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May 30, 2010

How IT Strategy and Business Strategy Co-Operate

What is the relationship between business strategy and IT strategy?

IT strategy must be seen not as a monolithic pronouncement but instead as a continual practice with which use of information technology is tailored to the business use of information.

Business use of information falls into many separate but inter-operable domains including (but not limited to) communications, learning, analytics, research, and history -- along with production, and then of course, process management.

When we say "business strategy", the assumption is that there is a type of influence that the business seeks to have on its community of stakeholders and in its operating environment. This is an influence that depends on a position that the business can establish for itself, relative to other functional or operational entities that are either contiguous or party to the community and environment. The strategy is made up of the intent and plan to take the position for the purpose.

The use of information corresponds to the strategy, but -- not all information usage is about the strategy, except in the sense that it needs to either allow or cause the strategy to succeed. This means that the usage itself needs to succeed given the particular method of usage and the actual information itself.

IT strategy must concern itself with what methods can be combined with what kind of information, to provide the opportunity that the business strategy needs, by creating effects that are either preconditions or causes of the opportunity.

Accordingly, for IT strategy to make sense, first the opportunity needed by the business strategy must be identified, and then the type of information usage needed for the opportunity must be enabled by IT.

This requires understanding how the different information usages will co-operate to create conditions that will add up to the opportunity.

Some of those combinations are intuitively appealing because they are part of proven past efforts.

Bottom to top, those pairings usually allow the business to identify functions, design ways to conduct them, and generate specific operational capabilities from the designs. Obviously, relevant capabilities are an essential type of "opportunity". Drawing learning from history, or drawing analytics from research, and so forth, are typical interactions, and the effects of one pair are commonly leveraged by the pair above it. 

At the same time,  there is no guarantee that accomplishments in one area will flow up into others. Even where certain lineups are compelling, it is necessary to look into how a network of influences can arise in non-linear fashion amongst the full set of usages. These influences can be inhibitors as well as promoters.

For example: history can predispose analytics, by culturally reinforcing attention to some issues and neglect of others. Meanwhile, learning can predispose communications, by preselecting audiences. And production may impact research, whenever they compete for resources or persuasiveness.

Along with new capabilities, most business strategies can think in terms of ideas (knowledge), relationships and assets when exploring the types of opportunities that may be needed. Usually, in a mature business organization, these are all enjoying focused management The question is, for each type of opportunity, what should IT do to enable and orchestrate the six or more basic information usages required for creating and maintaining it?

The touchpoint between business strategy and IT strategy is those usages. In practice, the business strategist must determine which certain opportunities should be pursued. The IT strategist must identify, engage and evolve the related touchpoints so that their interactions are balanced towards providing the opportunities that the business strategy needs.

 

 

Posted by Malcolm Ryder at May 30, 2010 1:00 PM