CHAPTER 6

THE FUNDAMENTALS OF IT STRATEGY

6.1 Laying the Groundwork for Transformation

In 1993, Michael Hammer and James Champy published a ground-breaking book titled
Reengineering the Corporation: A Manifesto for Business Revolution. Their book sought to disrupt
many management principles current at the time. They dared executives to think outside the box
and reengineer their businesses from the ground up. Here is a brief snippet of their call to action:

Business reengineering means putting aside much of the received wisdom of two hundred
years of industrial management. It means forgetting how work was done in the age of the
mass market and deciding how it can best be done now. In business reengineering, old job
titles and old organizational arrangements—departments, divisions, groups, and so on—
cease to matter. They are artifacts of another age. What matters in reengineering is how
we want to organize work today, given the demands of today’s markets and the power of
today’s technologies. How people and companies did things yesterday doesn’t matter to
the business reengineer. … Every company is replete with implicit rules left over from
earlier decades. These rules are based on assumptions about technology, people and
organizational goals that no longer hold. Unless companies change these rules, any
superficial reorganizations they perform will be no more effective than dusting the
furniture in Pompeii.6.1

Hammer and Champy’s book was a sensational bestseller. Their insights are just as relevant today.
Reread the above quote, only this time replace the words “business reengineering” with “digital
transformation.” Digital transformation faces many of the same challenges that Hammer and
Champy addressed nearly three decades ago.

The business cannot suffer unplanned downtime or disruption during your transformation effort.
Yet to pull off your transformation you need those people who today support the current
environment to also be enthusiastic in helping your transformation succeed. They will have to
work overtime. Your real estate will be strained as you find properly suited environments to run
your new system while still maintaining your existing one. You can move pieces to the cloud, and
you can outsource aspects, but you are still trying to rebuild a support structure while actively
competing in the marketplace with the current one. This awkward dynamic is the challenge.

“We need an IT Strategy.” Those five words have launched many of my consulting engagements
over the past 20-plus years. And those five words might be on the tip of your tongue as you read
this book. At the very least, you have some interest in IT Strategy. You may be faced with the
assignment of creating and presenting one for your organization. One thing I’ve learned is often
the client making the statement is not exactly certain what she needs, but she knows it’s called
“an IT Strategy,” and she knows she needs to deliver one to her management team. From there
begins her journey.
Often there are two follow-up questions: “What is the best IT Strategy?” and “How do I create
one?” Unfortunately, there is no single, one-size-fits-all IT Strategy. So, my answer to the first
question is usually, “It depends.” It depends because there are many variables to consider before
you can build your IT Strategy. To determine the best strategy for your enterprise, a thorough
discovery exercise is required.

Consider this example. Imagine walking into your doctor’s office for your first consultation. You tell
him, “Doc, I don’t feel well. Tell me what I should do to get healthy.” The doctor, drawing on his
vast experience replies, “Let me ask you a few questions.” His inquiry makes you impatient. You
retort, “You shouldn’t need to ask me any questions. You see lots of patients. You’ve had years of
training. Just tell me what I need to do to feel better and get well.” I hope you agree that this
position would be absurd. Sustained good health is unique to the individual, arising from a
combination of numerous factors.

First, the doctor would need to determine your current state of health by asking you several
questions:

 Do you feel ill or have you recently been hospitalized?

 Do you have aches, pains, fever or dizziness?
 Tell me your family history.
 Are there diseases or conditions that might be hereditary?
 Have you recently traveled outside of the country?
 Are all your immunizations current?
 What about your daily life?
 Are you active or docile?
 Is your diet healthy?
 Do you drink enough water?
 What about other daily habits?
 Do you use alcohol or tobacco?
 What about your stress levels?
 Can you list your medications, and do you take them as prescribed?

After understanding your state of health, the doctor would ask, “What do you mean by healthy?
Do you want to lose weight? If so, is your target weight loss 5 pounds or 50? Do you want to walk
up a flight of stairs without getting winded, or do you want to be healthy enough to complete a
full marathon?” Without asking these most basic questions, it would border on malpractice for a
doctor to prescribe therapy or medicine simply because you suggested you need some.

Now then, once you answer his questions, and he evaluates what you’ve told him, he can suggest
things to put you on a path to improved health.

With this backdrop, a similar logic holds for IT strategies. No two companies are at the same
starting point or current state. And rarely do two companies desire the same ending point or
future state. What works great in one business may not work at all in another, even if they are in
the same industry. Why? Because of many factors.
Each industry sector and geographical area faces unique IT challenges. However, within a given
industry sector, many common challenges exist. Therefore, as you consider your strategy, you may
find common elements in the strategies of your competitors. Admittedly, few companies
broadcast their IT strategies, but diligent research may help you identify common starting points,
ending points and lessons learned from previous initiatives.

