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Developing Information Technology Strategy for Business & IT Value

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DOI: 10.13140/RG.2.2.33321.85605/1

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 Developing Information Technology
Strategy for Business & IT Value
(This paper is modeled according to the rules and regulations of Journal of Information
Technology Management)

Paul Kahoro Kariguh

School of Science & Technology, United States International
University- Africa
[email protected]

Eric Gacheru Kariuki

School of Science & Technology, United States International
University- Africa
[email protected]

ABSTRACT
Background: Developing an Information Technology or Information System (IT/IS) strategy
that can be supported by a business strategy is imperative in generating business and IT value in
organizations today. In light of the ever changing business environment and the endless evolving
IT, nonetheless, organizations are yet to learn how to develop and implement an effective IT
Strategy.
Objective: To further build up on this issue, the objective of this paper is to provide a review on
the extensive research on developing IT/IS strategy for business and IT value.
Method: This study was carried out through the analysis of already existing published academic
research papers from relevant journals, local publishers, and observation of already existing
IT/IS strategies.
Results: The findings from our research submit that there are 5 critical success factors that
organizations should consider. The research also pinpoints practices as well as challenges faced
while developing an effective IT strategy.
Conclusion: This study will hopefully contribute to the greater body of knowledge on the
development and the implementation of IS/IT strategy in organizations for optimal business as
well as IT value.

Keywords: IS/IT, IS strategy, Strategy Development, IT alignment, IT planning

INTRODUCTION
In spite of the ongoing debate about the will sustainably drive IT strategy as has
strategic value of information systems (IS) conventionally been the case (Frohman,
the role of IS within organizations is 2010).
evolving. Rather than being demoted to the
With Technology becoming so much more
behind the scenes roles of the enterprise,
crucial to development and delivery of
IT/IS is now being appreciated in the
organizations business strategy, much more
boardrooms and is expected to play a
focus needs to be paid to Information
leading role in delivering high end value and
Strategy development than it has been
business transformation. In their research,
rewarded in the past. To further explore how
(Weiss & Anderson, 2012) found that
organizations are working towards
increasingly Chief Information Officers and
improving IS strategy development and
IT professionals are taking change and risk
implementation, the publishers convoked a
management positions. They are
community of practice that included senior
encountering internal and external pressures
IT managers from an assortment of
to decipher both business and technical
industries. This paper will initially describe
problems (Hu & Huang, 2009). With the
the communities of practice as used in this
increase in critical duties of IT‟s role, it can
research. Then, it will take an in-depth look
no longer be presumed that business strategy
at how our comprehension of IT/IS strategy
has transformed over time. It will then
deliberate on some significant success
features for IT/IS strategy establishments,
followed by how some organizations are
evolving into a more formal IT strategy
development process. Finally, this paper will
seek to revise and build on already existing
frameworks for IS strategies.

UNDERSTANDING IT/IS
STRATEGY Fig 1.0 IT strategy Elements (Henderson &
IT strategy is an all-inclusive plan that Jason, 2008)
information technology management
specialists use to guide and structure their
IT/IS STRATEGY: PAST,
organizations (Henderson & Jason, 2008).
IT strategy is the overall plan which consists PRESENT AND FUTURE
of objective, principles and tactics relating From a general perspective, a strategy is an
to use of the technologies within a particular approach towards doing business (Gebauer,
organization. Such strategies primarily focus 2011). Initially, the purpose of an IT
on the technologies themselves and in some function was to comprehend the business‟
cases the people who directly manage those strategy and then come up with a plan to
technologies. The strategy can be implied support it. Nonetheless, all too often, IS‟s
from the organization's behaviors towards strategic contribution has been subdued by
technology decisions, and may be written IT managers narrow understanding of
down in a document (Floyd & Wolf, 2010). business strategy as well as poor
understanding of IT‟s capabilities.
Consequently, most formal IT plans were
geared more towards tactical and tangible
lines of business needs or opportunities for
operational integration rather than on
supporting enterprise strategy (Burgelman & IS STRATEGY FRAMEWORK
Doz, 2003). With reference to (Galliers R. D., 2011) they
attempted to further polish the IS strategizing
In the present, IT is leading to considerable
framework as presented in (Galliers R. D.,
disruption as business models in many
2005). The framework was not meant to be a
industries (i.e., the way companies add
prescriptive tool, or a solution. It is a sense-
value) are under attack by new technology- making (Gebauer, 2011) devise, meant more as
enabled approaches to delivering products an aide memoir, to be used to raise questions
and services. Today “strategists [have to] and facilitate discussion concerning the
honestly face the many weaknesses inherent strategizing elements and connections that may
in [the] industrial-age ways of doing things. or may not be in place in any particular

