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“The accuracy of the IT strategy deteriorates quickly in the digital landscape. If it is not implemented correctly with unnecessary delays, IT will not be able to deliver business value and creates competitive disadvantage for business.”

The end of February is an important period in every organization from a performance management perspective. It is the time when we harvest the effects of a successful strategic planning process. A time when the strategy for the year has been set after careful consideration, the budget has been updated and all units/managers have meaningful KPIs and targets (thoroughly documented and approved) for the year. Even though we are almost two months into 2014, this a suitable deadline for complete strategic planning and turn focus on follow-up and starting planning for 2015. We are all set to go!

Few IT organizations have KPIs and target set today. Many will struggle for many more months to set and implement the direction of the year. Some strategic statement is probably ready on the very top level but has not been cascaded down in the organization. The fact is that many units will not get their directives, KPIs and target until the summer. The reason is obviously poor planning but also not having the tools to cascade strategic direction down in the organization. The top-level yearly strategy is often too fluffy and blurry making it impossible to cascade.

The main problem is that the value of the IT strategy deteriorates rapidly every month it is not implemented correctly. The level of unpredictability is rapidly increasing meaning that the IT strategy needs to be challenged every 6-12 months depending on industry. In an industry with 12 months predictability, this means that after 12 months – the accuracy of the IT strategy is zero. What does this mean? Accuracy is often defined as the degree of closeness to a true state. The closer we are to the truth or reality, the more accurate we are. We try to predict the true future state (hypothesis) by gathering and analyzing trends and change drivers, and define a strategy based on that hypothesis. But after 12 months, the pre-requisites have change to such a degree that the hypothesis is no longer valid. We cannot trust the analysis we did 12 months ago. The IT strategy is probably not completely wrong but we cannot trust it. It is like driving through France with an old map that might or might not be right – not easy, especially if you are in a hurry.

What we want to do is to leverage the IT strategy when it is as accurate as possible. With a predictability of 12 months, the IT Strategy is probably usable the first 9 months before the accuracy sinks too low. We don’t want to wait 7-8 months before completing the cascading as done in many organizations. In fact many IT units govern their work based on inaccurate IT strategies (7 – 19 months old) that is destroying business value and competitiveness. We can probably conclude that by cascading the IT strategy down in the organization 4 months late (defined in September and implemented in April), the accuracy of the directives and KPIs are only 50%. This means that we only leverage 50% of IT’s potential in delivering business value. Not good enough in the current digital landscape!!

So what can we do? The idea is to minimize the time between environmental (internal/external) analysis and the implementing of the IT strategy to maximize the accuracy of the IT strategy. There are methods of doing this by using agile management methods that take the dynamics (unpredictability) of the industry into consideration and keeping the accuracy of the IT strategy at a health level.

Recommendations:

  1. Build awareness around the cost of bad planning and inaccuracy of the IT strategy. What is the accuracy of your IT strategy? What is the consequence?
  2. Time-stamp the IT Strategy, and clearly state that no one will use an IT strategy older than 9 months.
  3. Don’t see the strategic planning process as an isolated event but rather as a continuous process covering all months of the year. Keep the deadlines!
  4. Contact me to for more information and coaching!

The accuracy of the IT strategy is important measurements to track the effectiveness of IT performance management. With increasing effects of digitalization, the effectiveness of IT performance management becomes a crucial instrument to optimize business value and assuring corporate survival. We are now in February and reaching an important threshold of performance management. Beyond this point the accuracy of the is deteriorating quickly and IT organizations without set KPIs and targets will becoming a threat and high risk to business success.

Hans Gillior

Hans Legend 1