6.2 What is an IT Strategy?

What, then, is an IT Strategy? Simply put, an IT Strategy is the comprehensive bundle of people,
processes and technology that will enable the achievement of IT’s mission. That leads us to the
next question: what is the mission of IT? The mission of IT is to perform what I call the eight
spokes of IT responsibility. These eight responsibilities—support, simplify, standardize, sharpen,
strengthen, scale, shepherd and steward—are the primary responsibilities of IT leaders. These
responsibilities combine to propel the business toward fulfillment of its broader, corporate
strategy.

An IT Strategy is the comprehensive bundle of people, processes and technology that will
enable the achievement of IT’s mission.

Creating the IT Strategy is not an insignificant activity; it requires a significant investment of time.
Your organization will need to assign this task to a dedicated team to complete the work that is
presented in this book. Depending on the size of your organization, the scope of the IT Strategy
and the general complexity of your organization, creating a comprehensive and thorough IT
Strategy can require several months.

What is the value of an IT Strategy? This will be the first question your superiors will ask when you
propose its development. Given the very dynamic nature of the IT world, with new technologies
introduced seemingly daily, some might question the need to invest in creating a long-term
strategy since the variables may change before the ink is dry on the plan. Possibly Dwight
Eisenhower said it best: “In preparing for battle I have always found that plans are useless, but
planning is indispensable.”

Heading into battle requires first contemplating the objective, obstacles to that objective and
possible counterattacks by the opposing forces. A field general would be a fool for attacking a
position without considering such basic and vital considerations. And this is the value in investing
in an IT Strategy. It forces you to be thoughtful before acting.

If weaknesses in the organization exist, these could be addressed in the planning portion of your IT
Strategy. The weaknesses could be evaluated, and plans could be drafted that mitigate them in the
strategy’s action plan or transformation roadmap. Such foresight allows for identification of
potential risks, hurdles and other critical considerations before committing to dates and dollars in
support of your strategy.

The IT Strategy reaches beyond just planning how to spend next year’s budget. It takes a strategic
assessment of the business’ future and IT’s role enabling that future. There are additional reasons
why organizations benefit from the investment in a sound IT Strategy. IT is a very big expense in
most companies, often consuming as much as 5% of the company’s annual revenue. Controlling
cost while simultaneously getting the greatest return on investment is one catalyst for a sound
strategy.

Another catalyst is many companies leverage IT to enhance their market positions. For example,
many companies use IT to analyze large volumes of transaction data to understand customers’
buying habits and anticipate trends. These companies expect IT to help them exploit opportunities
to upsell and cross-sell their customers.

6.3 The Eight Spokes of IT Responsibility

The expectations placed on today’s CIO are dynamic. As CIO, you are assumed to be proficient in
the day-to-day management and operation of your IT environment. You must know your IT
architecture and infrastructure so thoroughly that when obsolete components need replacement
you are prepared to hot-swap an outdated component for a faster, better and cheaper new one.

Beyond those roles, there are other common responsibilities such as maintaining a functioning,
efficient and effective IT environment, avoiding unplanned disruption, and managing vendor
relationships including maintenance and support contracts. You’re responsible to know and
support corporate compliance matters, and you must understand how to make reasoned risk
assessments. You will have to use all those skills and more when proposing new systems or
significant changes to existing ones.

The competent CIO is also expected to recruit, hire and retain the very best talent. But these are
only table stakes. The winning CIO possesses these skills and adds an understanding of business
value. Successful CIOs demonstrate they view their IT shop as more than just a service
organization. They are effective at positioning IT as a partner in the strategic success of a business.
The successful, strategic CIO is therefore considered a contributing member of the executive
leadership team. She provides insightful and innovative ideas to the executive leadership team.
Her insights and suggestions help the company position itself for competitive advantage.

Successful CIOs demonstrate they view their IT shop as more than just a service
organization. They are effective at positioning IT as a partner in the strategic success of a
business.

To represent the intersecting expectations placed on contemporary CIOs, I present the eight
spokes of IT responsibility. These eight key responsibilities (8 S´s) are:

 Support.
 Simplify.
 Standardize.
 Sharpen.
 Strengthen.
 Scale.
 Shepherd.
 Steward.
 Figure 6.1—The Eight Spokes of IT Responsibility

Together, these eight spokes work in concert to deliver a highly functioning and valuable IT
organization.

Support

The history of IT was as a support organization. IT supported the business. For many years, that
was its one and only mission. But simply supporting the core business is no longer enough. In fact,
not by a long shot. Support now encompasses much more than just infrastructure and operations.
Beyond simply supporting day-to-day operations, IT must:

 Introduce new and exciting mobile and innovative technologies.

 Support external parties including customers, suppliers, investors and job candidates.
 Engage in regulatory compliance.
 Facilitate growth and expansion as the organization acquires and integrates other
businesses and business units.

Simplify

Supplementing that support, IT adds value when it helps the business simplify. Simplification might
be a rationalization of the customer, part and supplier databases, or it could be a streamlining of
how users interact with corporate data. Simplification is important because complexity is
expensive to maintain. It is often an inhibitor to growth and causes agile course corrections to be
much less agile. Removing complexity—both from its own organization by standardizing
aggressively or by helping other internal customers simplify their processes—pays dividends and
makes the company nimbler.

