Strategic Planning and It Management
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Strategic planning is the process of determining a companys long-term goals and then identifying the best approach for achieving those goals (Wikipedia). This process aligns strategic planning with overall organization planning by assessing organizational objectives and strategies, setting the organizational mission and mandate, assessing the external environment and setting policies, objectives and strategies (Wikipedia). A study completed in 1999 revealed that less than 40% of US businesses included IT senior management in the strategic planning process. This first part of this paper will explore the reasons why organizations would be unwilling to include IT management in this process. It will also present reasons why IT management should be included in the strategic planning process. The second part of this paper will investigate who should have the role of justifying the capital outlay for large systems funding – business or IT management.
To Include or Exclude IT Management, That is the Question
Many organizations today experience a crisis of confidence in their information systems functions and in the IT managers who lead them. IT project failures, unrelenting hype surrounding IT, and rising costs of implementing IT systems have polarized the perception of how IT can deliver value to the organization as a whole. This is likely the main reason why IT has been excluded from the strategic planning process in a number of organizations. Earl and Feeny (1994, p. 11) write that ITs ability to add value is the biggest factor in determining whether the organization views IT as an asset or a liability. One liability for IT management can be found in its inability to understand the relationship between information technology and business requirements. Lee and Bai (2003, p. 33) suggest that organizations are reluctant to include IT in strategic planning because IT had not paid adequate attention to the relationship between information systems, and organizational objectives and goals. This negative perception of value likely stems from an organizations belief that IT either does not listen to business, or IT really does not truly comprehend the business environment. Another liability for IT that influences perception concerns IT managements inability to meet planning objectives and satisfy stakeholder requirements. A study conducted in 1994 only 24 % of planned information systems applications were actually developed (Slater, 2002). In the end, all the reasons stated above undermine the perceived value of IT, and its management, as part of the strategic planning process.
Why should organizations include IT management in the strategic planning process? The argument for the inclusion of IT management can also be related to the value that they do bring to the process. No matter what organizations believe, technology has enabled organizations to meet its objectives and goals. Earl and Feeny (1994, p. 19) write that IT management needs to be positioned within the process as agents of changes. IT managers understand the nature of how technology evolves business and can give guidance and provide recommendations on options available. IT managements ability to determine how and where the application of IT can be effective is another key motive to include them in the process. CEOs and business want value for money and they want to ensure that there are substantial benefits from exploiting IT to deliver the element of business transformation. Working with business, IT management can appraise the value of IT investment. IT management also brings experience to the strategic planning process. IT managers have worked or experienced through external stakeholders the many successes and failures of IT initiatives. From these experiences, IT managers have the lessons learned that can help organizations avoid the technology pitfalls of business transformation.
In the end, the reasons for inclusion or exclusion of IT management stem from the same cause: the perception of the value of IT. IT management has been negatively perceived as selling a vision for business transformation that is IT myopic. However, when one considers the value of experience and the nature of change of technology, it is essential to have IT management involved as they are the enablers of technology.
Who Justifies The Capital Layout for Information Systems?
Once a strategic plan is in place, and a decision is made on which information systems will be put in place, one question remains: who should justify the capital layout for these systems – business (the functional proponents) or senior IT management? Decisions concerning large IT investments and capital layout should remain with the business. All investments cases, whether they are IT or business related, require approval by the business. It is important to remember that business are the proponents for business transformation, and they are solely responsible for demonstrating to stockholders, analysts, vendors and employees that there will be a noteworthy return on investment on information systems. With business being responsible for the business goals and strategies of the organization to all of its stakeholders, it also must also assume the role and responsibility for the investment decision pertaining to a strategic information system.
Another argument that business should approve the capital layout for information systems rests on the fact that business is responsible for the culture of the organization. The success or failure of an information system rests upon a businesss ability to create and cultivate an organizational culture that is conducive to change; thus, promoting business transformation. Investments in strategic information systems need to be justified by business as they are the only ones that can effectively gauge whether they have this culture that is adaptable to change. Business