehog commitments. These should then represent the core of the
burgeoning or newly clarified strategy of the organisation or business.
In the absence of any involvement in their organisations strategy an ICT manager can use
these techniques to create an understanding of the strategy and for communicating it to the
ICT staff.
Once the Discipline Driver has been identified and Hedgehog diagram is complete, a business
or IT support function will have a clearly defined strategy which they can then start breaking
out into a series of customer led initiatives. This should be followed by an exercise where
internal systems, people, organisational model and information are correctly aligned with the
strategy; this is best achieved using the Balanced Score Card
(3)
and associated Strategy
Map
(4)
.
1.1 Preparing a Strategy Map
A critical part of the next phase of the exercise is definition of the KPIs that best describe the
progress of the company against its strategic targets and the identification of those business
Figure 3: Break Out diagram (part of Balanced Score Card)

7
systems required to underpin achievement of the strategy. These factors are crucial elements
in recognising how IT can help accelerate the progress toward increasing overall performance
and developing competitive advantage.
The Balanced Score Card is a proven and well documented process that provides a clear
structure within which an organisation can break its strategy out into four key and measurable
perspectives. The opening exercise in deriving a Strategy Map
(4)
and Balanced Score Card is
to complete the Break Out diagram (Figure 3).
In a workshop environment an empty version of this diagram can be created with the
previously defined Hedgehog strategy placed at the centre. The ICT or business executives in
the workshop can address the following four key perspectives in turn in a brain storming
environment.
The Shareholders Perspective (profit, balance sheet value, growth etc): An
important parameter here is the single financial measure defined during the
Hedgehog exercise. This section of the exercise will also define the critical high
level KPIs the business will monitor progress against.
The Customer Perspective: How does the company want to be valued by its
customers? As a provider of high quality, low cost goods?; Brilliant at delivery?; A
product leader?; Great at customer service?; Customer intimate?
Internal Systems Perspective: What systems will be required to achieve the
financial goals and deliver against its customer service and product delivery
aspirations? A secondary issue is to decide which of these systems will benefit
from automation.
Learning and Growth: What are the implications for employee recruitment and
training, what organisational model will help deliver the strategy and what
information needs to be provided to help the workforce deliver effectively and
efficiently?
When the four perspectives have been assembled in the breakout diagram they can
transferred onto a strategy map where the workflows associated with each key initiative can
be defined and the strategy fully refined and expanded. The strategy map is one of the most

8

effective and empowering parts of the Balanced Score Card process. An example of a
completed strategy map for a professional services company is shown above. The results of
the breakout brainstorm have been transferred onto the strategy map with a focus on the two
elements of adding value: growth and productivity. The customer perspective presents the
customer view of the company that it would like its customers to share. The systems section
describes those groups of management processes that the company now believes will deliver
customer satisfaction and meet its financial targets. The learning and growth section describes
the broad learning, training, organisational and information initiatives required to equip the
companys people with the means to deliver the strategy. This simple document also provides
a brilliantly straight forward way of informing the workforce of what the company is trying to do.
1.2 Creating a Balanced Score Card
Once a strategy map has been prepared and the key business objectives defined, they can be
used to create a Balanced Score Card for the organisation as a whole which defines the
parameters against which strategic progress can be effectively measured. This will represent
the top level KPIs in a company business intelligence strategy and should constitute an
opening dashboard in the organisations Management Information System (MIS). An example
Balanced Score Card for the professional services company mentioned earlier is shown in
Figure 5.

