Strategic Thinking: Making IT DecisionsStrategic Thinking: Making IT Decisions

For many companies, IT technology choices, expenditure levels, and fundamental direction are determined by a myriad of inputs. Decisions are made based on company culture, gut feel, internal politics, an extremely limited number of experiences at other companies, and whichever vendor happened to arrive with the slickest presentation at the right time.

However, what really counts--for customers, investors, and employees--is what a company does with its information technology. That's what ultimately determines the maximum quality of provided goods and services, the extent of earnings, the size and ease of use of the computer-driven "toolbox" with which to perform the company's magic. Yet, even with the fate of the company conceivably at stake, and with most large-scale IT initiatives resulting in disappointing results, managers make the same error, over and over.

The mistake is to rely solely on one's internal staff to generate, maintain, and translate the company's IT strategic plan. Or, worse yet, to proceed on the notion that a formal IT strategic plan isn't really needed, and doesn't really apply anymore ("what with the rapid pace of business today..."). Frequently, the substitute for substantive IT strategic planning and translation takes one of three forms: the pseudoplan, the vendor plan, or the denial plan.

Three Plans, Three Mistakes
In the pseudoplan, the company's IT staff assembles technical and business jargon, based heavily on sample wording extracted from other companies' plans. Typically, pseudoplans are so generic that they allow for extreme latitude in interpretation. The plan's lack of focused relevance to the particular organization should be apparent to all who read it, but it provides great comfort. Each reader can see his own solution strategy embedded therein, and it's pleasing to all political factions (with malice toward none).

In the vendor plan, the company in effect relinquishes its strategic planning and translation to a major supplier. For example, if the company perceives that it needs customer-relationship management, then it selects a major CRM vendor, and allows the vendor to provide the solution. This appears to work exceedingly well at the outset, because the vendor knows exactly what strings to pull within the organization: what words to say in that crucial first meeting with the big execs, what reassurances to give, and what "real-world examples" of successful previous implementations to cite. Comfort comes quickly to the decision makers, and the vendor's army of talent is poised to win over any who question the direction.

The denial plan reminds us of the famous line in the Humphrey Bogart classic movie, The Treasure of the Sierra Madre: "Badges? We don't have no badges; we don't need no stinking badges!" Just insert the words "IT strategic plan" in place of "badges." The way this works is that business leaders bask in the comfort of seeing "something" happening all the time with IT within the company. User PCs are renewed every two to three years; E-mail seems to be humming along; the new Web page has actually attracted some new business. And, while employees often complain about the legacy application environment, "Hey, people are always going to bitch about something!"

How About A Real Plan?
The sad fact is that business leaders who practice any of these scenarios are seriously shortchanging their companies. They don't know what they don't know. They aren't aware what's possible to accomplish with optimal IT resources. They don't fathom what the optimal cost for IT should be, even though that cost might be substantially less than what they're paying today. They don't receive enough correct, objective data with which to make a "leap of faith" from strategy to a defined or detailed solution component definition.

In each of the three scenarios, decision makers are lulled into a false sense of comfort, each for different reasons. While the denial and vendor scenarios might lead to the company going to the pseudoplan once its current approach fizzles, it's that first scenario that's perhaps the most insidious.

The second and third scenarios are often found to be sub-optimal. Sometimes it's through an eventual objective analysis. Frequently, and unfortunately, it's a result of 20/20 hindsight following a costly crash and burn. That's when pseudoplanning endures into perpetuity.

Pseudoplans are the least susceptible to discovery for what they are: a politically self-serving excuse to proceed with whatever hot button the influential decision makers deem worthy of pursuing. By the time such a plan is completed, it's been homogenized, sanitized, scrutinized, politicized, everything but simonized into an amalgamated bushel of drivel. And yet, just like mom and apple pie, who can quibble with statements such as, "IT will be strategically aligned to the business goals," and "IT will enable consistent solution delivery and increased accessibility to our business partners." All this can be extracted from any "Cliff's Notes" on IT strategic planning.

The issue is how to craft a truly meaningful IT strategic plan optimized to your company, and how to translate all that, even at the highest possible technical level, into appropriate solution strategies for which there's direct action. Is a fundamental commitment to a companywide database management system the right approach? Is CRM the right application solution? (And, if so, is a $30 million solution appropriate? or would a $3 million solution be better, because it would avoid a huge diversion of internal resources?) Should we integrate the disparate legacy applications within the company? And how? What's the best way to effect an optimal communications solution--everything from telephones to networks to the Internet?

These are enormously important decisions to the company. Yet they are most often handled (authorized, justified, implemented) through the auspices of the three scenarios presented earlier.

The Outsourced CIO
Enter the new breed of professional IT service provider: the outsourced, temporary CIO agency. This agency resource consists of former CIOs, people who have literally been there and done that, and who can bring your company the knowledge and objectivity it needs.

They can provide what simply cannot be provided solely from within the organization. Even if you have a CIO-level individual, he or she has to survive in the company's political landscape. He or she is constantly subjected to strong pressures exerted by people of great influence within that organization. Owing to the traditionally short tenure of CIOs in American business these days anyway, this doesn't bode well for maintaining objectivity in decisions with such far-reaching ramifications.

These outsourced CIO companies can work with you for the weeks or months it can take to construct optimal IT strategies and translations for your company. They will work with your existing staff to craft the solutions. They can then return periodically to review progress, assess business-strategy changes, and recommend adjustments to the IT strategic plan and translation methodologies. For smaller companies, where it isn't possible to fund a full-time, ongoing CIO position, this alternative provides an opportunity to set the right direction. With many millions of dollars resting on those critical strategies and translations, companies can't afford to make wrong decisions.

Above all, for any size company, these outsourced CIOs can bring fundamental objectivity and freedom from political pressures, prerequisites for choosing appropriate solutions.

Phil Van Praag, a former CIO and VP of IT, is president of EC Designs Inc., an IT consulting firm. Write to him at information.com/writetous.htm.