What Makes a Strategy 'Strategic'6

What Makes a Strategy 'Strategic'6

In Episodes 1 - 5 of this series, we have covered the general introduction to this Strategic Planning methodology as well as

  • the ‘Business Understanding’ phase - which reveals and incorporates the underlying business drivers for the process
  • the ‘Client Perspective’ phase - which obtains vital input from the firm’s clients
  • the ‘Review of Existing IT’ phase - from which we obtain all the source information we need about the current technology landscape in the firm, as well as how it is organised and managed
  • the ‘Target IT Structure’ – identifying and prioritising the various potential IT initiatives that fall out of the previous research phases.

[If you have chanced across this episode first, I suggest you go back to my article page and find Episode 1 and read the series in order. See Episode 1 here]

The final stage of the process, Phase 5 on this schematic, is the ‘Select and Plan the Preferred Strategy’ phase.

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We now have a set of potential IT initiatives and – for each of them – we have an analysis of the following factors, which allows us to assess their relative importance and their concomitant cost, benefits, risks and urgency:

  • a functional description
  • an estimate of costs
  • the benefits expected
  • the impact on the business objectives
  • risks
  • urgency
  • integration and dependency requirements of the proposed system in relation to other current and proposed applications.

Remember that these initiatives may include what we would classify as standard IT projects and procurements, but which may also include related non-IT specific or management issues, such as:

  • IT infrastructure projects: moving to Cloud, changing network topologies, outsourcing etc
  • pilot / proof of concept for innovative technologies
  • modifications to the firm’s working practices or processes designed to improve their effectiveness or efficiency in tandem with IT applications
  • management initiatives designed to improve the IT management function
  • management initiatives designed to augment the training in, and the more effective use of, IT applications.

There are now a number of iterative steps that need to be undertaken in assembling the final strategic plan. This starts with formulating the various projects in a two-year plan in the most logical sequence, bearing in mind the various factors and dependencies as listed above.

This will produce an initial version of a plan which – when you add up all the costs over time, and add in committed BAU costs (such as IT salaries, and current projects underway) - will probably be financially unpalatable to most firms.

Therefore, at this point you need to stretch and flex the plan (possibly multiple times) until you come up with a budget, and a timetable of related projected capital or operating spend, that is regarded as practical, manageable and affordable.

By this stage we have already included the BAU costs, but now we have a view of the whole strategy package of activities we can also consider and size:

  • the additional resource requirements of implementing the strategy overall – this would include things such as a larger (or differently constituted or located) IT team, outsourcing etc
  • any overall strategy management resource requirements e.g. appointment of an IT Partner, IT Steering Group, IT user Group etc
  • any additional external consultancy requirements.

This thinking may also necessitate additional costs which will need to be factored into the final overall budget.

A Word on Cost Benefit Analysis

One of the outcomes of the financial analysis of the strategic plan will be a Cost Benefit Analysis which will indicate the overall financial benefits to the final plan.

In the previous article we counselled taking a prudent approach to such benefits forecasting, in order to avoid over-egging the pudding and coming up with seemingly excessive and unrealistic benefits that will bring with them credibility problems with senior management.

A better approach than trying to squeeze every possible ounce of financial benefit out of the process, potentially leading to overestimation of benefits, is identifying only the quantum of behavioral change and consequent benefits that would cover the projected investment over the required planning period (aka a marginal benefits analysis). Begin by identifying the main potential headings of benefits that apply to all proposed systems. Examples include:

  • increase in the capture of chargeable time
  • minutes saved per consultant per day
  • increase in proposal/project win rate
  • increase in effective project realization

Then develop a spreadsheet model to identify what financial benefit would be brought about by a small increment in relation to each benefit class and flex the model in relation to each of the core projects only by the amount required to cover the proposed investment.

Smaller changes are inherently more credible, and if the firm believes such a degree of change is feasible saying yes to the investment becomes much easier.

For a fuller description of this approach to Cost Benefit Analysis, see my other article A New Approach to Cost Benefit Analysis

The Final Stages

Having assembled all the working papers and resulting plan into a detailed strategy document, together with a detailed and fully resourced project plan - we also need to draft a concluding section that itself will sow the seeds of the successful implementation of the strategy – otherwise it will stand in danger of languishing on a shelf while circumstances take over.

This section needs to identify, in detail for the first three months, and more generally thereafter exactly who needs to do what by when to effect the plan’s intentions. This means, at a management level deciding which Partner / Director (or committee) is to be held accountable for the overall strategic implementation, and which Project Sponsors / Managers will be responsible for each project or task.

You then need to build into the plan regular meetings to review progress and fine-tune next steps. Finally - as the world moves on alarmingly quickly - you also need to build in six monthly tactical reviews, which may produce refinements to the plan; and annual re-planning strategic reviews which will probably result in significant changes to the original strategy.

Summary

This methodology and approach as set out in these six articles delivers a fully ‘strategic’ strategy and can be seen to cover all your key project objectives:

  • deliver a strategy that sets the direction for IT in the firm for the next two years
  • ensure that the IT function is closely aligned with business needs
  • have a strategy that seeks to use IT to drive efficiencies in the firm
  • maximise the value of the technology you have/propose to have
  • have a list of prioritised business case driven initiatives
  • develop an implementation roadmap to get to the future state
  • identify a time frame and key initiatives to implement the strategy
  • compare the firm’s technology offering to industry best practice to ensure maximum return on investment.
Andrew Honey

Compliance Systems Lead (Intapp)

4y

Great series Neil. Your point “integration and dependency requirements of the proposed system in relation to other current and proposed applications” is often over looked as each business function drives forward their own objectives.

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