Figure 4: Strategy Map

9

2 Bringing ICT into the picture
2.1 Extending the Strategy Map
With the conclusion of a Balanced Score Card exercise the previously frustrated IT manager
should now have a reasonably clear idea of the critical management and business systems
the company needs. He or she should now be able spot those systems where automation will
accelerate progress toward achievement of the strategic goals and they will have a clear idea
of the critical KPIs a future MIS will have to present.
It is important to remember when creating an ICT and software project portfolio that the role of
technology is to accelerate progress, it is not a change agent in its own right. Prior to
embarking on any software project the underlying business process should be well defined
and the accelerating benefits of automating that process very obvious. The justification for the
project should be the clear contribution that the project is making to helping the company
achieve its strategic goals.
Waterstons have developed the strategy map to allow the areas where technology can help to
be easily recognised. An additional section has been added to the classical map where the
technologies that can be aligned with the rest of the strategy map can be added (see Figure
4). The colour coding and arrows connect various technologies to the key business processes.
I
N
T
E
R
N
A
L
P
E
O
P
L
E
Create a rewarding, stimulating environment where
talented people learn and grow at a pace limited only
by their own potential
Nurture
Plan account development : create and update plans regularly
Identify Opportunities: understand strategic benefits
Win repeat work: Submit proposals quickly, close deals
Survey regularly: Listen to and respond to feedback
Strategic Objectives Measures Perspective Targets
F
I
N
A
N
C
I
A
L
Increase Value
Operate
Efficiently
Grow Revenues
Maximise Productivity
Maximise Service Margins
Existing Customers
Win new customers
Share
Value
Profitability
Turnover
Growth
Per capita income
Margin by group
% revenue from exiting
% revenue from new
Share Value: % per annum
Profitability : 15%
Per capita: >5000
Margin by group: 52%
Turnover Growth: 15%
Revenue from existing: %
Revenue from new: %
C
L
I
E
N
T
Build the Waterstons brand
Create Permanently Infatuated Clients
Deliver
Initiate Properly: Quantify Strategic Benefits, Scope fully
Deliver to time and cost : Plan and execute well
Exceed Expectations: Demonstrate benefits, get feedback
Create Case Studies: Look for material to include
Support
Respond Quickly: Be accessible and well equipped to respond
Fix Quickly: Hone skills, Share knowledge, Escalate if reqd
Avoid repeat work: Get it right first time, test thoroughly.
Aquire
Clients
Select target customers: Assess suitability and affordability
Develop new relationships: Keep in touch, network
Meet with prospects: Secure face to face meetings
Win the first job: Close deals
Innovate
Extraordinary Projects: find exciting and innovative projects
Identify: Recognise opportunities to innovate
Manage & Deliver: Support innovators, deliver results
Gain recognition: Publicise, look for feedback, win awards
% PICs as a proportion of all clients
% awareness of us and what we do amongst
untouched companies
PIC rate: 50%
Awareness rate: 25%
% clients with ADP updated within six months
% clients with at least one new opportunity
% proposals successful
% customer satisfaction survey
ADP up to date: 100%
Opportunities: 75%
Success Rate: 80%
Satisfaction Average: 90%
% of projects which are extraordinary
% process or service innovations per employee
% of completed innovation initiatives
% of award winning projects
Extraordinary Projects: 10%
Identify: %50
Manage & Deliver: 90%
award rate: 5%
% projects with benefits fully identified
% projects with no slippage
% projects with excellent survey feedback
% case studies from projects
Initiate Properly: 100%
Deliver to T&C: 100%
Exceed Expectations: 100%
Case Studies: 50%
% score from customer survey
% tasks fixed within 4 hours
% tasks without follow-up
Respond Quickly: 100%
Fix Quickly: 95%
Avoid Repeat work: 100%
Number of target customers
% targets with relationship established
% targets with meeting held
% meetings resulting in a sale
Target Clients: #
Relationships: 10%
Meeting held: 5%
Win rate: 60%
% staff who have been at current level for
less than 3 years
% staff who have gained a new qualification
in the last 6 months
95%
100%

Figure 5: Balanced Score Card

10
The technology section is also broken down into a series of technology projects that will
provide the basis of the organisations IT Strategy, with business cases automatically made as
a result of the clear alignment of the projects with the underpinning business processes and
strategic objectives.
I
N
T
E
R
N
A
L

P
E
R
S
P
E
C
T
I
V
E
C
U
S
T
O
M
E
R

P
E
R
S
P
E
C
T
I
V
E
F
I
N
A
N
C
I
A
L

P
E
R
S
P
E
C
T
I
V
E
Increase Value
Productivity Strategy Grow Revenues
Improve business group
margins and productivity
Maximise individual
consultant margins
Account Development;
maximise returns from
existing clients
Target mid sized companies that
are growing and technically aware
Anticipate client needs, provide
relevant products and services
focussed around the 5 Ways
Use innovation & technology
to create improvement in a
customers financial or operational
performance
Build a close relationship
by communicating well,
responding quickly, sharing knowledge
unconditionally and demonstrating
integrity
Provide excellent customer service
which is highly proactive and always
exceeds expectations
Deliver business performance improvement and outstanding customer service
Continually evolve existing and new
services around business Improvement
Account reviews with
creative account
development plans
Communicate
regularly,
hold regular focus and
review meetings
Track &
address
issues
quickly
Do post project
reviews to check
quality
Scope projects
properly &
manage to time
and cost
Set & manage
expectations
Deliver Business Improvement Deliver exemplary service
Raise
awareness in the community with
Case studies, PR and seminars
Leverage our
people,
knowledge, ethics
and track record
Share
knowledge to
build a trusting
relationship
Win new customers
Maintain Great Customer Relationships
L
E
A
R
N
I
N
G

