Just as a captain charts each point of a long voyage to ensure efficient and safe passage, executives use business strategy to map their current business and to define new growth and revenue opportunities. What direction should a company take to ensure that it meets its corporate objectives? How can executives determine which initiatives require the most attention? Is there an effective way to select the investments that will bring the greatest returns?

In order to align the business strategy planning with the technology organization, the strategic planning process should include business strategy, investment analysis and benefits realization. With tools like these, organizations will be better prepared to navigate the winds of change and uncertainty and to chart a course toward business success.

Setting Sail: Integrating Business Strategy to Create Value Perspective

The first step in strategic planning is determining business strategy. Before you plot a course, you must first determine your destination. It is time to study your map, establish your coordinates and make a decision on the best direction to pilot your ship.

Business strategy is tightly integrated with investment analysis and benefit realization to create the business value perspective of IT management. Gartner Inc. predicts that by 2006-07, a majority of mature Global 2000 organizations will seek to run IT more like a business by implementing technologies to concurrently manage resources, projects and assets with a portfolio management framework.1 The first step to achieving organizational alignment is for business and technology leadership to collectively define the scope and structure of the business strategy process. Then, an appropriate process framework for executing on the strategy must be established through an IT governance model.

Now that you know where you want to go, it is time to decide the most efficient way to get there. The business strategy planning continuum includes missions, objectives and strategies. While organizational missions often represent the ultimate destination of a business strategy, objectives are what truly plot the course. Objectives breathe life into sometimes lofty or abstract missions, give shape and meaning through the use of specific quantifiable goals and define operational windows.

Objective attributes are the defining element to the overall strategic planning process; they combine to form both the planning horizon as well as the risk/reward posture for everything that follows. When unforeseen economic or regulatory issues arise, objectives are typically adjusted to meet the new challenges, unless the overall destination changes.

When defining business strategy, remember that it is part of a continuum. While it is relatively rare in the life of a business that overall direction undergoes wholesale change, refinements or course corrections should be considered at regular intervals or in response to business or market shifts. Another consideration is that objectives could span time periods beyond the planning cycle so they do not all start or finish simultaneously.

The net result is that defining strategic plans is a series of iterations, always mindful of past performance, current situation and ability to anticipate the future.

Accountability is Critical to Strategic Planning

While missions are owned collectively by the executive team, each objective, strategy, initiative or program should be aligned to a single, named, accountable individual. While an individual may have responsibility within several activities, sometimes at different levels of the planning hierarchy, each activity should have a single, designated owner.

Roles and responsibilities could be different depending on the size of the organization. In smaller organizations, a department head wears multiple hats, while in larger operations, responsibilities could be distributed across hundreds of individuals. Whatever the situation, the governance process should clearly define ownership by role, naming individuals responsible for each facet of activities.

Running a Tight Ship: Investment Analysis Focuses on Enterprise-Wide Benefit

Once you've plotted a course, it is necessary to make certain that everyone on board your vessel is aligned to the same goal. If you want to experience smooth sailing on this voyage, you'll need to run a tight ship.

Leading-edge organizations are looking to portfolio management processes and technologies to help them determine which investments will deliver the best return and align IT with business strategies, according to AMR Research.2 Business organizations understand that they must focus their limited resources on maximizing the value of their investments; however, they rarely apply this same qualitative approach to the bundle of investments undertaken by the enterprise.

Each investment must be evaluated both individually and collectively in relation to how they further the organization's strategic initiatives. Only through such a process can technology organizations ensure that they adhere to a commitment to deliver quality products and measurable business value.

Defining Investment Criteria

Investments can be defined as those efforts expended in support of and directly affecting the running, growing and transformation of the business. The linkage of individual investments is intrinsically tied to the overall strategic plan of the organization. The level of funding, both strategically and organizationally, is intertwined with those existing or approved efforts and proposed work.

Investment analysis translates the tactical direction and top-down financial plans of the business strategy into prioritized decisions for implementing portfolios of work. The overall objective of any investment portfolio is to balance and align the portfolio mix of strategic and tactical work against near and long-term goals.

Each portfolio within the enterprise framework reflects the organizational goals and objectives. Nondiscretionary work, associated with core operations of running the business, accounts for a majority of expense and effort, and it must be continually analyzed to validate ongoing benefit to the organization.

Discretionary, strategic investments to grow the business or transform the business can take years, involve thousands of person hours and cost millions of dollars. Organizations must carefully choose which of these investments to pursue and then regularly monitor them on a periodic basis to ensure that the business value is still relevant.

If the run-the-business obligations are not managed and monitored effectively, they can directly impact the ability to grow and transform the business.

Four Critical Investment Criteria to Ensure Measurable Value

Defining the investment criteria establishes financial constraints and goals, just as it documents and validates control guidelines. This ensures that those criteria, supplied by the governance board and implemented by the investment owner and business unit executives, adhere to the vision of the business.

