Connecting IT to Business Strategy: Part I

Connecting IT to

Business Strategy: Part I

by Bob Benson, Tom Bugnitz,

and Bill Walton, Senior Consultants,

Cutter Consortium

Despite all the strategic thinking and budgeting in which

businesses engage, several factors can prevent organizations

from accomplishing their goals. In this Executive Report, the first

in a two-part series, learn how a company can reap the benefits

of the Strategy-to-Bottom-Line Value Chain to align its IT

investments with the goals of the business.

Business-IT Strategies

Vol. 7, No. 8

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Logical and practical disconnects

occur in how senior leadership

teams link their business strategy

to effective management actions.

Ideally, a company’s IT invest-

ments clearly and directly carry

out strategy; ideally, the plans,

budgets, and actions of every

company component should

clearly reflect a company’s strate-

gies. The reality is that organiza-

tional silos, overconcentration

on quarterly bottom-line results,

and sheer inertia prevent the

ideal, and the result is an inconsis-

tent investment in IT and a lesser

bottom-line impact.

The Strategy-to-Bottom-Line Value

Chain is a consistent set of man-

agement processes that work

from a common foundation and

a clear expression of the business

strategy. The value chain effectively

carries forward that strategy

through company planning, IT

project development, investment

decisions, and annual plans and

budgets. At all points along the

way, the management processes

use value chain tools to ensure

that plans, projects, budgets, and

management actions are consis-

tent in carrying out the strategy.

The idea is simple: a company

should spend money on IT only if

those dollars directly support its

business strategy and its opera-

tional effectiveness.

Our two-part series will provide an

end-to-end example of how the

many tools and processes of the

Strategy-to-Bottom-Line Value

Chain are consistently applied and

used to maximize the bottom-line

impact of a company’s manage-

ment actions and investments.

Rather than focus on generic how-

to process descriptions, we follow

Angus International and its senior

leadership team through planning,

budgeting, and action steps.

(Angus is actually a composite of

several real Fortune 500 compa-

nies that have successfully applied

the value chain.) We describe the

team’s decisions from the des-

cription of the business strategy

through the projects, budgets,

actions, and metrics that track

how well the team applies IT to

execute the strategy; in effect,

we show how all decisions are

guided by strategy. At each point,

the decisions involved choices,

and the company’s senior leader-

ship team made them using the

tools of the Strategy-to-Bottom-Line

Value Chain. We end by describ-

ing how the team implements key

Connecting IT to Business Strategy: Part I

BUSINESS-IT STRATEGIESADVISORY SERVICE

Executive Report, Vol. 7, No. 8

by Bob Benson, Tom Bugnitz, and Bill Walton, Senior Consultants, Cutter Consortium


initiatives to impact the Angus

bottom line.

Through its application of the

value chain, the company con-

ducted the following four basic

management processes:

1. Strategic planning:

� Stage 1 — establish manage-

ment’s strategic intentions for

the business

� Stage 2 — create the strategic

agenda for the use of IT in the

business (i.e., the business

“demand” for IT), including

strategic alignment and func-

tional quality from the business

perspective

� Stage 3 — create the strategic

IT plan (i.e., the “supply” of IT),

including technical and busi-

ness risk from the technology

perspective

� Stage 4 — derive the strategic

IT requirements for the neces-

sary IT initiatives

2. Initiative and project devel-

opment: translate strategic

IT requirements and strategic

agenda into projects.

3. Annual planning:1 establish

annual project plan (prioritized

and scheduled); determine

annual business plan (as it

applies to the use of IT); and

determine annual IT plan (as

it applies to the supply of IT).

4. Budgeting-to-action plan:

translate annual plans into

approved budgets; translate

annual plans into performance

measurements; and execute

and monitor action plans.

In this Executive Report, we

describe Angus’s background and

examine the first two stages of

the strategic planning manage-

ment process, outlined above.

Covering these two stages in such

detail is essential; these stages

establish the strategic context for

Angus and the company’s basic

decisions about the use of IT to

carry out its strategy.

Part II will pick up where we leave

off here and finish the strategic

planning management process

discussion before continuing on

to examine the remaining three

management processes imple-

mented by Angus.

OBJECTIVE OF THE STRATEGY-TO-BOTTOM-LINE VALUE CHAIN

Every company’s IT senior leader-

ship team confronts the need to

improve IT’s bottom-line impact

and at the same time control IT

budgets and investments. The

leadership team can do so by

consistently and persistently devel-

oping and selecting the best IT

investments and eliminating exist-

ing underperforming IT activities.