A
N
D

G
R
O
W
T
H
Professional Services Company: STRATEGY MAP
Continuously monitor
status of relationship
Develop industry,
business and IT
strategy knowledge
Become a technology
centre of excellence
Develop project
management
excellence
Share
Knowledge across
the company
Recruit talented
individuals with growth
potential
Develop
recognise &
retain people
Manage under
performance
sensitively but quickly
Promote and
direct continuous
learning
Demonstrate values:
integrity, honesty, trust, empowerment,
leading by example
Develop people Develop knowledge and skills
Keep overheads
constant
Develop a culture of
innovation and
continuous learning
Use time well;
respond quickly
at all times
whatever the
situation
Organisation
Place Customer at
centre of organisation
Establish skills and
competency based groups to
aid training & personal
development
Acquire
competitors
Understand
the clients
business &
strategy
Share
knowledge
T
E
C
H
N
O
L
O
G
Y
CRM System
CRM System
Communications
Appraisal System:
Forms Server
SharePoint
Project Management
SharePoint; open access
to all information
Complete
Training
Records
Interactive website:
SharePoint 2007
Document
Management and Search
Data Warehouse
Data Warehouse
Performance Point
Server
Resourcing and Time
sheeting
Email System
Exchange
Enterprise Project Management
Instant Messaging
OCS
Monitor
customer and
consultant
margins
Collaboration and
Knowledge Sharing
HR Records
Open and Easy
communications
Accounts system
Feedback
Customer
survey
statistics

Figure 6: Strategy Map for a Professional Services organisation
2.2 Business Systems Automation
The problem of identifying relevant and value adding IT projects to extend the strategy map
can be made easier if the following approach is used. In general, these automation,
communication and information initiatives will fall into one of five key categories (The 5 Ways):
2.2.1 Acquiring and Retaining Customers
The process of tracking and recording the history of contacts with customers and prospects is
key to the success of most companies as is the preparation of online and material description
of services and products. Customer relationship management software, web site content
management software, graphics design as well as online customer services are essential
ways in which ICT can accelerate and scale business and management processes that are
critical to the growth and the success of any organisation.
2.2.2 Raising quality and lowering costs
In these days of off-shoring and steadily increasing levels of customer expectation, the
requirement to simultaneously maximise quality, increase throughput and/or raise productivity

11
and lower costs is essential. Enterprise Resource Planning (ERP) systems are now
dominating much of the manufacturing capturing and feedback data to minimise stock,
optimise through put and exercise tight control of quality. In addition, document management
systems are cutting down the time to store and retrieve essential information and data and
modern integrated accounts systems are removing the need for expensive manual and
spreadsheet work to support the preparation of management accounts and speedily close
month and year ends.
2.2.3 Improving worker effectiveness and instilling team work
The time of the knowledge worker has arrived and progressive companies are devolving more
and more responsibility to the front line work force where decisions can be made quickly and
efficiently with little management intervention. The need to supply these newly empowered
workers with information and the ability to communicate and collaborate is becoming an
imperative. This raises the opportunity of using intranet technology, Voice over IP Telephony
(VoIP), mobile technology, unified messaging and collaboration software to instil team work
across the front line of any local or global company. In this new information era, time and
distance mean nothing as people can exchange information and ideas at any instance in time
in what is now a genuine global village.
2.2.4 Providing accurate and timely management and control information
This newly empowered and automated world raises the importance of organisational leaders
being able to measure the impact of any company, division, or individual quickly and
accurately. In a trusting environment where direct control of an individual is impossible, it is
only possible to monitor a persons or groups performance by looking at results and
outcomes. This information requirement needs to be properly identified using the Balanced
Score Card process defined earlier. Once complete, an automated system can be designed to
capture the information and then distribute it in an appropriate form to every key member of
the workforce and the organisations leadership.
2.2.5 Reducing business risk and protecting information and data
A growing dependence on ICT to accelerate strategic progress and maintain and grow profits
places a great deal of emphasis on information security. Disaster recovery and contingency
plans need to be well formulated, rehearsed and routinely updated. A companys electronic
data in the new information age is a gold mine, the loss of which can have a terminal impact.
Information security must be an essential part of any ICT Strategy
2.3 Creating a strategic balance
The balance between these categories will vary depending on the nature of the business. An
operationally excellent company will invariably adopt an all embracing ERP system that allows
it to control costs and quality with rigorous uniformity. Product leaders are more interested in