Critical investment criteria are based on four distinct types of descriptive and measurable components and the generic information related to the work.

  1. Attributes. Either scored or descriptive in nature, attributes address such investment criteria as risk assessment, strategic alignment or other types of descriptive criteria.
  2. Measurements. The financial values and/or capacity-related values associated with a specific work or portfolio of work can include total cost of ownership, capital outlays and projected costs.
  3. Metrics. Each particular characteristic related to the overall performance of a portfolio must be measurable. Examples include return on investment (ROI), internal rates of return, net payback period, etc.
  4. Measurement Group. A compilation of ROI values or benefits are measurement groups, the aggregate of values associated with measurements.

Information that does not fit any of the types just mentioned is classified as generic information and relates to either a portfolio of work or the work item itself. Generic information expounds on issues not necessarily related to attributes, measurements or metrics.

Evaluate Your Voyage: Determine Success by Defining Benefit Realization Components

You've docked your ship, touched dry land and taken a well-deserved shore leave. Now it is time to ask a few questions: Was this your intended destination? Did you arrive on time? Was this extensive journey worth the effort?

Fifty percent of IT initiatives fail to meet business objectives, primarily due to lack of strategic business alignment, according to industry analysts. Realizing the benefits of specific investments in technology is very difficult. Sometimes it takes years to realize the benefits integrated with other initiatives and affected by a constantly changing environment. A couple of questions come up repeatedly: How do you know if headcount reductions resulted from a specific investment? How do you know if the revenue increase came from a specific project?

As a critical component of the overall business planning process, benefits realization must first focus on the benefits needed as part of strategic planning. Next, quantify the benefits as part of investment analysis. Finally, actively manage development of benefits during execution and perform a disciplined comparison of actual benefits versus what was planned and promised.

There is no magic formula for evaluating benefits. An organization can ensure that intentions are translated into actionable business benefits by employing a structured approach that brings processes into the open, formalizes roles and responsibilities and links management at multiple levels.

This well-defined approach to establishing and measuring the benefits realization of business strategy is built on several critical elements: consistency, alignment, extended planning horizon, collaboration, communication and control.

Benefits Realization is Measured in Organizational Efficiency

The efficiency and effectiveness of the technology provider begins with clarity of customer needs and a high-level perspective of how resources and assets are to be deployed to achieve those needs. One way to measure benefits is through integrated lifecycles. Proposed benefits are captured and revisited multiple times throughout the investment's lifecycle: approval, execution and delivery. Lifecycles further ensure postdelivery follow-up for benefits validation.

According to Forrester Research, "IT management is frustrated with its inability to see fact-based views of IT activities. This includes demands on resources and plans for new initiatives, the cost and effort expended to maintain existing applications, and the performance and consumption of infrastructure resources on which the applications operate."3 Too often, organizations simply allow themselves to be taken by the current for lack of consistent direction, or worse, for failure to control the rudder. On an individual level, unfocused resources react to conflicting or inconsistent guidance, constantly stopping and starting as they jump from one activity to the next. Many organizations fail to see that the same effect translates through the entire hierarchy when strategic direction is inconsistent, ambiguous or simply nonexistent.

Few organizations have the experience to integrate their resource needs at the strategic level and at the execution level. Strategies are often developed as rough-cut estimates but are never reconciled to the execution level.

When the executive team establishes a balanced, comprehensive and consistent strategic plan, the IT organization can focus their resources on the right priorities and proactively plan their execution efficiently. The result is a smooth-sailing organization, facing into the wind and navigating toward a single destination.

Enterprise portfolio management helps decision-makers prioritize their investment decisions based on key criteria such as benefits, time frame, cost and risk - and that means a much better alignment of IT and business strategies to provide bottom-line, measurable results.

Charting a successful course that strategically aligns everyone in an organization - from executives setting strategies to staff executing support tickets - means the organization must be integrated into a common lifecycle. At each stage of the lifecycle, the correct information, documents and forms are provided to the person required to take action.

The result: time and money are never lost in poor communications, and an audit trail tracks the decision-making process. The course is defined, the obstacles charted, and the destination is achievable.


  1. Ballou, Melinda-Carol. PlanView/Apax Press Release. Gartner Research. 15 November 2004.
  2. Gaughan, Dennis and Carline Durocher. "IT Portfolio Management Software: Clear Benefits, Converging Marketplace." AMR Research: June 2004.
  3. Visitacion, Margo, Phil Murphy, Thomas Mendel, Ph.D. "Integrated IT Management Drives Efficiency. Role-Based Dashboard Views Will Make It Happen - Get Ready." Forrester Research: 2 February 2005.

Register or login for access to this item and much more

All Information Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access