Today's executives are totally dependent on technology to achieve their organisation's goals and objectives — without technology they cannot compete. According to Forrester, CIOs have a vital role to play in developing business strategy and framing the business technology strategy — defining the technology direction for the organisation in future years to achieve competitive advantage. Forrester defines business technology (BT) as:
A slow but relentless revolution in which traditional technology management, historically delivered only by an IT organisation, is changing to be pervasive technology use managed increasingly outside of IT's direct control and measured by boosting business results.
Many alternative strategies are possible to achieve business goals, with the effectiveness of any single business strategy increasingly dependent on, and enabled by, technology. "Pervasive technology use... measured by boosting business results" requires the development of business strategy that fully integrates technology capabilities and innovations; Forrester calls this "BT strategy."
Developing a BT strategy requires CIOs and CEOs to fuse IT strategy and business strategy in the development stage, making technology a fundamental building block of business strategy. Because of this, we refer to the method of developing a BT strategy as "fused."
By adopting a fused approach to BT strategy development, CIOs can move beyond alignment to an environment where IT is viewed as a business enabler. And by developing IT strategy in conjunction with the business, IT has a greater opportunity to influence the business agenda through technology innovation.
BT strategy must start with business and end with business
CIOs must adopt a business-first approach to developing BT strategy. Because BT strategy is developed in conjunction with business strategy, a traditional waterfall approach to strategy development does not work — instead, CIOs and IT strategists must adopt an iterative approach to BT strategy that begins and ends with business.
- Model business differentiators using high-level business capability maps. Start strategy development by focusing on the long-term vision for the business and its goals. Business goals inevitably break down into a number of interim objectives such as annual growth targets. Use a high-level business capability map to identify the core business competencies that differentiate the organisation from competitors — these are the basic business building blocks your leadership team believes will sustain your competitive advantage over the long term.
- Develop BT strategy scenarios. Developing alternative scenarios is at the heart of BT strategic planning. Do this as a joint IT/business project: Bring the expertise of technologists into the conversation to identify how emerging technology can enable a strategy, and bring in business expertise to determine the potential value of the strategy enabled by the technology.
- Develop a technology road map. After agreeing on the best high-level strategies, begin the detailed work of building the IT road map with a technology gap analysis. Enterprise architects are important members of the strategy planning team, helping map the existing architecture to the future-state architecture. The gap analysis aims to identify the major architectural changes requires in order to implement the BT strategy.
- Plan the business of IT. The IT business plan is the final stage in the BT strategic planning process, where the CIO determines how IT will function as a services operation — supporting and enabling the business technology strategy.
CIOs must establish IT’s credentials as strategic thinkers
The development of BT strategy is perhaps the most valuable responsibility of the CIO. Too often, CIOs delegate the development of strategy to team members, taking little or no involvement in developing the strategy themselves.
Highly effective CIOs lead the strategic planning process and take an active part in shaping business strategy. It's not enough to get involved in the business planning once a year; CIOs must engage in business discussions about all aspects of the business year-round in order for them to be seen by their peers as having value to bring to the table when it comes time to plan business strategy.
Also, CIOs should seek out experienced business strategists from other parts of the organisation to join the IT leadership team. When recruiting to the leadership team from outside the enterprise, CIOs should look for business expertise and MBA credentials as well as evidence of strategic thinking.
Finally, flexibility is needed to cope with changing environments and market forces — revisit the strategy on a regular basis to verify it is still appropriate for prevailing business conditions.
Nigel Fenwick is vice president and principal analyst at Forrester Research serving CIOs, focusing on the role of CIO as a business leader influencing business strategy and performance. For more information, see Nigel’s blog or contact him via (CIO UK registration profile).