The world is dynamic, so are aspects such as language, technology, business, and customer tastes and preference. We currently live in a digital age meaning that the traditional means and ways have quickly been replaced by technology. Right from the education sector to the transport sector, technological advancements have influenced management. The business sector is not an exception. The traditional mode of shopping is challenged by e-commerce, thus the rising need for retail storeowners to improve their marketing strategies. Moreover, the rise in Information Technology has also had an impact in the way organizations handle their businesses. This paper focuses on explaining why it is necessary for firms to have an IT strategy, the value of having an IT strategy, and the qualities of an IT strategy that are essential to develop value.
IT strategy may be referred to as a Technology strategy or Information Technology Strategy or Information Technology Communication (ICT) Strategy. It is essentially a comprehensive plan that includes objectives, principles, and tactics that refer to how the technologies within the organization can be used. It is an iterative process to ally the IT capabilities with the business stratagem and requirements (Thorn, S. 2011, n.p). It is developed by representatives from the organization including those from the IT department, and is led by the Chief Technology Officer.
Brown, A. (1992, 193) says that IT strategies are vital to the future success of the business and are part of the business strategy. They are frequently linked to specific initiatives to attain competitive lead. There is a need to have close working relationships between senior users who understand the business needs as well as the experienced IT professionals who translate the business requirement into technical responses as they are evolving. He explains that these strategies should not automate an existing business process rather they should break the ground. Furthermore, Brown, A. (1992, 193) says the strategies may have an interface and its objectives include delivering benefits to both internal and external agents. There is often a need to develop further increments along with extensions to business initiatives, and it must be easy and fast to revisit the analysis steps. Information content of the business product is crucial in these systems, whether it is part of the core product or is provided in order to boost delivered value for customer satisfaction.
Organizations need to develop an Information Technology strategy for the following reasons; is increases the capacity to respond sooner and efficiently to modifications in the business setting. This has been evident especially in major electronics corporations that improved the relations linking business and technology strategy in the business environment. It leads to better quality goods, earlier product launches, increased revenue and profit for the company. For example, a technology strategy project in a large manufacturing company created a clear focus on main technologies in which at least 10% of the total resources were refocused on the most important technologies and new product development. IT strategy also helps to gain protection from sudden technology leaps or unforeseen discontinuities. For this reason, it safely cushions and protects the current business or single products from substitution and replacement (Bone, S. 2000, 51).
It is important for firms to develop IT strategies due to the benefits associated with them. Chew, E. K., & Gottschalk, P. (2009, 78-79) say that there are several kinds of benefits THAT come along with an IT strategy. They categorize these benefits into four categories; rationalization benefits, control benefits, organizational benefits and market benefits. All these benefits are at different levels each having different implications. Rationalization benefits are found at the operational management level and imply cost reductions. They occur when information Systems or Information Technologies are taking the place of the people through automation. Person-years may be saved when replacing people with IT personnel cost drop while IS/IT cost rise. The benefits acquired here are the net difference. A necessary requirement for achieving this kind of benefit is that there are other tasks for the people released for their duties or that people can be disseminated from their jobs if it is socially acceptable in the corporate culture. Rationalization benefits were the typical justification of early investments even if they created unemployment.
Control benefits are found at the operational management level and imply both cost reductions and increased revenues. They occur when employees are able to make better and different decisions and actions than they would have done without the information. For instance, when secretaries make appointments for lawyers, information on client profitability and importance can make them schedule more meeting in the law office, thereby reducing travel time for lawyers (Chew, E. K., & Gottschalk, P. 2009, 78-79).
Moreover, organizational benefits are found at the middle management and top management levels and imply cost reductions and increased revenues. They occur when IS/IT opens up for organizational structures which create higher motivation, better work from the employees and better economic results. Some tasks in the organization were previously worked on sequentially while IS/ IT today enables parallel work. Chew, E. K., & Gottschalk, P. (2009, 78-79) explain that market benefits are found externally and imply increased revenues. They occur when IT/IS provides business with competitive advantages leading to more sales and higher profits. Information systems and information technology strategies make the company look completely different from their competitors.
Another reason why firms should develop IT strategies is that IT strategies support business processes. Information sensitive business processes will typically find intensive support by information systems. Business processes that were manual and inefficient may be restructured and activities in the processes may be automated using information technology.