The value chain presents an inte-

grated approach to controlling IT

budgets and getting the biggest

bang for the IT buck. Its objectives

include the following:

� Creating better investment

alternatives, which in turn

creates better ideas for new

development projects

� Choosing the right invest-

ments and projects from

those alternatives

� Eliminating nonperforming and

poorly performing existing IT

activities from current spending

� Improving the performance

of the remaining existing IT

activities

� Implementing and following

through on the right invest-

ments and performance

improvements

The value chain starts with a

coordinated business-IT strategic

planning process and continues

through to business-IT perfor-

mance measurement. The value

chain applies a suite of tools for

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22 BUSINESS-IT STRATEGIES ADVISORY SERVICE

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e-mail [email protected].

1For most companies’ business dynamics, an annual cycle is much too long. We use the annual

framework for descriptive purposes and with the understanding that most companies perform

such tasks more frequently. Angus uses the framework but applies it quarterly.

mailto:[email protected]


understanding, managing, and

controlling all IT spending, aimed

at producing exactly the right IT

actions for the organization. The

result moves IT management

from a passive, prioritization-based

activity to an active, action-oriented

one that produces significant,

demonstrable bottom-line impact.

BACKGROUND ON ANGUSINTERNATIONAL

Angus International is a Fortune

500 manufacturing firm specializ-

ing in “house brand” consumer

goods. Angus’s many products

are rebranded by leading retailers

and other well-known distribution

channels (e.g., Web-based

resellers and catalog merchants).

Angus is more than 100 years old

and has been profitable for most

of that time. It evolved from a sup-

plier of electrical goods to a com-

pany that produces a wide range

of electrical and electronics prod-

ucts. Its primary market is the

domestic US. The company is

headquartered in a southern state,

with all its manufacturing located

within 50 miles. Angus’s competi-

tion comes from similar compa-

nies in the US and many new

manufacturers overseas, primarily

on the Pacific Rim. Angus has

managed to stay competitive on

price but is intent on strengthen-

ing its capabilities for flexible and

rapid response to customer

requirements. According to its

mission statement, Angus’s goal is

to conduct the business of manu-

facturing and selling quality con-

sumer goods in the most ethical

and profitable manner possible.

The company’s annual volume is

several billion dollars. Angus has

more than 10,000 employees orga-

nized in six basic departments:

operations (which includes manu-

facturing, R&D, and product devel-

opment), sales (which includes

marketing), finance, human

resources, legal affairs, and

administration (which includes

most of the back-office functions).

A Note About Angus International

In this Executive Report, Angus

International is presented as a

single line-of-business company.

The senior leadership team man-

ages the components of one basic

business. We also present Angus

as a domestic US company with-

out the complexities of global

operations. We simplified the

company’s position in order to

focus on the basic processes and

examples. Though this report

describes a composite company,

each process example and result

is based on one or more real-life

company experiences.

Angus’s Problem

Although Angus has been prof-

itable, the senior leadership team

is concerned about how in the

upcoming three years the com-

pany can strengthen and enhance

its ability to cope with new Pacific

Rim competitors. These competi-

tors can produce similar goods at

less cost. Angus hopes to build on

its core strengths and strategies.

To that end, the senior leader-

ship team has undertaken a

comprehensive review of its IT

planning. The CEO has posed four

key questions:

1. How do we know we are

deploying our IT resources

in a fashion that will sig-

nificantly carry forward our

basic strategies?

2. Will our investments in IT

produce the business results

we need?

3. Can we measure IT on an

ongoing basis to prioritize our

allocation of resources and

improve over time?

4. How do we know if our mix of

technology and staff capabili-

ties is appropriate to our busi-

ness requirements for IT?

In response to these questions,

Angus’s senior leadership team

commissioned a comprehensive

project to focus on two things:

(1) to establish the exact business

and IT strategy of Angus, down to

the roles that each major compo-

nent plays in carrying it out; and

(2) to establish a significant IT

plan for the upcoming three years,

including the establishment of

the best development projects

to carry out the strategy.

The leadership team specified

three basic objectives:

1. To establish a strategic plan-

ning and management process

that confirms alignment of

functional department plans

with Angus plans, aligns IT

plans with Angus and depart-

mental plans, and introduces

©2004 CUTTER CONSORTIUM VOL. 7, NO. 8

EXECUTIVE REPORT 33



technology-enabled business

opportunities.

2. To apply an IT planning proc-

ess that produces a starter IT

strategic plan, prioritizes and

rationalizes resource alloca-

tion, and links to project-level

planning.

3. To create an IT management

process that provides a holistic,

enterprise-wide view of 100%

of IT resources for planning,

operation, and performance

measurement.

To achieve these objectives,

Angus uses the Strategy-to-

Bottom-Line-Impact Value Chain

framework. This report docu-

ments how the components of

the value chain consistently carry

out these basic themes.

Note that the project objectives

go beyond what might tradition-

ally be viewed as appropriate for

a strategic IT planning project.