12
innovation and design with a focus on free flowing collaborative team work and close
monitoring of product life cycle profits and costs, sales forecasts and speed of new products to
market. Customer intimate companies place great store on customer relationship
management (CRM) systems, monitoring of customer profitability, customer led collaborative
innovation and project management.
The high level KPIs defined as part of the Balanced Score Card process provide the starting
point of a business intelligence strategy focussed on measuring progress against the strategic
objectives. These can now be broken down into subsets of information tailored to the needs of
individual groups of employees committed to delivering the various facets of the strategy.
In the event that an IT Manager is not part of the strategy development process, but wishes to
ensure that his resources are used to good effect, Balanced Score Card tools can be used to
compile a view of the companys strategy and also to justify IT spend to senior colleagues.
Although not ideal, this approach is better than any alternative and will clearly demonstrate the
IT functions commitment to helping improve their companys financial and operational
performance and efficiency.
2.4 Infrastructure and Technology
The issues of infrastructure and supportive technology should only be addressed once the
automation strategy has been derived and the key performance improvement projects
identified. The key decisions should be driven by a discrete series of priorities.
2.4.1 Well matched to need
The hardware and infrastructure should be well matched to the software being installed and
the communications issues that are being addressed. Scope for expansion should be built in
from the outset but the systems should not be over engineered or over specified.
2.4.2 Best value
The capital and revenue costs should be no more than that necessary to meet the perceived
need and ensure optimum reliability, performance and security. Big savings can be made by
utilising virtual server technology to reduce the investment in hardware required to host a new
business system. For many smaller companies, access to business systems and
communication tools can be achieved easily from a company that hosts the required systems
and rents access to their client organisations.
2.4.3 Resilience and reliability; low total cost of ownership
All ICT local and wide area infrastructures should be selected or designed to ensure that
ongoing maintenance costs are kept as low as possible. It should be possible to use modern
monitoring techniques to ensure support costs are kept to an absolute minimum. No Chief
Executive wants to see his ICT budget being dominated by maintenance and repair costs or

13
by the need for constant upgrades. The bulk of the ICT budget should be spent on projects
that progress the companys strategic interests and not on support.
2.4.4 Security
From the outset, ICT projects must guarantee as secure an environment as possible so that
data and communications are unaffected or uninterrupted. Apart from intrusion from external
or internal parties and antivirus issues, amongst others, it should also be possible to recover
damaged or lost systems and data with little loss of time or impact on operations.
3 The strategic benefits of outsourcing the ICT function
For many companies who feel that their focus should not be detracted from their prime
business, the benefits of outsourcing should definitely be explored. A professional outsourced
company will possess the business and technology skills necessary to ensure that the full
benefits of ICT are realised. It is commonly believed that an outsourced contract only benefits
costs and, in many cases, this can be the case. In the best examples, however, an outsourced
contract can have much greater benefits for a company including offering a guaranteed way of
ensuring the full strategic benefits of ICT are properly realised. In general, a correctly
formulated contract will address the following benefits:
1. A much more strategic approach is taken to the use of ICT in the organisation, and the
need to guarantee that contractual and SLA standards are met will ensure that the
contracted company will be more aware of the need to perform well and add value for
the customer. The organisation is very probably going to obtain the services of a
qualified and business aware IT manager as part of the outsourced arrangement.
2. The costs of supporting the infrastructure will be substantially reduced as the
technology is updated with more resilient technologies and the benefits of modern
remote management tools and better operational standards are realised.
3. A much greater proportion of the ICT budget will be spent on projects that are
designed to accelerate achievement of the organisations strategic goals and
objectives.
4. Business continuity issues and information security can be addressed as part of the
contract.
5. The career progression opportunities are much greater for staff working for a larger
ICT outsourcing company and there is greater incentive for training and skill
development.
Needless to say, selecting a competent outsourcing partner should be approached with care
and only those with a proven track record of delivery should be seriously considered.

