Information technology regardless of size and industry, every company relies on information technology, and must have a strategy for using it, especially as the internet becomes more widespread. Information technology strategy is an enabler of business strategy. Companies must not only manage relationships with their constituents, but must also be able to connect with them electronically through the arteries of data – supply, value, and demand chains for information. The supply chain and demand for information are external, the information value chain is internal.
The information technology strategy is a special case functional strategy because every function in a company requires electronic information delivery capabilities, and many require electronic process control as well. In very large companies, strategy can be formulated at both the company and organizational unit levels.
As websites such as Facebook, LinkedIn, MySpace, Plaxo, and Twitter become more pervasive in business, the relationship between application systems and databases and social networking sites will become more important to enable constituents to communicate both collaboratively and cooperatively. Just as e-mail with information technology has now become the primary method of communication between companies and their constituents, so have social networking sites especially for advertising and e-commerce.
Business intelligence information can be used to identify opportunities for competitive advantage. However, information technology itself can be an enabler of competitive advantage, especially when there is an opportunity to digitize products or deliver information products electronically. In such cases, business strategy cannot be separated from information technology strategy.
Information technology consists of analytical and operational application systems, databases, and technical infrastructure (hardware and networks) of an enterprise. Not all computer technology is information based. Computer technology is used for process control applications in special purpose equipment. However, connectivity is critical as apps become more integrated. As digital construction and manufacturing practices evolve through technologies such as computer-aided design/computer-aided manufacturing (CAD/CAM), processes, process control, and the products and/or services provided by processes, all rely on information technology for connectivity.
For example, in the manufacturing industry, not only can design and manufacturing work be done through integrated CAD/CAM processes with electronic linkages to operators, such as FedEx and UPS, but all project and process management activities can be monitored electronically from idea to delivery.
Through information technologies such as electronic data exchange and electronic transfer of funds, data and digital products and information flow through the supply chain and demand for information in parallel with the supply chain of materials and products and services. Within the enterprise, data flows through the information value chain from the supply chain to the demand chain.
Developing an information technology strategy document is essential for describing the requirements and for educating users because:
- The impact is enterprise or organizational unit wide and other elements of strategy cannot be implemented without it
- Administrative activities, such as legal, finance, and human resources, and operational activities, such as research and development, procurement, manufacturing or equivalent, distribution, marketing, sales, and service depend on information technology – analytical and operational systems support both administrative and operational functions
- The time frames, expenditures, risks, and magnitude of efforts are usually larger and more complicated than other initiatives and must be clearly understood; information technology projects have a tendency to go out of control and under deliver – therefore, contingency plans are always necessary
- The subject matter can be complicated if not well explained
Information technology strategy is usually packaged as a separate document but is linked to the strategic plan. It is deployed and executed through specialized programs and projects that develop new or improve or maintain existing application systems, databases, and technical infrastructure. Large information technology development projects are usually cross-functional, and can be part of a broader initiative sponsored by many functions collectively.
Broader initiatives that have information technology components include:
- Market research and development
- Product research and development
- Infrastructure research and development for processes and information delivery
For example – for the development of a:
- Digital manufacturing system integrating both research and development and sales and production activities (sponsors: Manufacturing and Sales functions – impact is on Research and Development, Procurement, Manufacturing, Distribution, Sales, and Service functions)
- Financial, managerial, and regulatory accounting and reporting system (sponsor: Finance function – impact is enterprise wide)
- Human resource management system (sponsor: Human Resources function – impact is enterprise wide)
- Sales tracking system (sponsor: Sales function – impact is on all salespeople enterprise wide)
Sales tracking system (sponsor: Sales function – impact is on all salespeople enterprise wide)
Some projects may be solely for the function of Information Technology, in this case the customer himself.
Steering committees should be established for large programs and projects representing the various affected functions to resolve cross-functional barriers. Key programs should be under review by planning and policy committees at the enterprise level.
The formulation of an information technology strategy is a separate project at the company or organizational unit level. Very large projects are grouped as programs of interrelated components under the program manager. Projects can stand alone too. A single project may provide one or more application systems and associated databases and technical infrastructure, or several projects may be required depending on the complexity.
The work breakdown structure for downstream development, improvement, and maintenance projects is decomposed into planning, analysis, design, construction, implementation, and performance measurement phases. The performance measurement stage can be carried out in parallel with the other stages, and each should end with a performance review. A feedback loop for future planning activities should be established so that lessons from the past can be reflected in future initiatives.
Meeting cost and schedule requirements is always a major consideration. Therefore, “meeting the date” is often a requirement for project success. However, after implementation, the scope of what was delivered and its quality is usually more memorable than when. To anticipate the need to make changes after implementation, adaptation projects may be required to adapt, standardize, and integrate results.
The information technology planning stage is carried out at the enterprise, organizational unit, or program level for one or more projects depending on size and complexity. However, each application system and associated database and technical infrastructure is delivered through the project with different phases of analysis, design, construction, and implementation.
Each phase always begins with detailed planning activities to ensure that resources are allocated appropriately. The work breakdown structure does not preclude the use of iterative methodologies in each phase for rapid application development and prototyping. Website development, enhancement, and maintenance can be very fast, and highly interactive with user engagement, when the appropriate tools are used.
Key questions and deliverables by information technology strategy project and downstream phases include:
Strategy project (enterprise and organizational unit levels):
Key questions:
- How does information technology enable business strategy?
- What are the investment priorities?
Deliverables include:
- Information technology architecture (applications, data and databases, and technical infrastructure)
- High level project phasing and plans
Planning phase (enterprise, organizational unit, and program levels):
Key questions:
- What are the administrative functions’ systems and information needs?
- What are the operational functions’ systems and information needs?
- What are the priorities for the candidate analytical systems?
- What are the priorities for the candidate operational systems?
Deliverables include:
- Process models
- Function models
- Data models
- Information models
- Economic evaluation
- Scope of analysis projects and schedules
Analysis phase (project level):
Key questions:
- How do processes, functions, and systems fit together?
- How do systems processes and functions relate to enterprise processes and functions?
- How do systems processes and functions and enterprise processes and functions fit together?
Deliverables include:
- Functional requirements
- Economic evaluation
- Scope of design projects and schedules
Design phase (project level):
Key questions (by system):
- What are the system’s functional requirements?
- What are the system’s technical requirements?
- What is the total cost of ownership and benefits (tangible and intangible)?
Deliverables include (by system):
- Application system specifications
- Data and database specifications
- Technical infrastructure specifications
- Scope of construction project and schedule
- Total cost of ownership/benefit analysis
Construction phase (project level):
Key questions (by system):
- Is the system being constructed according to design?
- If not, what change orders are required, and why?
Deliverables include (by system):
- Tested application system and interfaces, databases, and technical infrastructure
- Trained users
Implementation phase (project level):
Key questions (by system):
- What are the costs and schedule relative to plan?
- What is the scope relative to plan?
- What is the quality relative to plan
- When will the benefits be realized relative to plan?
- What adjustments for tuning, standardization, and integration are required relative to plan?
- What are the current anticipated enhancement requests?
- What are the current anticipated maintenance requests?
- What are the lessons learned for the future?
Deliverables include (by system):
- Working application system and interfaces, databases, and technical infrastructure
- List of enhancement requests
- List of maintenance requests
- Performance measurement report
As companies become more dependent on the internet for connectivity with constituents, it is important to develop, improve and maintain information technology strategies on an ongoing basis. The strategy should emphasize connectivity through the data arteries as digital products and information become more pervasive.
Information technology strategy formulation is entrepreneurial competence (entrepreneurship, leadership, and management).