Best Laid Plans

Best Laid Plans

Strategic planning is back in a big way, with an increased emphasis on aligning IT planning with a company's business focus rather than simply putting together blueprints for catching up with technology advancesNext to technology evaluations and rapid proof of concept, the single most important function GIO's Strategic Planning Group has these days is turning on business people to technology. Strategic Planning manager Daniel Calleja says the insurer's Technology Awareness Program has become the centrepiece of its strategic planning program and GIO uses the program at every conceivable chance to excite the business people about the opportunities being offered by IT.

"What we do is to look at new technologies and assess them, along with the people who have the ability to talk 'busino-tech' -- the ones who hear business . . . and can translate it into technology and vice versa. Then they go out and excite the [the company] about technology opportunities that are really business opportunities," says Calleja. GIO is not alone in its emphasis on planning. Strategic planning, historically the bane of an IT manager's life, is enjoying a big resurgence en route to the new millennium. CIOs and other IT executives who would once have winced at the phrase are not only dusting off their strategic planning methodologies, but refining and enhancing them.

Peter Hind, InTEP manager with research company IDC Australia, conducts a massive research project every year in Australasia called "Forecast for Management". The latest results show 56 per cent of companies updating their strategic plans annually; 22 per cent every three years, 5 per cent every five years; and just 17 per cent having no strategic plan at all. Those strategic plans variously embrace IT organisation and service delivery (91 per cent), telecommunications (66 per cent), IT architecture (90 per cent), information management (79 per cent) and other areas (7 per cent). More companies update their plans annually in the finance/business services area (68 per cent) than in mid-range companies (45 per cent), while only 35 per cent of organisations with fewer than 50 employees do any strategic plan at all. Of course for some organisations, the failure to get involved in strategic planning may be no bad thing, points out Graeme Simsion, managing director of IT consultancy Simsion Bowles & Associates. How important a good strategic IT plan is to any enterprise depends entirely on the level to which information technology and information systems are key to the business. "In finance -- where you are basically about processing information -- strategic planning is absolutely fundamental. In manufacturing, if you feel you've got the manufacturing technology right, and you've only got two buyers and two suppliers, you may feel that it's less important to you."But with new sophistication in strategic planning approaches and increased emphasis on aligning IT planning with a company's business focus, strategic plans these days have a distinctly different face to those of yore. Calleja says his discussions with others in corporate Australia reveal a new emphasis on planning and outward vision, after what he calls "the planning gap" of the last few years. "In terms of strategic thinking, I think there has been a recognition of the fact that no change equals possible demise," he says. "The number-one rule is still alignment with the business goal; but the other corporate philosophy change I see happening is that where IT was once viewed as an overhead, it's now being viewed more as an investment. So you need people with a strategic planning focus who have some IT capacity and also some business savvy -- along with the ability to translate between the two groups."Hind, who holds frequent focus groups with CIOs and IT managers, says many CIOs now accept that in the past too much lip service tended to be paid to strategic planning while long-term views of strategies were overlooked. At a recent focus group, he says, a CIO from the banking industry pointed to the need to reassess the way intellectual capital was measured as an asset of the organisation -- including the capital knowledge that derived from systems development. Others in the group agreed with his primary point: the need for organisations to think far more strategically about how they can measure and assess the value of information.

Technology No-No

While for many companies strategic planning remains a very traditional process, Philip Ingerson, principal with Intec Consulting Group, advises his clients to forget about the technology side. "The idea is not to focus on new technologies we should be into and how can we use them in our business. Successful strategic plans focus on business advantage, considering what the business is trying to achieve and thinking about technologies that can help them achieve that. I think that is still a very valid way to approach things." But Simsion has a different outlook. In the old days, he says, the theory was that the business plan drove the IT plan. You came up with a business plan then produced an IT plan to suit. More modern thinking calls for a so-called "fusion" approach where IT planning and business planning go hand in hand in recognition that the business plan will inevitably be affected by what can be done with IT. Yet few organisations have really come to grips with that approach, he says. "It still tends to be that business planning is done almost as though information technology doesn't exist; then IT is added later," Simsion says.

Flexibility is a crucial element of any good IT strategic plan, he says, but there's a tricky balancing act to getting the plan right. On the one hand, the technology you put in place typically has to last five years or more to give you an appropriate payback. You have to be looking long term because of the sheer cost of the technology. On the other hand, business and technology are changing so fast that what may seem right now may no longer be right in 12 months or two years' time. "You need to strike a balance between long-term thinking, in line with the size of the investment you're making, and being flexible enough to change direction if some of your assumptions turn out to be wrong -- if a new technology comes along, if a business opportunity comes along," Simsion says. "One rule of thumb is that the more things you regard as being strategic, the more rules and principles that you put down, the less resilient to change the plan is going to be."A plan that lists a hundred things to be achieved over the next five years will inevitably get derailed. Better to get very highly focused, setting down perhaps three fundamental things the IT environment has to provide: say, a consolidated customer management system, world's best practice in order processing, a total picture of the customer for marketing purposes. This way your plans will have some life no matter where the technology moves in future.