Van, G. W. (2004, 321), says that an IT strategy is essential to organizations since it enables the management to implement new technologies within their organizations on the basis of this strategy and will subsequently be able to derive strategic benefits from this. The use of the available technology or purchase of more technology enables the management make good use of the available technology. It will also enable the organization to increase their productivity due to increased speeds of the machinery used thus increasing customer satisfaction and at the same time increase their profits due to the high sales. In addition, the IT strategies also make work much easier for the employees such that they do not have to work for longer hour to complete a task; rather many tasks are accomplished at a given time.
According to Brief, B. (2015, n.p), IT strategies critically enable a business to grow and transform, a need to be given a chance to play a fundamentally different role as it partners with the business. It helps businesses advance products and innovation and foster customer led growth. It also advances their businesses goals and work seamlessly with current people and processes. IT strategies develop a business from the previous traditional system with limited products and customers to a greater iconic business enterprise. It enables the business to improve on the quality, quantity, and types of products thus increasing its customer base.
In an article written by Norman L. and Media, D. (2015, n.p) they encourage firms to develop IT strategies in that businesses should not view IT as an extra aspect to the business plans, rather consider it as a prime factor since IT shapes business strategies at its core. They say that businesses should take on IT strategies to help them mold their plans for their future lives. For this reason, the business plan becomes less chaotic and disconnected. They also say that IT strategies help business companies have competitive advantages over their competitors. This consequently leads to happy customers and employees, which propels production and customer consumption of products higher. IT strategies also help manager know their roles in the organization and how their work fits in the overall business model and plan.
Norman L. and Media, D. (2015, n.p) explain that the result of having an IT strategy is that the IT department that was previously separate from the organization functioning get a clearer picture of their part in the business. The availability of clear communication channels enable employees to efficiently communicate with the customers and other co-workers through the company’s Information Technology strategy thus enabling him/her to enjoy more streamlines, communication and work processes. Moreover, development of an IT strategy enables officers and IT employees to know the makeup of the business on a deeper level. They get a deeper understanding of the company’s resources and enable the company to know how to measure its progress on the way to its goals, make changes more seamlessly when necessary and make better decisions about the business and information technology.
The basic reason why firms run their businesses is to achieve profits. This can only be maximized if a firm overcomes s competition from its competitors. According to Porter, E. M. and Millar, E. V. (2015, n.p), the revolution of information has affected competition in three ways. It changes the business industry thus affects the previous rules of competition, creates a competitive advantage in that it gives companies alternative ways to outdo their rivals, and spawns the whole new business frequently from in a company existing operations. Furthermore, Porter, E. M. and Millar, E. V. (2015, n.p) say that information has changed the way corporations function in creating their products, packaging of their goods and services and the information businesses offer that creates an appeal for their customers. They adopt the value chain to explain the role of information in competition, which divides the activities of a company into economical and technological activities.
The value of affirm developing Information Technology strategy is immeasurable. Information technology executes a range of cutthroat competitive strategies such as lower costs, differentiate, innovate, promote growth, develop alliances, improve quality and efficiency and build and IT platform. Investments in IT can assist a firm’s operation processes to be substantially more efficient and IT managerial process more effective. Implementation of such improvements helps a firm to be able to dramatically cut its costs, improve the quality of customer service, and grow inventive products for new markets (Lecture notes, 2-3).
Moreover, investments in information systems help an organization to be able to develop fresh products, services, and practices. For this reason they create new business opportunities, enable a firm enter new markets and facilitate a firm to penetrate fresh market segments of accessible markets. These investments can also permit a business to lock in clientele and suppliers and at the same time lock out competitors by adding important new associations with them. This is achieved by deterring both clients and suppliers from deserting a company for its competitors or daunting a company into accepting fewer moneymaking dealings. It offers improved quality service to the customers for a company to differentiate itself from its competitors and create inter-organizational information systems that telecommunication complex electronically connect the terminals and computers of a business and suppliers resultant in new business coalitions and partnerships (Lecture notes, 2-3).