Specifically, the objective to

“confirm alignment of functional

department plans with Angus

plans” inserts the project into

business planning and, more

particularly, into identifying and

assessing business-organization

plans at both the strategic and

the tactical (annual) levels.

In our experience, however, it is

difficult to translate strategy into

tactical and operational plans. In

fact, it does little good to do a

strategic IT plan if the managers

and organizations do not perform

consistently with the specified

business strategies. Without such

consistency, they’ll find it very

difficult to agree with and under-

stand the IT strategic plan. Further,

many companies rarely strongly

connect strategic input to annual

planning processes and, in par-

ticular, IT project development.

In fact, it is a considerable con-

tribution to the business to create

alignment of organizational plans

with the business’s plans. Such

alignment is the focus of this

report.

We strongly recommend that

strategic planning processes

accomplish this objective of con-

firming alignment of functional

department plans with company

plans. This creates a strong basis

for aligning IT plans with business

plans and for ensuring that IT proj-

ects and initiatives are parallel to

and support business plans and

initiatives in each organization.

The Result for Angus

The purpose of this two-part

Executive Report series is to show

how a company like Angus has

used the four management

processes described in the side-

bar “The Strategy-to-Bottom-Line

Value Chain” (beginning on page

7) to produce effective IT actions

and investments that positively

affect the bottom line. The actual

process as applied at Angus pro-

duced considerable information.

Each strategic intention, for exam-

ple, resulted in the definition of

three to five strategic objectives

for that strategic intention and a

large number of specific strategic

initiatives. The latter represent

what each functional organization

intends to do to meet the strategic

objectives and strategic intentions.

They, in turn, produced significant

numbers of strategic IT require-

ments, projects, budgets, and

so forth.

The Appendix at the end of this

report includes three tables that

detail the complete results of

Angus’s application of the value

chain. For much of our discussion

in the main report, we will focus

on only one (profitable market

share) of the six strategic inten-

tions that Angus identifies. For

simplicity’s sake, we will follow

the steps of the value chain in

detail as they relate to this one

intention.

Table 1 presents a simplified view

of the results of the steps that

Angus management completed.

The senior leadership team was

able to convert the strategy (artic-

ulated as specific strategic inten-

tions) into the detailed business

and IT actions necessary to carry

it out. In the process, the elements

of IT spending that were previ-

ously unconnected to business

strategy were examined and, as

appropriate, reduced. The result

was a much closer link between

IT spending and what manage-

ment wants to accomplish (i.e.,

a completely linked, strategy-

driven IT process). Table 1 shows

how the business strategic inten-

tion of profitable market share is

reflected in specific decisions

about IT, projects, and budgets.

While Table 1 details only one


outcome at each process step, the

report discusses multiple results

(e.g., multiple strategic inten-

tions for the use of and supply of

IT, multiple strategic IT require-

ments, etc.).

MANAGEMENT PROCESS 1:STRATEGIC PLANNING (FOR IT)

Let’s begin by looking at the first

of the management processes out-

lined above and how Angus imple-

mented it. The strategic planning

process first defines the demand

for IT by identifying business strate-

gic intentions (including business

strategic initiatives); it then defines

the supply of IT as the means by

which the IT organization delivers

business solutions to match those

business strategic intentions.

This process covers how strate-

gic intentions are formed, how

they result in basic strategic initia-

tives and strategic requirements,

how they are turned into the

strategic agenda for the use of IT,

and how strategic IT requirements

are the outcome.

This management process estab-

lishes the basic strategic direction

(in terms of strategic intentions)

and produces specific strategic

IT requirements as well as a

strategic IT plan. The strategic IT

requirements state what IT needs

to satisfy in order to support the

business’s strategic intentions

and objectives.


EXECUTIVE REPORT 55

Value Chain Process Step Partial Example of Profitable Market Share Strategic Intention

Strategic planning. Stage 1: to establish management’s strategic intentions for the business.*

Strategic intention: profitable market share; to increase the number of prime customers and increase the percentage of house-brand products supplied to each.

Strategic planning. Stage 2: to create the strategic agenda for the use of IT in the business (i.e., the “demand” for IT).*

Strategic intention for the use of IT: to make timely, integrated information and analysis tools available to all at Angus who can influence profitable market share.

Strategic planning. Stage 3: to create the strategic IT plan (i.e., the “supply” of IT).

Strategic intention for the supply of IT: to establish industrial-strength, large-scale warehouse (capability to collect, manage, analyze, and access information) for all relevant aspects of Angus’s business that influence profitable market share.

Strategic planning. Stage 4: to derive the strategic IT requirements for the necessary IT initiatives.

One strategic IT requirement: to create processes and capability of integrating databases that underlie Angus’s investment decisions (e.g., promotions, products, and channels).

