value insights

Drivers of IS/IT Strategy Development- Valutrics

The purpose in developing an IS/IT strategy is to ensure that the best possible value can be delivered from IS/IT investments. This can be achieved by tightly aligning the IS demand to the business strategy— strategic alignment—and by exploring opportunities for IS/IT to shape the business strategy where it is possible to improve the overall competitiveness, productivity and fitness of the organization to meet the forces acting upon it—competitive impact.
The arrival of threats and opportunities cannot be forced into a convenient timetable to suit the business strategy cycle. An organization that is setting out to be flexible and responsive needs to be prepared to respond to fast-moving stimuli and to change its plans accordingly,  and the IS strategy needs to be able to respond in the same way.

The figure  shows how the pace of change in the external environment can prompt business responses. The effect can mean activity in all four quadrants, with IS/IT following the business lead. There is always the danger that all of the activity falls into the ‘Defend’ box, but IS/IT can help to strengthen the ability to respond by building up strategic capability.
There are a number of sources of stimuli for IS/IT strategy development, or revising the existing strategy, any of which may have an effect on the aims and objectives of planning.

External Business Factors. These factors drive the development and revision of business strategy.

External Technology Factors. These sometimes pose threats or opportunities that directly stimulate IS/IT strategy activity. For example:

  •   competitive opportunities and threats (real or potential) based on new IS/IT developments (e.g. the Internet and wireless technologies);
  •   new products or markets created by IS/IT;
  •   major cost-factor changes giving real or potential competitive advantage, producing an urgent need to improve productivity via technology or risk losing business.

If the emphasis in the strategy is on exploitative and entrepreneurial use of technology, it probably implies new attitudes to the use of IS/IT are required, as well as for new skills and for different people to become involved with new types of technology. It is important that the IS function keeps abreast of technology trends, innovative use of technology and how competing or similar organizations are applying IS/IT, so that they recognize when significant and achievable opportunities emerge, or when to respond to technology threats.

Internal Business Factors. Changes in the nature of the business or the
structure and organization of the enterprise may result in the need to
revisit or reconsider the IS/IT strategy. The stimuli may be as diverse as:

  •   response to the regular business-planning cycle or budgeting cycle;
  •   takeover by a new owner(s) or the appointment of a new CEO or management team—this may simply mean a new attitude to technology, or it may herald more drastic change if it occurs as a result of a merger or takeover;
  •   major rationalization caused by, for example, downturn in the economy, necessitating a severe trimming of IS/IT budgets;
  •   restructuring—often resulting from corporate strategic planning (e.g. changing a business from a production-led to a marketing-led orientation, and leading to radical business re-engineering);
  •   new products or markets or channels-to-market—where there is a recognition that the present infrastructure is incapable of adapting to new requirements;
  •   recognition of the importance of strategy formulation and planning for IS/IT, based on the need to increase its direct contribution to the business.


Internal Technical Factors. These factors may arise from the need to deliver increased value for money, to cut costs, to improve the working relationship between the IS function and the business, the recognition that the current environment and legacy systems are starting to ‘creak’ and numerous other factors. They may all prompt IS management or business management to recognize the need to reassess the role of IS/IT and its current strategy. For example, the inability of many legacy systems to handle the new millennium dates absorbed the greater part of many IT budgets for up to two years to solve the so-called Y2K problem.

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