The Back-end of IT Strategic Planning

by Ken Rau

December 2005

Organizations have struggled with developing strategic plans for their Information Technology (IT) functions since the 60s. Most of this attention has centered on identifying technological opportunities that would benefit the organization economically and the ubiquitous dilemma of linking the organization’s strategy to the IT function’s direction. Less attention has been focused on the “back-end” of IT strategic planning, that is, how to proceed following the identification of needed IT projects. Yet, like so many initiatives undertaken by businesses, the effort required in time and resources increases as we attempt to complete the IT strategic plan. It’s as if we started at the apex of a triangle and, as we proceed towards completion of the effort at the base of the triangle, the increasing width is indicative of the effort required. Why then has so little attention been spent on describing and theorizing on the resource-intensive back-end effort?

While it is undeniably important to get the front end right, i.e. to identify the IT projects needed by the organization, it is not sufficient to provide a list of identified projects to IT and await implementation. Guidance on how to prioritize and arrange the plethora of needed projects into a consensus IT strategic plan is also critical for success. Continuing to maintain senior management and the organization’s consumers of technology (user) involvement during the evaluation and ranking of projects is required to obtain commitment to the result. Too often these non-technicians excuse themselves from what they perceive to be the technical steps of sizing, estimating and evaluating the projects, leaving this to the IT members of the planning effort, only to find the results of what started off as a quality, encompassing endeavor to be not satisfying. This does not have to be. Users and management can and must continue to be involved in defining and estimating the cost, benefits, risks, demand and impact on the business of the candidate IT projects if a consensus plan is to result. Enabling continued participation by users and senior management is possible and necessary. Let’s look at the steps involved, and see how this can be accomplished.

An initial step following identification of needed projects is to agree on the evaluation criteria that will be used in ranking. Candidate criteria to be considered include:

• Business Strategy Impact: How well does the proposed technology project support the organization’s ability to achieve its strategic objectives?
• Return on Investment (ROI): What is the economic benefit of the project?
• Risk: What is the probability that the expected benefits of the project will be realized?
• Demand: To what extent does the proposed technology project meet an urgent need or diminish a threat to the organization? Is the project required to satisfy a regulatory requirement? Does the project provide an urgent or required capability without which the organization will not be able to continue operating?
• Intangibles: Does the project offer intuitive, non-quantifiable benefits, a competitive advantage, or compelling ethical value which the organization desires to pursue?

Once all parties involved in the IT strategic planning effort agree on the criteria to be used, the team assigned to develop deliverables of the IT strategic planning process can begin the evaluation process. To obtain organizational commitment to the results, the team must be composed primarily of users representing all of the key process areas of the organization. Who better to evaluate each project’s impact on the business than knowledgeable users? Asking the technicians on the team to do so is to take them outside their area of expertise and risk lack of acceptance of the result by the organization. Far better to have respected and representative users from the organization evaluate a candidate project’s impact. The same can be said for the evaluation of the last two criteria cited, demand and intangibles. ROI requires the evaluation of the project’s cost and benefits. Once again, users are in the better, more credible position to estimate the benefits, and their participation in estimating cost components is also critical. Finally, evaluating the risk of pursuing the project, i.e. that the organization will successfully realize the planned benefits, requires considering the organization’s familiarity with projects of a similar size, structure and technology. User recollection of such factors is often keener than are those of the technicians.

Structured techniques can be established so that all projects are evaluated in the same way, i.e. against the same factors within each criteria, and result in a normalized scale score for each criteria. By listing projects in the order of their normalized score, an initial ranking results. Senior management, often in the form of an IT steering committee, is then in a position to review and comment on the initial ranking using their judgment in order to achieve a final widely-accepted prioritized list.

The prioritized list is then arranged into a time-phased IT strategic plan. In doing so, it is often necessary to rearrange projects from the idealized order of implementation based on their adjusted ranking, to one that considers precedence among projects as well as certain other “engineering” consideration, including resource availability and risk mitigation. Finally, the willingness of the organization to invest in the development of IT projects must be considered. The effect of a greater or lesser willingness will determine the pace of implementation.

By taking this structured, multi-criteria, inclusive approach to creating the IT strategic plan, the foundation is laid for establishing an effective, repetitive planning process. The discipline of the approach allows new, not previously considered projects to be appropriately evaluated and introduced into the plan. In time, the organization can build a process for routinely updating and refreshing its IT plan keeping it current and avoiding the need for periodic replacement efforts.

By considering the back-end of your IT strategic planning process and ensuring it receives as much attention as does the front-end, you will save time, ensure organization-wide commitment to the result, and lay the foundation for an effective, repetitive IT strategic planning process. Participation by a broad cross-section of the organization, including both technicians, users and management, ensures commitment to the result and a satisfying IT strategic planning result.