The ability to connect technology investments to business strategy and business outcomes has always been a critical factor determining a CIO’s success.
Yet this connection, often referred to as alignment, remains elusive for the vast majority of CIOs.
While most IT groups broadly align with the business, only 21 per cent describe IT as highly-aligned and just 4 per cent identify IT as fully-integrated into the business.
The pain of not just achieving alignment, but also maintaining alignment over time is on the rise.
You need only to consider the complexities of untangling IT systems in the face of increasing corporate restructuring, accelerating changes in consumer preferences, and ongoing financial uncertainty to realize that the traditional process of developing a standalone IT strategic plan aligned with business strategy is not enough.
The CIO needs to be part of the business strategy as it is being developed.
In fact, we would argue there should not be a standalone IT strategic plan at all. It must be a business strategic plan with technology components embedded in it.
Over time, successful CIOs will play a vital role in shaping business strategy, defining the technology direction for the organization, and demonstrating their business acumen to manage demand and marshal scarce resources.
To get there, CIOs need access to the tools, insights, data, and trusted advisors that will help them sense and respond to changes in the business environment.
A key ingredient in the development and execution of the strategic planning process is finding and using appropriate data and insights and this often means data that lives outside of IT.
Thinking broadly, this includes data on consumer behaviors, business executive priorities, and the impact of technology on workforce productivity.
Without these critical inputs to the front end of the planning process, CIOs will continue to struggle to justify and defend budgets using traditional comparative staffing and cost benchmarking data alone.
CIOs that successfully take on the role of developing a joint business technology strategy and then executing on the technology components of this strategy will need to:
1 Understand the customers and workforce:
To increase workforce productivity at the lowest possible cost, business leaders need a baseline understanding of how their employees use the technology they are provided, and how that usage compares to other companies.
In Forrester’s recent survey of information workers globally, we found 26 per cent of directors use their smartphones more than three hours per day compared to just 9 per cent of the individual workers.
Facts on usage help optimize CIO investments.
2 Identify and capitalize on emerging technologies:
CIOs must be aware of rapidly emerging and disruptive technology landscape, but more importantly they must put it in the context of their business.
Developing an emerging-technology strategy requires coordination across IT.
Like any strategic IT activity, it impacts relationship management, architecture, delivery, operations, and support.
It is not just about technology selection, but also about IT's ability to help business users succeed.
For example, mobile, social, cloud, and analytics each have vastly different implications across industries and applications.
3 Focus on business value through Budgets & Spending:
In an uncertain business environment, made more challenging by everything from the debt crisis in Europe to erratic economic growth in the US, business budgets are under pressure.
CIOs need help defending their budgets and building the case for increased IT spending.
Budget benchmarks enable organizations to gauge their IT spending relative to their industry peers.
They provide a baseline for discussions around size and composition of IT investments, as well as how much of their spending should be focused on operations and maintenance versus new initiatives.
4 Identify staffing and sourcing competencies:
Many CIOs take pride in running their IT organizations efficiently but often struggle with determining appropriate staffing levels.
We found the percentage of IT staff increases initially then levels off with the size of the organization; from small organizations (4.4 per cent), to medium-large organizations (5.4 per cent), to the largest organizations (5.5 per cent).
While staffing ratios alone don’t provide all the answers, they are an objective and indispensable tool to identify outliers and justify needed additions to staff to deliver business results.
CIOs need the ability to look outside of IT and across the spectrum of data and business trends impacting the business.
The data is just the start. We recommend CIOs:
- Start with Strategic Visioning. Understand key consumer, employee and business technology adoption and usage trends, and analyze how and why these trends will impact your business.
- Use Data-driven insights to set business technology strategy. Support the front-end of the planning process with digital business facts: end customer behaviors, business leader priorities, and employee expectations.
- Conduct a Plan Review to stress-test the strategic plan. Make sure that plans are consistent, realistic, comprehensive, and ready for broader distribution.
- Measure business outcomes with an Impact Review. Solicit useful, structured and directed feedback on the Plan and planning process itself from those involved in creating it.
CIOs need an end-to-end strategic planning process, data-driven insights and comparative data to help them understand critical technology and customer trends, ensures the company adopts the right technologies at the right time, continuously innovates, and measures progress effectively against business goals.
It’s time to rethink your IT planning process.
Marcus Matic is Director of Forrester’s Strategic Planning Forrsights, and Khalid Kark is Vice President and Research Director at Forrester Research