14
4 Conclusions and Recommendations
The primary conclusions of this paper are as follows:
1. Defining strategically valuable Information and Communications Technology projects
can only be achieved if they are derived directly from consideration of a companys
strategy.
2. An unclear or loosely defined strategy can be effectively clarified using simple tools
such as the Discipline Driver Model of Treacey and Wiersema
(1)
and the Hedgehog
Principle of Collins
(2)
.
3. The Strategy Map
(4)
and Balanced Score Card
(3)
of Kaplan and Norton is the best way
of breaking a strategy into the customer service, internal systems and people related
initiatives that will ensure strategic alignment and ultimate business success.
4. The Balanced Score Card and Strategy Map exercise are essential steps in identifying
those business processes where automation will strategically benefit the organisation.
5. An IT Department can use the discussed techniques to help justify its initiatives,
although it is preferable that senior management are involved in the process. At the
very least it will provide a form of business language that ICT management can use to
describe the role and purpose of any proposed ICT initiative.
6. To help an ICT Manager identify those projects that will benefit from automation she or
he should remember the 5 ways ICT can be used to accelerate the achievement of a
companys strategic objectives.
7. It is essential that information security has the right level of priority in any ICT strategy.
8. Infrastructure projects should be designed around the software, information and
communications needs identified during the strategy clarification exercise. All
infrastructure projects must be judged in the context of a close match to need, best
value, low total cost of ownership and security.
9. An organisation that wants to capitalise on ICT, but also wishes to keep its focus on its
own key business competencies, can outsource management and strategic
exploitation of its ICT to a competent and trustworthy ICT company with a proven track
record of delivery.

Mike Waterston
Monday, 08 December 2008

15
Bibliography
1. Treacey and Wiersema, Discipline Drivers, Basic Books, ISBN 0 201 40719 1
2. Jim Collins, Good to Great, Random House, ISBN 0 7126 7609 0
3. Kaplan and Norton, The Balanced Score Card, HBS Press, ISBN 0 87584 651 3
4. Kaplan and Norton, Strategy Maps, HBS Press, ISBN 1 59139 134 2

Common questions

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Infrastructure and technology decisions in an IT strategy should be guided by specific criteria including ensuring that hardware and infrastructure are well matched to the software and communications needs while allowing for future expansion without overengineering. Cost considerations should focus on achieving best value by minimizing capital and revenue costs to ensure reliability, performance, and security, possibly using virtual server technology to decrease hardware investments. Decisions must also prioritize resilience and reliability, maintaining low total costs of ownership, supported by modern monitoring techniques to minimize support costs, directing the majority of the ICT budget toward strategic projects.

The Balanced Score Card and Strategy Map contribute to strategic planning by providing a clear framework to translate an organization's strategy into measurable objectives. The Balanced Score Card breaks down strategy into four perspectives: shareholders, customers, internal systems, and learning and growth, each defining key performance indicators (KPIs) to guide and measure success. The Strategy Map visually connects these perspectives, outlining workflows and initiatives necessary to achieve strategic goals. This structure allows a company to effectively communicate its strategy and ensure all business functions align with strategic objectives, thereby fostering organizational coherence and focus.

Creating an IT strategy aligns with the overall business strategy by ensuring that ICT projects are identified and justified based on a clear understanding of business objectives. An effective ICT strategy is dependent on a business strategy that is clearly communicated and understood across the organization. Techniques like the Strategy Map and Balanced Score Card help in breaking down the strategy into components aligned with business needs, where ICT projects can enhance productivity, quality, or customer retention. Thus, IT strategy supports business goals by driving improvements through automation, information management, and risk reduction.

An appropriately executed Break Out diagram contributes to the development of a strategy map and Balanced Score Card by organizing strategic goals and initiatives into manageable components. It starts by placing the Hedgehog strategy at the center and addresses four key perspectives: shareholders, customers, internal systems, and learning & growth. This structure helps identify critical KPIs, necessary business systems, and strategic initiatives. By visually mapping these out, it facilitates the formulation of a coherent strategy map that can then be translated into a Balanced Score Card. This visualization aligns the organization towards strategic goals, ensuring that all efforts are focused and measurable.