They [must] redesign, build upon and organization. Exploitation strategy (Deliberate) -
Environmental and organizational analysis -
reconfigure their components to radically
Codified „solutions‟ e.g. Enterprise systems,
transform the value proposition.” (Tapscott,
„Knowledge management‟ systems -
D;, 2011). Such new business strategies are
Standardized procedures and rules - Information
inconceivable without the use of IT. Other
services (sourcing).
factors, also facilitated by IT, are further
influencing business strategy. Increasingly,
globalization is altering the economic
playing field. As countries and companies
become more deeply interrelated, instability
is amplified. Instead of being generals
plotting out a structured campaign, business
leaders are now more likely to be
participating in guerilla warfare (Eisenhardt,
2008). Flexibility, speed and innovation are
therefore becoming the watchwords of
competition and must therefore be
incorporated into any business through IT
(Hitt, Keats, & DeMarire, 2009).
Fig 2.0 Redesigned structure of IT Strategy

WAYS TO COME UP WITH AN

IT STRATEGY DEVELOPMENT
PROCESS outcomes. The challenge facing today‟s
Strategy can be seen as an art and not a leaders is that they are unable to predict
science, this is likely remaining so in the which combinations of strategic elements
future. It is posed not be a coherent, long will bring about success to their
term plan with possible predictable results or organizations therefore limiting their ability
to direct their organizations towards the
intended direction. (Quinn, 2002). This Continuous review and updating of plans
scenario only worsens the problem often and budget
Due to the existence of an ever changing
faced by IT leaders in strategy development.
business environment and rapidly evolving
It is very difficult to come up with and build
IT there is need for organizations to review
IT systems, information and IT
their plans and budgets are often as possible.
infrastructure in an environment whereby
Most organizations suggest that they should
the direction of business is continuously
do it on a quarterly basis, this enable the
changing and also there is the rapid evolving
organizations to maintain current plans and
of IT. Ironically this is also the kind of
budgets.
flexibility is exactly what is required in
businesses. (Prahalad, 2002). Traditionally Implementation of enterprise architecture
organizations do IT planning and budgeting Every organization should strive to have a

once a year but this no longer is doable in blueprint for the sustainable development of

the current business environment because it the enterprise this must involve both

make IT to lag behind the business side due business and IT. This architecture includes

to the continually changing business data, infrastructure, applications and

environment. business processes. The enterprises

architecture‟s function is to go through and
Therefore this brings us to the conclusion
validate or approve all business and IT
that organizations should start developing
related projects and should be instrumental
their strategies differently away from the
in eradicating redundant solutions. As
traditional mechanisms and practices. The
observed in some businesses this process is
way to do this is not a single defined
initiated by the IT and later validated by the
practice but many organizations are trying to
business whereas in other organizations it is
come up with innovative ways of linking the
more or less a joint venture. However, this
IT strategy to the business strategy. While
enterprise architecture should be handled
the practices are not well defined we have
carefully so as to avoid it becoming a bottle
identified a few that are making
neck or making the processes too
organizations move closer towards the goal
bureaucratic.
of coming up with a dynamic well inclusive
IT strategy.
Different sources of funding CRITICAL SUCCESS FACTORS
For today‟s organizations balancing short- FOR DEVELOPING STRATEGY
term returns with long-term returns is a There are various ways for developing IT
continual challenge. It is view that the five strategy but generally there are the five
types of IT investments that is business critical factors that can be found common in
improvement, business enabling, business these various ways.
opportunities, opportunity leverage and
Revisiting the business model
infrastructure (Smith, 2007)are an important Usually business models are confused as
aspect to ensure an effective IT strategy. being the business strategy. (Ross, 2002) but
Companies are using predetermined they are two different things. A business
percentages on their IT budget to model basically explains how the different
appropriately fund their different types of parts of a business work together ensuring
IT. (Ross, 2002). This mechanism helps that everyone in that business is focused on
keep continuous pressure on IT to keep their creating the value the business wants. It is
utility cost down and also free up resources important that the business model is clear so
for other types of projects. Also this helps as to enable easy development of strategies
organizations build their infrastructure; this on how the business can deliver value to its
is achieved through small incremental clients or customers in a unique way and
investments as opposed to large investments bring about return on investment to its
which will strain other projects in the stakeholders. (Ross, 2002) This makes it
organizations. (Smith, 2007) important for both IT managers and business
managers to understand how their business
works in a holistic manner.

