Business IT News &
When to Have an IT Strategic Plan
|Oct 17, 2023|Managed IT
One challenge that many growing businesses face is deciding when they need a strategic plan for information technology. Previously, planning for technology would be incorporated into the budgeting cycle, allocating funds for hardware and software refreshes and incremental growth in the number of employees.
As the company grows, there are indicators that signal the need for an IT strategy. Some examples of these are:
- Size of the technical investment – is technical spending becoming a larger percentage of your operating expenses?
- Competing priorities- are you able to spend enough time to know that your technical investments are providing the value you want? Are you just not able to give enough time to look at how your investments are performing?
- Competitive landscape – are you seeing your competitors offering better products and services through their use of technology? Are you keeping pace with industry practices?
- Size of the organization – with your growth, are things still running as smoothly as it did eighteen months ago?
Qualitative indicators of the need for IT strategy
In looking at the previous bullet list, these are measurable indicators (e.g. we can see where our time is spent, and we know what our competitors are doing). We can think of the previous list as focused on the technology side of IT. What about the information side of IT? To look at the information side, these are often subjective indicators. Looking at the information side is to understand what information is collected, created, and used, and how important is it to business operations and the value provided. These sometimes can be more significant than the measurable items in the previous list.
Leveraging these subjective indicators requires judgment about how your business uses information. What are some examples of qualitative indicators?
- Public versus private information – where does the data come from? Is it mostly information that anyone in the marketplace can find (e.g. cost of fuel, tax rates, average labor costs) or is it information that is generated by the business (e.g. forecasts on commodity pricing). Another way to look at this is if the information is used operationally (cost of doing business) versus strategically (value provided to customers). Higher uses of private (strategic) information warrant attention to ensure the delivery and value retention of that information.
- Information density in your product or service – what percentage of your delivery of a product or service is based on information? Of the information used or provided, is it critical to your delivery? For example, weather forecasting is important for both a landscaping company and for a food grower (farm). With landscaping, though, it is not core to the service: it is used for scheduling and operational planning (is mowing possible tomorrow?). With a food grower, crop yield drives most of the decisions for the farm, and without good forecasting, the entire operation is at risk.
- Leading versus lagging indicators – is the information used to measure performance or is it used to set direction for the company? An investment firm uses the information to drive their decisions as an example of information as a leading indicator.
What is in an IT strategic plan?
An IT strategic plan would contain the components common to any type of strategic plan: Vision; Priorities; Goals; Objectives; and Key initiatives. As part of the plan, there would be coverage of mid-range plans, and operational projects (next 12-18 months). These would talk about timelines and metrics as well as best practices and governance.
In essence, an IT strategic plan outlines making the right decisions at the right time for the right price, and the approach to follow to do those things. This sounds easy, but there are some areas where the planning can go astray. These include:
- High-level mismatch between IT provider and corporate strategy – if the corporate direction is to be the low-cost provider in the market, an IT strategy that looks to leverage investments in expensive, leading-edge technology is not going to succeed. Same if there is a low-cost approach for IT while trying to provide a high-value service: technical limitations dilute the value delivered to the customer. At the highest level, the IT strategy in its vision has to align with the corporate strategy for its approach to the market.
- A mismatch between timelines – challenges arise when business timelines don’t match up to technology timelines. If the ERP upgrade is two years out, but there’s an expectation for supporting new acquisitions in twelve months, this will be a major disruption to operations and to technical initiatives. The IT plan should identify key points of IT support for the business initiatives in the coming years.
- Underestimating risk – there is an inherent level of risk with technology that requires a level of investment to protect the business. When only looking at the cost of the protection against the likelihood of an event, it is easy to dismiss those risks while planning and thereby under-funding the protections required. Like insurers, that evaluation should also include the costs incurred should an event happen (e.g. low probability the business is hacked, but if it is, it would go out of business if not up and running within 48 hours).
- One and done – an IT strategic plan is something that should be communicated and reviewed frequently. Critical components to review are the vision and priorities, as this is the foundation for the plan. If these change, the plan should change. At a minimum, an IT strategic plan should be reviewed and updated annually.
Should I have an IT strategic plan?
Interested in learning more about IT planning and whether you should have one? Contact us at Blue Net and we’ll be delighted to talk more about IT planning and if it’s time for something more strategic.