IT strategies also increase operational efficiency, create hurdles to entrance for new players in the business and dispirit companies previously in the market. This can be accomplished by growing the sum of investment or the difficulty of the technology necessary to participate in a market segment, dishearten companies already in the industry and put off exterior firms from joining the industry. Moreover, the use of information technology also makes it possible for a firm to put up strategic IT policy that allows it to take advantage of the strategic opportunities by obtaining hardware and software, constructing telecommunications systems, employing information systems experts, and teaching end users. A company can then influence investment in information technology by setting up fresh products and services (Lecture notes, 2-3)
An IT strategy is not blindly developed; it requires careful consideration for it to be advantageous to a firm. It is also important that the IT strategy should possess particular characteristics for it to be of value to an organization. According to Thorn, S. (2011, n.p), if an organization has a weak IT strategy, it constrains its financial budget since it is costly and wasteful at the same time. This is especially disadvantageous to small organizations that have constrained budgets, technology and knowledge. A weak IT strategy also affects the organization’s ability to respond to the dynamism of business requirements in good time. The unavailability of an IT strategy also means that the organization is inefficiently reactive therefore; the organization is forced to constantly catch up with the changing market trends.
It is therefore essential to develop an Information Technology strategy with the following qualities; it should encompass the company’s mission, vision and objectives. According to Smart Advice, (2015, n.p) IT plan needs a point of focus drawn from the vision, mission and objectives whether written or unwritten. It should clarify a corporation’s vision, mission as well as its objectives. By looking at the objectives given, the IT strategy can derive the particular goals for next year. A good IT strategy also has business driven priorities. In the absence of a strategic IT plan for the business, organization sub-units have the growth plans, action plans that are used to achieve its objectives; expenditure plans sales targets, impending acquisitions or joint ventures and the strategies to minimize operational costs. These plans are essential in creating the subsequently year’s technology plan and indicate the unspecified corporate strategy. The IT strategy should also be results driven. It should consider and be founded on preceding activities and information use. This involves current technology usage that involves outlining your previous year achievements, stressing on technology usage by corporate unit. It also involves resources allocation, technology architecture. Information (Smart Advice, 2015, n.p)
Furthermore Thorn, S. (2011 n.p), says that a good IT strategy should be able to respond to the following questions: are the right things being done with technology that address the organizations most vital business priorities and continuously develop value to the customers? Are the right technology investments being made? From the technology, is it possible to measure the actual value to the organization? Is the IT strategy sufficiently agile; flexible to constantly support a successful organization? Is the technology in the organization well managed, sustained, secured and capable of supporting the clients and at the same time cost effective? Is the IT strategy able to support the current and future business requirements? An IT strategy that sufficiently responds to these questions is bound to propel the business to greater heights. It is therefore important for development team of a firm’s IT strategy to consider these questions when developing one.
Glaser, J. P., & Salzberg, C. (2011, n.p) explain that an IT strategy should portray the following characteristics: improvement, support, integrity, agility, efficient implementation and support. Under improvement, the IT strategy should improve the existing operations and activities. Processes and activities should be more efficient and effective as a result of the implementation of application systems. They should provide superior support to critical processes and activities. Not all processes created are equal nor are they equally important strategically. For processes and activities that contribute more to organizational prowess other than application systems should be more than good. It should be superior.
Moreover, Glaser, J. P., & Salzberg, C. (2011, n.p) explain that the systems should also behave with integrity. They should perform as expected, consistently and quickly. Errors in the application software should be few and nonexistent. System performance for example response time should enhance and not interfere with work. They should also have some agility in that they should be reasonably efficient, effective and timely to alter the application to respond to the need for revolution. The response can be in the form of frequent vendor upgrades for tools that enable the organization to change the organization easily and safely. Moreover, implementing and supporting the application should be efficient. The cost of managing the application on an ongoing basis should be modest relative to the value of the application. Application efficiency strategies can involve changing platforms to reduce support costs or standardizing an application across a delivery system in an effort to reduce application maintenance costs.
Brown, A. (1992, 2120 says that a good IT strategy should contribute to a more flexible responsive organization rather than consolidating or reinforcing the status quo.
The above discussion succinctly explains why it important for firms to have an IT strategy, the value of having an IT strategy as well as the qualities of a good IT strategy. It is evident that an IT strategy it is beneficial to the management, the customers and the employees. The value of the IT strategies should not be underestimated since they are the basic reasons behind the success stories of major companies globally. In addition, it is important that the development team should consider the various qualities of strategic IT development in order to produce systems that are both beneficial and functional to the entire organization.
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