In the past IT and business used to work in

isolation from each other, causing
misalignment to the business objectives and
often conflicting strategies. With time
business managers have developed great
willingness to under the impact of
technology to business but it is for IT
managers to find a simple language of
explaining their ideas and IT concepts into improves revenue collection, curbs
business language. It is very important for corruption by removing the human interface
IT to understand and align their focus on the in payments, provides accountability for
business. government. This shows that the county
government used a theme to involve their
Implement Strategic Themes
IT strategy has now become a implementing employees and residence while following a

several programs that are carefully broad yet specific strategy. IT manager and

synchronized to developed particular business managers find it easier to track

business capabilities as opposed to some important strategic activities but grouping

time back where IT strategy was the programs in a few themes. This also

implemented in individual projects. enables them to see the interdependencies of

the programs across the whole organization.
This results to each program having smaller,
interrelated businesses and IT programs that Involve the Right People
One of the major differences between
then run across a couple of functional areas.
companies that are able to get high IT
These are not fixed but designed to be
business value and the ones that have low IT
flexible to allow adaptation, reconfiguration,
business value is their senior managers. In
acceleration or deceleration as the strategic
companies with high IT business value
program takes shape. Themes have a holistic
senior managers take the leadership role in
view hence giving the business managers
decision making of all matters IT. Failure to
and IT managers a wide yet focused area of
take up responsibility is a definite recipe for
implementation which motivates them to go
disaster. (Ross J. W., 2002) Involving the
beyond the usual operations. (Kanter,
right people means getting the business
2002)For example if a county government
managers and other stake holders to
decide to provide better services buy
understand and get involved with the IT
implement a e- payment portal which allows
strategy. This may include having frequent
county residence to pay for services and
meeting to brief the management and
licenses online, this brings about paradigm
stakeholders of the progress in
shift by bringing services closer to the
implementation of the IT strategy. Secondly
grassroots level where every citizen can
is that the line managers can work with the
readily access the e-payment portals,
functional managers while the IT manager
can work with the top management probably First and foremost there is lack of a
on the IT steering committee. This brings supportive governance structure, giving
about cross functional synergies and the fact that strategies run across the
strategic interdependencies. organization integrating various functional
units, there is need to manage them in a
IT should work in Partnership with the
Business better way. More often than not there is no
For a company to implement a strategy formal structure to identify and manage the
successfully there must be a partnership different business process interdependences.
between IT and business so as to bring in the Unlike previously when everything was
input of the two functional areas in strategy aligned to organizational boundaries, with
decision making. This partnership allows the the introduction of strategy, there is a
two functional areas to start working to complexity issue due to running programs
together as well as align business to the IT that which have a broader organizational
strategy and vice versa. Effective scope. Also the current control systems and
strategizing is seen as continuous and organizational incentives for managers are
dynamic synchronization of capabilities designed to reward managers whose
(Kanter, 2002) thinking is aligned only a particular business
process and not to the greater good of the

CHALLENGES organization.
Looking at various organizational trends, we
Secondly, there is lacking a fund model
can observe that IT leaders are in the
which is enterprise- wide. For every
present day making progress in articulating
program to take off there require negotiation
IT strategy and going further to link it with
for its funding between the business lines
the organization‟s business strategy hence
which control resources. This is not always
making it more effective. On the other hand
very clear with IT about who is supposed to
business leaders are also becoming open to
take the IT strategies and expound them into
integrated processes. Despite all of these we
detailed IT plans for the rest of the
cannot ignore the fact that there are still
organizational leaders to understand.
some organizational barriers that are
hindering the development of strategy. Thirdly, use of the traditional planning
and budgeting practices presents a
challenge. This is because it leaves out the attention to the process, the business and IT
element of IT strategy, the business and IT leaders are bound to get better; unfortunately
strategies are not always done in parallel or the present managers possess rudimentary
even around the same period in time, hence skill which hence limits their ability to
the two are never aligned. Also business develop a quality strategy.
plans change often and this further degrades
IT strategy is all about getting a middle
the situation making IT strategy grow
ground between competing strategic
further apart. Annual budgeting practices
imperatives. It is seen as a balancing act
tend to put an organization‟s expenditures as
between tact and operational commitments
fixed whereas the organizations are in a
and the work done by the managers that
rapidly changing environment hence proving
leads to long term capabilities. Key
the practice not to be practical. This
decisions on which trade-offs to make
therefore means that today‟s IT
between different types of IT work, makes
organizations need to have a longer view in
the essence of an effective strategy. Very
there resource allocation practices and also
few businesses are able to do this very well
reserve a clause to enable them make
(Burgelman & Doz, 2003). This is because
changes to it more often .
traditional business thinking is more
Fourth, business and IT leaders have inclined to short term profitability and on
become good at implementing projects but the other side IT leaders are more incline to
have not been able to develop better skills in a long-term view. Balancing the allocation
strategizing and innovation. This has of resources to various projects is critical
resulted in many business areas having not making sure that the respective projects are
so well thought about business and strategy neither overfunded nor underfunded. This
which has detrimental consequences to the can also be considered as a continual
business in terms of performance and challenge facing both business and IT
staying relevant in a particular field. Leaders leaders in the present times.
in both organizational functional units have
to challenge each other so as to get them
think beyond the general issues for example
“growing the business by 25% this year is a
realistic target for us”. With this kind of
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