Standardization
Standardization is another key responsibility of an effective IT organization. This point is
controversial in many enterprises because standardization sounds like the imposition of
restrictions such as which devices or applications to use. Standardization is indeed restrictive. It is
restrictive by design. Supporting every conceivable option creates an impractical burden.
Moreover, supporting anything and everything would hinder the enterprise’s ability to react to
changes in its dynamic business environment. Therefore, rationalization of the options must be
devised, and compliance must be enforced. If that choice sounds harsh and autocratic, well, that’s
the nature of standardization. Just as you have all accepted the constraints of automobile traffic
discipline, you must acknowledge that there is shared value in complying with IT standardization.
On the other hand, a balance must be struck in this pursuit of standardization. Complete
standardization is too imposing and confining. And complete freedom is too expensive and
difficult to maintain.

Sharpen

Sharpen is the next responsibility of the IT organization. The CIO must look for ways to sharpen the
enterprise. This sharpening takes two forms: insight and cost. Delivering actionable insights from a
sea of data is an ever-increasing role for the IT team. Additionally, IT must sharpen its pencil as it
finds ways to identify non-value-added activities and drive out costs. IT must optimize its budget
and assist other departments with analytics to help reduce their costs as well.

Strengthen

IT can play a vital role in strengthening the organization by exploring new technologies, identifying
and penetrating new markets, using data to empower product development and helping the
organization lead rather than follow. To strengthen your organization, consider addressing two
key expectations: security and disruption. Securing data from breaches, both internal and external,
is among the key responsibilities of a contemporary IT organization. An IT organization must also
develop a strategy for enabling the enterprise to gain marketplace advantage—to be the disruptor
and not the disrupted.

Another key area where the CIO can strengthen the business is by staying connected to new and
exciting tech topics. Explore what other companies in completely different industries are doing
that shatter old assumptions. Companies like Amazon, Apple, Google, Starbucks and others are
frequently experimenting with technologies and concepts that are way outside of the typical box.
Magazines such as Fast Company, Wired and Inc. regularly feature companies that are developing
clever things for niche applications. Some of those unique and uncommon technologies might
have an intersection with challenges that are facing your business and if adopted might give your
company an edge, even if those applications aren’t precisely targeted for your industry.

Scale

Understanding scaling opportunities and presenting them as part of an overall IT Strategy is

becoming increasingly common. A sound IT Strategy projects how IT will enable the organization
as it grows or contracts. Such a strategy involves technology, of course, but also must consider
staffing, vendor relationships and other variables. The use of cloud computing is enabling IT
organizations to adopt a near-elastic model for growth and contraction. Cloud computing is also
enabling companies to build prototype environments for experimentation without incurring the
time and cost of purchasing and installing racks of hardware to support experiments that might
fail.

Shepherd

Shepherding goes by a more familiar name—organizational change management. Helping

reluctant or recalcitrant users successfully move from one paradigm to another requires skillful
organizational change management. If you let things go their natural way, they will in almost all
circumstances devolve into dysfunction. The English writer and poet G.K. Chesterton (1874-1936)
is credited with saying “only living things move upstream.” In order to provide competitive
advantage, IT must help the organization move upstream. To do that, the CIO must plan,
anticipate challenges, anticipate shifts in markets and be visionary regarding new approaches to
old problems. The effective CIO exploits the systems of today and capitalizes on new systems of
tomorrow. Moving upstream is a battle against many forces—opposing currents, obstacles and
fatigue.

Steward

Our final spoke is stewardship. No IT organization ever gets all the funding it desires. And every IT
organization is faced with justifying what it does receive and showing it has deployed those funds
in the most effective manner possible. This expectation is not a requirement to always go with the
lowest-cost option, as the lowest-cost option may not offer the lowest total cost of ownership.
Each expenditure must be evaluated as though it was your own money. And you cannot assume
that there will be an automatic replenishment of funds once these are spent.

The effective CIO has an eye on reducing costs while simultaneously not reducing services. The CIO
is a steward of company resources and must consider the value of every dollar spent on the
company’s behalf. Notwithstanding, the CIO hopes to invest in solutions that work well with
currently deployed solutions. Or the CIO plans a future when integration will be improved as aging
solutions are decommissioned and replaced with more strategic ones. A mosaic of best-of-breed
solutions that do not integrate well is generally not a prudent use of company resources. Limited
deployment of emerging solutions is often common, but a hodgepodge of incompatible solutions
is neither a sound long-term strategy nor a demonstration of one’s understanding of good
stewardship.

These eight responsibilities form the basis of your existing IT organization. As you explore the
Deliberation elements in Section Three these responsibilities will come into clearer focus.

Armed with the foundational knowledge of strategy, it’s time to focus on IT Strategy in three
dimensions.

Maholic, Jim. IT Strategy: A 3-Dimensional Framework to Plan Your Digital Transformation and
Deliver Value to Your Enterprise (p. 57). Jim Maholic. Edición de Kindle.