Never let the plan be too top-down or too bottom-up. Plans that are too top-down incorporate grand visions that ignore existing legacy systems. Simsion has seen far too many of those. Plans that are too bottom-up take an incrementalist view that considers every possible project the organisation can conceive of for the next five years, based on where it is now. "Good strategic planning looks top-down and bottom-up and finds a balance. The mostly faulty strategic plans that I've seen either are too bottom-up: they are a just a wish-list of projects; or too top-down: they are the grand vision that nobody believes in." Food chain Franklins put a strategic plan in place in the middle of last year, covering the directions the company wants to go, the IT capabilities required, the projects needed to develop those capabilities, and the underlying IT functions and infrastructure development. Strategy IT manager Herman Kogekar says that with the parent company striving to achieve a common approach to strategic planning across a number of companies, much of his work is involved with aligning local company directions with parent company directions. That means rejecting a project-by-project basis for strategy planning.

"We are looking at projects as the sub-entities to trying to achieve a business outcome. The business outcome might be that you want to reduce the cost of your supply chain; and that might require projects such as electronic commerce, reducing the inventory in the warehouse and doing forecasting for the warehouse. But it is all of those projects -- plus business changes in the organisation [and] social changes -- which together give you the capability.

Otherwise you have new technology, but people are still in the old organisation working in the old way and the technology doesn't give you any benefit." The more holistic approach Franklins has now adopted is already leading to better outcomes, Kogekar says. And, as a part of the overall strategy plan, significant organisational and cultural change activities have occurred.

New Views

A successful strategic plan will have an external as well as an internal focus. The federal Veterans' Affairs Department started overhauling its basic framework three years ago with a view to achieving a better connection between finance, IT, HR and business. That involved overhauling the corporate plan and having a "good long think" about how it was structured and the messages it was sending, says to Strategic Planning and Coordination director Sean Farrelly.

"It was really a process that tried to tackle all the elements of our major planning systems at the same time," he says. "None of it was done perfectly first time around, but tackling the various elements on a broad front really wised us up to some of the issues that we would have to face up to in the next iteration." One of the issues the department focused on was the external world, not only considering how that world affected the department but also the ways the department might conceivably influence it. "I think traditional strategic planning has tended to have organisations just responding to those external factors, rather than actively influencing them," Farrelly says.

To create a plan that truly is strategic, the CIO and the CEO must work together; and to create a strategic plan that will work, it must be driven from the very top. "There are plenty of CEOs who might appear to be on board but who aren't really," Farrelly says. "If you don't have the CEO driving the strategic plan then the senior executives around the place will tend to be a little bit wary of it, because of issues of accountability and all those things. "Then if you close the planning loop by linking it to performance indicators -- quarterly review and annual review via your performance appraisal process at the executive and non-executive levels -- you turn it into something real. If you go back to your plans and the targets and performance indicators you set for yourself at the end of the year, people are more likely to pick these things up during the year and pay some attention to them," he says. Even more important than the endorsement of the CEO, Brolga Consulting director Allan Smith says, is a vision shared as widely as possible across the company. The vision must be clear. The management team must believe in the vision. And, the organisation's employees must contribute to the vision. "I would suggest such involvement is essential," Smith says.

Drawing up traditional strategic plans was very much like following a recipe, Smith says, whose ingredients included vision, mission, goals, objectives and a whole lot of other detail. Now he has moved towards vision-based planning, which has as its starting point some inspiration or ideal the organisation would like to achieve: To be an outstanding provider of widgets, perhaps. To have the most innovative products in the industry and maintain leadership amongst the field. To provide products and systems that reward or develop services for people in the industry. "The vision-based plan very much puts the focus back on the leadership of the organisation. If the leader or the head of the organisation is not committed to the ideal of where that organisation should be heading, then it doesn't matter what sort of plan you have, people won't buy it," Smith says. "Unless there is that commitment to the endpoint, and it is visibly shown by people, then the plan is just platitudes. It's just going through the motions. And in fact, ideally, a vision and the sorts of values that drive an organisation, I believe, outlast any single person who heads that organisation."He says the biggest dangers are: failing to involve the people who will have to make the plan work in the drawing up of that plan and the lack of commitment and communication on the part of the chief executive officer or senior management.

Something New on the Horizon

In physics, the Event Horizon is considered to be the "surface" of a black hole, or the area within which the velocity required to escape from the gravitational field is faster than the speed of light. Larry Quick, managing director of Dow Digital has his own "event horizon concept", as applied to the field of IT strategic planning. According to Quick, his "brainchild" is proving useful in helping clients to "future-proof" their strategic plans. Quick loosely defines his event horizon as the point at which people can clearly see the shape of the future and start working towards it. Thus when Juan Antonio Samaranch stood up and said 'And the winner is Syd-eny', the event horizon for the Sydney Olympics was reached. "It was at that point that people could 'see the future' and it became a tangible thing they could work with," Quick says.

