What Makes an IT Strategy 'Strategic'​2

What Makes an IT Strategy 'Strategic'2

Episode 2: The 'Business Understanding' Phase

In Episode 1 we discussed the problem with those strategies that are not actually strategic – in that they are not fundamentally driven by the firm’s business objectives; which should be the main factor underlying all truly strategic IT planning.

[By the way, if you have chanced across this episode first, I suggest you go back to Episode 1 here...]

The essence of getting it right is that the first stage of any strategy must be to gain a clear understanding of the firm’s business objectives. With one exception, that we will come to later, this phase has nothing to do with technology.

The starting point must be the firm’s recently documented business strategy. This often contain somewhat generic ‘motherhood’ statements and may not be sufficiently granular, quantifiable or prioritised for our purposes. In order to get to these outputs, the first stage is to extract the higher-level business objectives from the business strategy.

Next, from these we need to distil a slightly more detailed set of objectives that are usually called ‘critical success factors’ or ‘do-wells’, because they describe the activities that must be undertaken successfully in order to achieve the higher-level business objectives. Ideally, they will also contain some elements of measurability.

Next, we will identify the principal functional area on which the burden of achieving the ‘critical success factors’ will fall: such as central management, HR, partnership, IT, Finance, coal-face (i.e. client legal service delivery) etc.

Finally, these various ‘critical success factors’ need to be prioritised; not to a high level of distinction, High, Medium and Low will be fine.

Such ‘critical success factors’ may be things such as:

  • increase margin by 10%
  • decrease staff turnover by 15%
  • reduce write-offs by 12%
  • increase turnover by 25%
  • reduce client complaints regarding bills
  • bring the average age of precedent documents in the knowledge management system down from 3 years to 18 months
  • increase referrals in by 15%
  • etc etc

You'll probably end up with somewhere between 12-30 of these 'critical success factors'. Getting agreement from senior management that these further expositions of their intentions truly reflect their business objectives is vital. The best way to do this is to undertake this process with your most senior strategising body, ‘The Board’, say. Otherwise it can be undertaken separately, as long as the outputs are signed off by that body.

At this stage it is also helpful to have a discussion about:

  • any likely major changes to the firm or its strategy
  • other strengths, weaknesses, opportunities and threats
  • the view of the firm’s service and support functions
  • the main pressure points on quality and productivity
  • an initial view of the level and degree of IT support currently provided.

This latter is the first element of IT involved in this stage of the process. The other is to identify – with the board - any emerging technologies that are so significant that they may either have a disruptive impact on the firm’s business objectives, or which may single-handedly be responsible for novel business opportunities in their own right.

These are the exceptions to the principal that – in the strategic planning process – the business objectives are the dog and the technologies are the tail. These technology-led initiatives should also be prioritised.

The outline of the entire IT Strategic planning process is as follows, and will become clear in the forthcoming articles:

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Fundamentally, Phases 1, 2 and 3 are deal with ‘where are we now’, Phase 4 is about ‘where we want to be’, and Phase 5 is ‘how are we going to get there’. I never said this was rocket science; but it is methodical, and it works.

Having said that, it does behove us to consider some problems that have occurred in the past when undertaking this Phase of an IT Strategy.

Firstly, there is no Business Plan – or if there is, it is too out of date for our purposes.

You will not be astonished to learn that this has happened with law firms on several occasions. Whilst it is impossible to proceed with a proper IT strategy without the outputs referred to above; it has proven possible on these occasions to ‘jump start’ the process either by persuading the firm to undertake a business planning exercise, and postpone the IT stagey process until it is complete, or by holding an extended Board discussion that starts from a tabula rasa. In every case of a ‘missing’ business plan, one of these techniques has proved sufficient.

Secondly, in discussions with senior management there is no consensus on the distillation of the ‘critical success action’ and/or on their relative priority.

This has threatened to become problematic on a few occasions, but careful facilitation of the discussion has - almost - always recovered the situation.

There was one spectacular exception in the late 1990s when one firm effectively split and was dissolved when the Board discussion process revealed that there were two different factions within the firm which were unable to agree on the identification or prioritisation of one set of ‘critical success’ factors. The Business Plan that they had previously produced used language that was sufficiently generic, high-level and ambiguous to allow them all to settle on it. However, when we started to unpick it in the way required for these purposes, the fundamental dissonance was impossible to hide, and it broke up the firm.

It can also go the other way, one firm in Hong Kong was kind enough to say that:

“We undertook a Board session with Neil to further define and prioritise our business objectives for our IT Strategy. As facilitated by Neil, and informed by his experience of law firms, this proved to be an invaluable exercise – not just for the IT review, but also for the extent to which it added value to our business plan.”

Thirdly, the Board gets bogged down in the prioritisation process – especially in the assignment of relative priorities of High, Medium and Low.

The assignment of any factor as ‘Low’ being especially problematic. Naturally, all the ‘critical success factors’ are important, they come out of the firm’s business planning process after all, but some are more important that others, and others may therefore be relatively low. We normally get there in the end.

Now we have the necessary ingredients to ensure that the entire rest of the process is business driven, and we also have the means to help us prioritise our resulting set of IT initiatives down the line. How this works will become apparent in Phases 4 and 5.

The next episode, Episode 3, is on understanding the client perspective, or ‘what the client wants’, and how that fits into the overall strategy.

Jump to Part 3...

By the way; the answer is "yes" - this methodology will work for any professional services organisation... 

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Jonathan Maas

Discovery/disclosure veteran with four decades of high level experience in both hard copy and electronic evidence.

4y

Ooh I love a good stratregy!  Part 1 went in yesterday's BONG; this will go in tomorrow's.  Are any more parts planned?

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