Three Approaches to Developing an IT Strategy: What's Right for Your Company?
More and more companies are getting involved in the development of IT strategies and digital transformation strategies. This process accelerated after in 2021 the Ministry of Digital Transformation in a directive order demanded from large state-owned companies the development of digital heating. Alexander Mikhailov, MBA, expert in IT strategies and digital business transformation, CEO of IT Management Consulting, explains that there are currently three main approaches to developing IT development strategies. Let's take a look at the advantages and disadvantages of each of them.
Approaches to developing IT development strategies
Almost all Russian CIOs have heard of IT strategies, and some have even developed them. There are also typical structures of IT strategies and methods for their development.
However, a few years ago, the “digital transformation of business” approach became popular, and in 2021, the Ministry of Digital Development (the Ministry of Digital Development, Communications and Mass Media of Russia) began to directively require large state-owned companies to develop strategies for digital business transformation (hereinafter referred to as “DT”). In 2022, the requirements for developing a DH strategy began to apply to medium-sized companies that are part of state-owned holdings.
I spent the summer of 2021 not on a well-deserved vacation, but on developing a DH strategy for a large Russian company. Prior to that, he participated in the development of dozens of IT strategies for about 15 years. In my opinion, the methodology by which the Ministry of Digital Development requires the development of digital transformation strategies is very strict and does not contain sections traditional for an IT strategy (including IT infrastructure), considering new digital business models.
Here are the main approaches to the development of IT development strategies (IT development planning for several years ahead):
- Traditional IT strategy: it is planned to develop the main elements of IT (information systems, IT infrastructure, IT management) for a period of 1 to 3 years;
- Digital transformation strategy according to the methodology of the Ministry of Digital Development: it is planned to introduce new (digital) business models based on the use of new IT technologies for 3 years or more. Traditional elements of IT are not considered, it is likely that it will be possible to introduce new business models without changing the existing IT infrastructure, information systems and data;
- IT strategy for digital transformation: it is planned to develop traditional elements of IT, as well as elements of digital business transformation, starting with the creation of a single digital business platform.
Further, the main approaches to the development of IT development strategies are considered in more detail.
Traditional IT strategy
The traditional IT strategy considers plans for the development of the main elements of IT (information systems, IT infrastructure, IT management).
The structure of a traditional IT strategy is shown in figure 1:
Fig. 1. The structure of a traditional IT strategy
The main sections of the traditional IT strategy:
- Business requirements for IT
- IT goals
- Desired state of IT (information systems; IT infrastructure; IT governance)
- IT project plan. IT budgets
The main parameters of a traditional IT strategy (hereinafter, the estimates of benefits and costs are made on the basis of surveys of Russian CIOs and are given in the discussion “Strategy for Digital Business Transformation. What can a CIO do?”):
- medium to high benefits from IT strategy: 10-25% increase in business benefits from IT;
- average risks of failure to implement IT strategy: 30-50%;
- optimal joint development by consultants and the CIO, with the participation of other IT managers and the CEO (or IT curator);
- when developing, you can use consultants from international consulting companies, as well as the one proposed by the author of this article methodology for presenting IT strategy in the form of a pyramid.
Next time we will talk about the digital transformation strategy according to the methodology of the Ministry of Digital Development. To be continued…
Reference:
The article was prepared on the basis of a report on this topic made by Alexander Mikhailov at the Reboot 6.0 conference, which was held by the GlobalCIO|DigitalExperts community in September 2021.
The following materials were used to prepare the article:
- Discussions with CIOs of Russian companies published on the GlobalCIO|DigitalExperts portal “Strategy for Digital Business Transformation. What can a CIO do?”
- Results of surveys of IT managers conducted among subscriber’s website on IT strategies and digital business transformation;
- The personal experience of the author of this article as part of the IT strategy development and business digital transformation assistance published in the book “IT Strategy and Business Digital Transformation Strategy: What It Is, Design Options, Key Sections”.
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