Why is a digital strategy so important?
- 06 September, 2018 12:13
Developing a digital strategy is hard work, harder than it has ever been. This is because we are in a constant state of change – which, unfortunately, is somewhat of a planning paradox. Some post-modern IT consultants may try and convince you that this planning paradox just reinforces the agile mantra. Agile investment, agile procurement, agile development and agile deployment.
Don’t believe them!
I’m not against the agile methodology for IT delivery – it definitely has an important place in contemporary organisations – just not in strategic planning.
So why is strategic planning of your digital investments so important? To quote Lewis Carroll“If you don't know where you are going, any road will get you there.”
Fumbling from one IT investment to the next is unlikely to be sustainable, nor will the investments be suitably aligned to organisational objectives. Mind you, if your organisation doesn’t have a clear vision and set of objectives, then there’s not much point having a digital strategy – after all, to rely on serendipity would be the folly of the brave and foolish.
In my book, “The Digital Governance Handbook” (see link below), I highlight that a digital strategy is a key enabler of digital governance as it provides a critical reference point or anchor for digital investment decisions and the subsequent focus on meaningful benefits and value delivery.
My previous articles on digital governance have discussed the need for strong project governance and benefits management. However, neither of these important governance practices will help your organisation if you don’t have a digital strategy that aligns your investments to your organisation’s objectives.
The value of engagement in strategy development
When developing a digital strategy, perhaps more important than the destination is the actual journey. The journey of developing a digital strategy, if done well, is a journey of engagement with key stakeholders.
It is an opportunity for the IT boffins to emerge from their corporate havens of solitude (a little harsh I know) and hold rich and meaningful conversations with a broad set of stakeholders. These stakeholders include: the board of directors (or equivalent if in government), the executive leadership team, other key staff, customers/consumers and strategic business partners.
The engagement of consumers in developing your digital strategy is particularly important in this age of digital disruption where, arguably, consumers now hold the balance of power.
The other digital age shift is the need to actively consider partnerships and collaborations, even with those previously considered competitors. Strategic partnerships allow organisations to respond more quickly to market opportunities – just look at the number of recent partnerships and white labelling in the airline, insurance and finance sectors.
The process of engagement to develop a digital strategy will vary dependent on your organisation and whether the decision making culture is authoritarian, collegiate or anarchical. My recommendation is to try and run a series of consultative forums to allow as many people to contribute to the strategy as is practicable. Broad engagement with stakeholders will help make the digital strategy communal property rather than a secretive domain of the privileged.
Digital strategy as a proxy for digital risk mitigation
The development of a digital strategy provides an opportunity for the organisation to revisit business and strategic risks. Such risks range from the obvious threat of digital disruption through to regulatory / legislative compliance risk. It is therefore good practice to analyse the current internal and external environment as a preamble to the strategy.
When defining your digital aspirations, try and focus on the business value to be derived from digital investments rather than focus on the technology itself. That is not to say that a narrative around technology trends is not important, but it is too easy to get caught up in the technology hype without really thinking through its relevance to your organisation.
Bringing a risk management lens to digital investment decisions is a good discipline for keeping focussed on generating business value and at the same time mitigating business and strategic risk.
Key strategy elements
In my experience, digital strategies are not always well-conceived. Some provide little more than ethereal principles, whereas other strategies have too much technical detail with little to no alignment with organisational objectives. To be credible with stakeholders the digital strategy should articulate the target audience, the organisational context within which the strategy will be executed and, most importantly, how the digital strategy supports/enables the organisation to achieve its objectives.
It is also appropriate to provide an overview of the current state of technology within the organisation, including any challenges with the existing technology platforms and systems.
Once this background information has been presented, then you can comfortably and confidently set about outlining what your digitally enabled organisation will look like. It is really important that you do so through the eyes of your stakeholders. In other words, describe how the organisation could be different from the perspective of staff, consumers, business partners and other key stakeholder groups.
Beyond these key stakeholders there are two additional elements that your digital strategy should tackle. The first is resource management – how will technology drive better utilisation of organisational assets and resources, the two most precious being money (capital) and people (staff). The second additional element is technology infrastructure – the digital strategy should articulate your approach to key technology infrastructure such as data centre assets, network infrastructure and end user devices.
You’re almost there!
If you have done all of the above, you may well now feel exhausted. However, there is one important task left to do, which sadly, many organisations omit. You must now devise a plan, or at least an overview, of the investments that are required to deliver on the digital strategy.
Without an investment plan it is difficult, if not impossible, for the organisation to commit to the strategy. The investment plan also helps legitimise the strategy from the perspective of affordability and deliverability. As a minimum you should outline key initiatives over a given period including a reasonable estimate of costs and benefits. Without a competent investment plan, your strategy is at best a pipe-dream, at worst, simply ignored.
What’s an appropriate strategy timeline?
Given the planning paradox of our ever-changing digital world, I often get asked what’s an appropriate horizon for a digital strategy. Obviously this depends on your organisation and its current position in the organisational life cycle.
Some digital strategies seek to outline two, three, five or even 10+ year horizons. My recommendation is that the digital strategy should be revisited or refreshed at least every four years. The supporting investment plan, however, needs annual review to take into account changing organisational resources and priorities.
So what are you waiting for? If you’re a CIO (or equivalent digital leader) and you don’t have a lauded digital strategy and investment plan for your organisation, then get to it!
There is no governance control more important than a digital strategy – it will guide your organisation’s investment decisions, provides context for business cases and provide the organisation with confidence in its digital future.
Dr Malcolm Thatcher is CEO of Strategance Group – a consulting firm focussing on assisting organisations with Digital Strategy and Governance. Previously, Dr Thatcher has served as CIO for Queensland Health and for the Mater Hospital Group in Brisbane. In early 2018, Dr Thatcher published a new book titled “The Digital Governance Handbook for CEOs and Governing Boards”, available from Amazon and other online outlets.