Your To-Do List for Managing Demand: The Strategy Behind Strategy-Making

As your business clamors for more and more IT, you need a strategy for determining value.

November 01, 2005 — CIO — Let’s convene another session of CIOs Anonymous. Ernest, a CIO at a large company, stands up and says, "My group has too much to do and we are going to fail." The audience feels his pain; Ernest sits down, at a loss for what to do.

Yet Ernest is in many respects an exemplary CIO. He has improved IT-business alignment significantly by delivering on projects as promised, establishing IT councils to set priorities and increasing communication across and among the IT and business organizations. In his gut, however, Ernest knows that his success will be short-lived if he doesn’t get a handle on the demand for IT services. Delivery will start to suffer, communication between the business and IT will turn negative, and the positive cycle he has worked so hard to establish will be reversed.

This article is the second in a series examining promising concepts to improve IT-business alignment. Overwhelming demand is a universal issue for CIOs, a problem for which there are no easy solutions. CIOs can establish internal mechanisms to allow IT capacity to flex with varying levels of demand and encourage business leaders to say no to their own unreasonable demands for IT services. These mechanisms help to incorporate IT into business strategy and make IT value a practical matter.

The strategy behind strategy-making

Ernest’s company doesn’t have a formalized strategy process. But that’s not the problem. It’s unlikely that any strategic plan would reflect a company’s reality in a form that could be used to drive IT decision making. I support the approach outlined by Marianne Broadbent and Ellen Kitzis in their book, The New CIO Leader. They recommend that strategy making be incorporated into the IT governance process by convening an IT Council for a one-day session to "shape and inform expectations for an IT-enabled enterprise."

The output of this session is in the form of business and IT maxims. Business maxims, according to the authors, identify what needs to happen if the organization is to successfully execute its strategies, and IT maxims identify how the enterprise needs to connect, share or structure information. For example, a business maxim might be that a company manage its global customers through a single point of contact. The corresponding IT maxim would be that the company have common, shared data on customers, products and financials.

Don’t worry about perfecting your strategy-making process. Just make sure it includes the right people and is efficient, so that you can ensure an ongoing dialogue. In their MIT Sloan Management Review article, "The Real Value of Strategic Planning," Sarah Kaplan and Eric Beinhocker emphasize that the highest outcome of strategic planning is not the plan per se, but rather the learning that occurs through the process. This results in prepared minds that "have a solid understanding of the business, share a common fact base and agree on important assumptions."