Quick's new model was born out of the Crash of the 1980s. Quick had been helping clients prepare strategic plans for years, but none of the modelling he'd done in all that time had helped him or his clients predict the crash.

"There was no indication really, that that crash was going to happen, so our predictive modelling and our planning wasn't accurate. It was partial," he told CIO.

It was clearly long past time to revisit the models he was using as the basis for those plans. After evaluating other views of planning, Quick devised a concept called "Strategic Planning in Action", a model with a heavy emphasis on strategic thinking and predictive modelling. "In the old days, when the cycles of change were a lot slower, your planning targeted where you wanted to be, and you shot for that target. These days, the cycles of change are so fast it's more like clay pigeon shooting -- where you shoot out in front and the target actually hits you. So your predictive model has to be a lot more substantial than what we've had before," Quick says. "So the model Strategic Planning in Action basically uses some of the old ways of planning but takes into account a much broader base of trends. Once you have an understanding of those trends, you look at possible scenarios that they will produce," he says. Having achieved that, it is time to pinpoint 'the event horizon' -- the critical, behaviour-shifting point where the future starts to become visible before it actually happens.

Quick cites e-commerce as an example. As far back as 1990, he began measuring the trends that were developing around the Internet, monitoring the media and carefully watching business use of electronic means of doing business, consumer connectivity and technological developments. Nothing hard about it, just simple trend analysis -- the sort of thing, he says, anyone can do.

"Now, I had a scenario in my head that the Internet would be an important part of how business was done in the nineties. Back in 1990 that wasn't thought about," he says. "The first thing I noticed was that Internet connectivity started to grow exponentially. I noticed the big thing that occurred -- from a trend point of view -- was the World Wide Web: the Internet became graphical.

That was a significant enabling technology breakthrough. I also watched how many businesses in the US had taken that [the Web] up, and that take-up went exponential as well. This was in 1994." From a predictive modelling point of view it was then possible to work out an event horizon for e-commerce, paying careful consideration to the cross over between consumer and business use.

"When consumer and business cross over, that's a very important relationship," Quick says. "You have to look at the trends and the relationship between the trends. People were talking about the technology. Generally people don't buy technology, they buy a promise from a business."The biggest change occurs when business and consumers get together to reach critical mass. And doing that kind of modelling will potentially give you several event horizon scenarios to incorporate into your strategic plan, according to Quick. "The scenario that I saw was that the Internet would be a key influence on business that would fundamentally change the way we do business. Yet when I developed that scenario in 1991 there was nothing to prove that the Internet could do that. We didn't have the World Wide Web. We weren't using e-mail. Most people didn't have a clue about the Internet. Despite all that, that was one of the scenarios that I came up with. "Then you look at possible trends to support that scenario. And it's at that point, when you are looking at the relationship between the trends, that you can identify the event horizon. And the relationship I always look for is when business meets consumer, from a business perspective. When consumer and the business agree that something is going to happen, there is very little you can do to stop it," Quick says.

Once you've reached that point, developing meaningful strategic plans becomes much simpler, because a paradigm shift occurs. But beware of merely using the future paradigm as an add-on to an old paradigm. "At that time of determining where the future is -- where that scenario is -- you have got to be very clear on what that paradigm in that scenario is going to be. Make sure you can take advantage of the new way of doing things as an add-on, while realising that that is not the end game. The end game is the new paradigm that you're going to be working in. "For instance, the challenge for most of Australia in e-commerce is deciding what e-commerce is in the new paradigm. But by monitoring the trends, it almost becomes intuitive. You actually know what it is because you have been watching it for so long," Quick says. -- S BushellMake No Mistakes Take note of these pitfalls to avoid during the IT strategic planning process - Don't view the process as a highly structured exercise with strict guidelines. Instead, focus on building relationships and improving communication between IT and the business side of the enterprise using such tactics as extensive interviews with users and stakeholders. - Distinguish between tactical short-term goals and long-term strategy. Planners sometimes mistake short-term goals, such as buying more PCs, for long-term strategies that will truly align business with IT. A solid strategic plan can be expensive, involves much of the organisation and is not always easy to retract.

- Don't rely too heavily on outside consultants to draw up the plan.

Consultants are often not worth the added expense and there is often enough talent in your own organisation to put together a plan. If you do use consultants, check out their business partnerships ahead of time -- sometimes a consultant or systems integrator will have a vested interest in pushing a particular software or technology.

- Don't make the plan a closed document set in stone. It should be open to revisions and updates in case the business or technology changes. -- Mindy Blodgett

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