Developing a strategy is a lot about talking and listening, according to Noel Fitzpatrick. It needn’t be a lengthy process, either, he said.
A former head of IT and of Change Management at Ulster Bank, Fitzpatrick struck out on his own to form Change Alignment Limited. There, they help organizations with change and project management. His remarks were made at the Understanding Business Strategy seminar at the Irish Computer Society this week. Fitzpatrick gave a brief overview of business strategy development before recommending approaches to building an IT strategy and on how to move IT from being a cost center to being a value contributor.
A firm will approach strategy development by composing a Mission Statement e.g. to be number 1 widget seller in mid-coast Wicklow. Achieving this goal will be done by strategy. There are a number of ways to draw this up but the steps are usually:
- Target setting
- Gap analysis
- Strategic appraisal (understanding the competitive environment and the organizations strengths and weaknesses in this environment)
- Strategy formulation
- Strategy implementation
A number of tools help organizations to assess the business environment, Fitzpatrick said. These include analysis using PEST, SWOT or Porter’s 5 Forces. Another tool is the 3 Dimensions of Competence. This says that a firm must meet certain basic standards in customer intimacy, operational excellence and product or service leadership. However, it must excel in at least one area, he said.
And where does IT fit in to all of this? Corporate strategy drives lower level business plans, Fitzpatrick noted, and it is the role of the CEO to make sure they are all going in the same direction.
The consequences of a non-aligned IT strategy can be serious, Fitzpatrick said. Problems include: unavailable or unreliable information that leads to incorrect management decisions; handing competitors an unnecessary advantage; pursuit of tactical or departmental goals that work against corporate goals; or an unnecessarily complex technical infrastructure.
The key steps to drawing up an IT strategy are:
- Understand the business strategy
- Defining the information and functions required
- Document your position
- Identify the gaps
- Identify the options to fill the gaps
- Select the most suitable options
- Create a strategic implementation plan
How is this started? “Get out and talk to the business,” Fitzpatrick said. Read reports and industry papers to understand the company and its market. “It’s very easy to have a dialog with the business and understand the gist of it,” he said.
Fitzpatrick said the IT plan is not just about technology. In Ulster Bank, he appointed three “relationship managers” from IT to work closely with key departments in the bank. Effectively program managers, they “were married off to the business.” They also fed back information that gave IT a quicker and better picture of where the business was going, Fitzpatrick said.
IT should also be looking at better use of its resources and should demonstrate the value of its projects to management outside the department, he said.
On how to move out from under the cost center label, Fitzpatrick suggested:
- Understand what keeps the CEO awake at night
- Work with the business to understand IT potential and to improve business performance
- Agree clear criteria and a governance structure with the business on IT projects
- Set up an Investment Approval Board of senior people. Have it chaired by someone like the Finance Director
- Implement a benefits realization methodology
There are three classes of IT project, Fitzpatrick said. Those that run the business, those that grow it, and, most importantly, those that transform it. “These change the competitive picture,” he said.
Asked in the Q&A session about the danger of getting stuck behind a desk, Fitzpatrick stressed the importance of getting out and talking to people. Some companies appoint a CTO to handle technical aspects and then a CIO to work closely with the business. He spoke of his decision to appoint relationship managers, but said the time invested is worth it for IT. “We got huge visibility and credibility” in Ulster Bank, he said.