Extending the Strategy Map to include ICT projects enhances strategic execution by clearly highlighting where technology can accelerate desired business outcomes. The inclusion of ICT projects links technological initiatives with business strategy, determining where automation and advanced technologies can improve efficiency, reduce costs, or enhance customer interactions. By visually representing these connections, organizations can prioritize ICT investments that directly contribute to strategic goals, ensuring that technology supports rather than drives change, thereby facilitating seamless integration of business processes with IT systems.

The Discipline Driver model serves as a simple basis for deriving a practical strategy by focusing the debate on which discipline driver best describes the strategy of the business, acknowledging that while a company can employ all three drivers, one should be dominant. For example, BMW primarily focuses on operational excellence, even though product leadership and customer service are important. The Hedgehog concept, on the other hand, is a complement to this model and emphasizes setting strategic priorities by clarifying what a company can be best at, what it is passionate about, and its key financial metrics, as observed with companies like Gillette and Walgreens. Thus, while the Discipline Driver model defines the primary operational focus, the Hedgehog concept refines this by aligning it with clear strategic commitments.

Resilience and low total cost of ownership are critical considerations in selecting ICT infrastructures because they ensure long-term sustainability and cost-effectiveness of technology investments. Resilient infrastructures are robust against disruptions, maintaining operational continuity, which is vital for strategic stability. Ensuring low total cost of ownership means that the ongoing costs of maintenance, support, and upgrades are minimized, allowing the company to allocate more resources toward strategic projects rather than sustaining existing systems. This focus on durability and efficiency supports a strategic approach to technology management, aligning investments with business goals.

Key Performance Indicators (KPIs) are crucial in the Balanced Score Card process as they provide the metrics against which strategic progress is measured. Each of the four perspectives in the Balanced Score Card—shareholder, customer, internal systems, and learning and growth—has associated KPIs, helping translate strategic objectives into tangible outcomes. For example, shareholder KPIs might include profitability metrics, while customer KPIs could measure satisfaction or service quality. By tracking these indicators, organizations can assess their performance, ensuring strategic objectives are met and adjustments are made to drive continuous improvement and competitive advantage.

Organizations leveraging operational excellence, product leadership, or customer intimacy have different MIS needs that align with these strategic focuses. Operationally excellent companies typically adopt comprehensive ERP systems to manage costs and quality uniformly. Product leaders focus on innovation and require MIS that support collaborative teamwork and monitor product lifecycle metrics and market introduction speed. Customer-intimate companies emphasize CRM systems to enhance customer relationship management, facilitate customer-led innovation, and manage projects effectively. These systems ensure that management processes are in tune with the company's strategic goals, facilitating progress monitoring and competitive advantage.

Outsourcing the ICT function can bring several strategic benefits to a company, including a more strategic utilization of ICT, as the outsourced partner is motivated to meet contractual and SLA standards. This ensures ICT efforts are aligned with strategic goals. Additionally, costs associated with supporting the infrastructure can be reduced through the adoption of more resilient technologies and efficient remote management tools. Outsourcing also allows a greater portion of the ICT budget to focus on strategic projects, provides improved business continuity and information security, and offers better career progression and skills development opportunities for ICT staff.

Creating an IT Strategy 
 
Mike Waterston 
December 2008 
 
Waterstons Ltd 
Liddon House, 
Belmont Business Park, 
Durh
2 
Contents 
 
Summary ....................................................................................................
3 
Summary 
The following white paper describes the essential steps required to identify and justify 
Information and Commu
4 
Creating an IT Strategy 
Introduction 
Before the introduction of Information Technology, there were many organisations
5 
Strategy
Types
Product Leadership
Customer Intimacy
Operational Excellence
Customer driven & Proactive
Unique product to
6 
d) What is the single parameter that best describes the financial performance of the 
business (e.g profit/x) 
Companies
7 
systems required to underpin achievement of the strategy. These factors are crucial elements 
in recognising how IT can
8 
 
effective and empowering parts of the Balanced Score Card process. An example of a 
completed strategy map for a profe
9 
 
2 Bringing ICT into the picture 
2.1 Extending the Strategy Map 
With the conclusion of a Balanced Score Card exercise
10 
The technology section is also broken down into a series of technology projects that will 
provide the basis of the org

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