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Originally Posted On: https://www.osibeyond.com/resources/technology-strategy-101/
Successful organizations share the common trait of relying on planning processes to ensure growth and operational efficiency. Just as with other business functions, every organization needs to have a considered and well-developed technology plan. In this introduction to Technology Strategy, we will explore why it is important, how it is developed, and how to implement it successfully.
What is Technology Strategy?
Technology Strategy is an overall plan which consists of principles, objectives, and tactics for using technology to achieve organizational objectives. A Technology Strategy may define specific technologies, identify which staff members have responsibility for managing these technologies, and how these technologies will align with business objectives. The goal of the strategy is to outline and specify how technology should support overall corporate strategy spanning 3 to 5 years into the future. The Technology Strategy is typically developed by the organization’s Chief Technology Officer (CTO) in collaboration with senior managers from other business units and the executive team. This collaboration is vital as organization-wide buy-in ensures the success of the Technology Strategy. Technology Strategy impacts budget allocations, operational procedures, responsibilities in relation to business objectives, and day-to-day functions. Ensuring overall agreement within an organization is a key factor to its success.
Selecting the Right Technology Strategy
New technologies can benefit an organization by disrupting traditional processes, creating efficiencies, and therefore leading to competitive advantages (example: Managed Security Services). Technology experts forecast technology shifts that disrupt organizations, industries, and sectors in order to determine whether an organization should adopt a new technology.
However, the timing of implementation continues to be a challenge for most organizations. The challenge lies in being too late to the party or too early. For example, in 2000, the founder of Netflix, approached Blockbuster’s CEO with a proposal for partnership, in which Netflix would run Blockbuster’s brand online while Blockbuster would promote Netflix in stores. Blockbuster’s CEO laughed at the idea and Netflix went on to dominate the online video rental industry, leading to Blockbuster’s bankruptcy in 2010. In this case, Blockbuster failed to recognize the emergence of new technology which would disrupt what had been traditionally a very profitable business model.
Now let’s look at an example of a company that was ahead of its time. In 1999, Napster was founded as an independent peer-peer files sharing service. Napster specialized in sharing MP3 files of music through a user-friendly interface. It became widely popular with college students sharing songs from their dorm rooms for free. However, Napster was sued by the music industry for copyright infringement and ultimately was shut down by the courts in 2001. In 2003, Apple launched its iTunes Music service in cooperation with record labels and consisting of digital rights management, which was an evolution of Napster’s idea. In this case, Napster failed to consider how the use of this new technology would impact the music industry and business models. Technology adoption and implementation timing can have a profound impact on the success or failure of an organization.
Another key factor to consider when adopting new technologies is whether the technology utilizes existing ecosystems or emerging ecosystems. For example, when Voice over IP (VoIP) technology was emerging in the 1990s, the adoption of the technology made sense for most organizations given that the new technology would use existing data networks to transmit voice, thus cutting costs and enabling integrations with applications. Similarly, when virtualization technology emerged in the 2000s, its adoption also made sense for most organizations, given that the new technology could operate on the same on-premise hardware infrastructure, but would provide more efficiencies and consolidation, thus reducing costs.
By the mid 2000s, “Cloud Computing” which is on-demand delivery of resources by a cloud services provider, started to emerge. However, for VoIP and virtualization technologies to be successful in the “Cloud”, a new ecosystem would have to be created in order for the adoption of the new technology to be feasible. The emerging ecosystem would have to provide satisfactory performance, which depended on reliable internet connectivity with sufficient bandwidth to transmit data or voice across the internet without latency. It also had to do so securely. Therefore, the adoption of Cloud Computing technologies depended on a foundational ecosystem to be developed in order for the concept to be adopted and therefore successful. The consideration of existing versus emerging ecosystems is critical in determining the timing of new technology implementation.
Implementing a Technology Strategy
The first step in implementing a Technology Strategy is to develop a team. This team is typically led by the CIO/CTO of an organization, however organizations that do not have internal resources in technology positions can fill this role with external consultants with technology expertise. The team must also consist of individuals from various functions across the organization who are passionate about technology and will serve as advocates to the rest of the organization.
The next step is to thoroughly define the organization’s business objectives in order to align the technology strategy. Once long-term business objectives are clearly identified, then a plan needs to be developed that exactly defines what needs to happen over the next three years. Note that a one or two-year plan is not going to result in a technology transformation on its own, as large-scale changes always take longer than expected.
Once a detailed plan is drafted, the technology strategy should be aligned with the organization’s technical architecture. The organization’s long-term technology strategy will not be realized if the underlining IT infrastructure cannot support it. Therefore, ensuring an architecture roadmap is developed, is critical to successfully executing the technology strategy. The architecture roadmap will provide a technical perspective on the maturity of existing applications and hardware infrastructure. It should consider when software and hardware might reach end of life, as this will be a factor when implementing new technologies.
Next it is important to prioritize technology initiatives strategically. No matter what the size of an organization, there are usually never enough resources and funding to meet every demand. Ad-hoc projects will pop-up during the planning process, and each business function within the organization will have their own “special projects”. It is thus important to make strategic choices in the allocation of resources to achieve planned end results and organizational objectives.
The final step is to go out and sell the new Technology Strategy to the organization. This step requires a comprehensive plan as to how the strategy is going to be shared with leadership, executives, and staff, including engagement, communication, and messaging. This process will require repetition to ensure all functions within the organization are on the same page on the overall timetable of the Technology Strategy. Once this has been achieved, Technology Strategy is ready for execution.
Benefits of Developing a Technology Strategy
Most organizations do not have a long-term technology strategy. Often, they have a one-year plan at best. However, shorter-term plans on their own are not sufficient for aligning an organization’s technology with business objectives as that is not their purpose. The difference between a short-term plan and a long-term strategy is that the former focuses on the technology, while the latter focuses on the business and its goals. It is important to understand that the sole purpose of leveraging technology is to meet business needs in order to achieve the organization’s mission. A well-developed technology strategy offers many benefits to an organization. These include:
Alignment with Business Objectives
Technology is not simply there for convenience, but rather it should be directly associated with business needs. A technology strategy ensures that the business needs are fulfilled by directly linking objectives of the technology strategy to business needs.
Development of Long-term Vision
A technology strategy ensures a long-term vision, focused on the future that looks into the horizon to try to predict what the organization’s business needs will be based on the market and competition. While at the same time understanding that change will take time, and is achieved through series of milestones, objectives, and goals.
Increased Operational Efficiency
When technology is aligned with business needs and implemented at the right time, there are direct efficiencies that are gained. These efficiencies can be in the form of increased employee output (production, performance, etc.), improved customer communication (response, experience, etc.), and enhanced team collaboration (sharing information, solving problems, etc.), all of which make an organization more agile.
An organization that can operate more efficiently by strategically leveraging technology, inherently gains competitive advantage. Competitive Advantage can be in the form of higher sales and profits (in commercial businesses), or progressing the organization’s mission (in non-profit, advocacy and research organizations).
Technology is a fundamental part of business, it has resulted in the emergence of new business models and changed customer experiences. In order for organizations to compete in today’s world they must operate at the speed of business or risk becoming obsolete. As such technology must be part of every organization’s business strategy.