Initiative and project development. To translate strategic IT requirements and strategic agenda into projects.

Projects to carry out strategic intentions: to rebuild the customer information system; replace sales force automation platform; and convert sales/marketing database.

Annual planning. To establish annual project plan, annual business plan, and annual IT plan.

Included in departmental plans: to use business process to put information in sales force hands and plan to enhance call center to provide instant customer information. Included in IT plan: to replace inadequate sales force automation package and install customer information warehouse.

Budgeting to action plan. To translate annual plans into approved budgets; translate annual plans into performance measurements; and execute and monitor action plans.

Business budget: to project for training and process change program in sales force and to project for call center enhancement. IT budget: to project for infrastructure additions and upgrades, especially warehouse, and redeployment of sales force system resources to warehouse.

*These stages will be discussed in this report; Part II will cover the remaining concepts.

Table 1 — Angus International: From-Business-Strategy-to Action Plan and the Bottom Line

As Figure 1 illustrates, the strate-

gic plans for IT have two basic

components. For IT demand, the

strategic plan focuses on how IT

is to be used in the business and,

in particular, how IT will support

the business strategic intentions.

For IT supply, the strategic plan

focuses on how the IT organiza-

tion will satisfy those demands.

In simple terms, the inputs and

outputs for the strategic planning

management process include:

� Input (or created): business

strategic intentions, business

assessed portfolios (assessed

on alignment, service/quality,

technical risk), and innovations

� Output: strategic IT agenda,

strategic IT plan, and strategic

IT requirements

The strategic planning manage-

ment process typically occurs

annually. The purpose of each

year’s cycle is to confirm what

occurred during the previous

cycle and to add any innovations.

For Angus, the cycle described

in this report was the first. As

a result, all the deliverables

were created for the first time.

There was a predecessor strategic

plan for the business, produced

through an engagement with a

(then) Big Eight firm, but the doc-

ument was considered ineffective.

Instead, the CEO had a business

vision and direction in mind that

he expected his direct reports

could carry out. So for the CEO

and for Angus, this was essentially

the first time a formal planning

process was in place. Given that

one objective was to ensure align-

ment of the departmental plans,

it certainly was the first time that

the strategic planning processes

were expected to influence

and deal with individual depart-

mental plans.

For Angus, the strategic plan-

ning (for IT) process was accom-

plished in four stages during the

year. This is the typical approach

for many companies, although

the actual steps done at any

company depend on the partici-

pants as well as their schedules

and objectives. As we’ve stated,

a primary objective for Angus was

to explore or develop in detail the

departmental strategic initiatives

to ensure that the tactical plans

were consistent with the corporate

strategies and plans. This placed

significant emphasis on the middle

stages of the process. Generally,

the four stages apply to any com-

pany; the outcomes (e.g., strategic

intentions, objectives, etc.), are the

same, but how companies accom-

plish them may differ.

Figure 2 on page 11 shows the

four stages that Angus completed.

We begin our discussion of Stages

I and II below.2

Stage I: Establish Management’s

Strategic Intentions

As Figure 2 shows, Stage I pro-

duces the company’s strategic

intentions. The senior leadership

team was led through the follow-

ing six basic steps to identify

Angus’s strategic intentions and



(Text continues on page 10.)

Businessstrategic intentions

Businessstrategic intentions

for the use of IT

ITstrategic intentionsfor the supply of IT

Strategic intentionsfor each portfolio

Programs (strategic initiatives)

Strategic ITrequirements

Businessstrategic objectives

Businessstrategic initiatives

Portfolio assessments Applications

infrastructure

Services management

Strategic IT Plan

for

IT Supply

Strategic Planfor

IT Demand

Strategic objectivesfor each portfolio

Businessstrategic objectives

for the use of IT

Businessstrategic initiativesfor the use of IT

ITstrategic objectivesfor the supply of IT

ITstrategic initiativesfor the supply of IT

Figure 1 — Strategic plans for IT.

2See the “For Further Reading” section at

the end of this report for other publications,

including Cutter Consortium journals, that

describe the strategic intention concepts

applied to IT.



EXECUTIVE REPORT 77

THE STRATEGY-TO-BOTTOM-LINE VALUE CHAIN

The value chain is a series of connected management processes that culminate in project and operational budgets and

performance metrics to monitor action and bottom-line impact. The value chain is made up of the following components:

� An integrated framework for the entire value chain that is based on shared and consistent business and IT management roles,

responsibilities, and information. The framework uses tools such as IT portfolios as a kind of connective tissue.

� A set of interconnected and interrelated management practices that can take advantage of the overall framework and bring it

to life. This requires that these practices be well defined with consistent roles and processes. The practices include the following:

— Alignment

— Strategic planning for IT

— Prioritization

— Performance measurement

— Innovation

� A defined set of 12 deliverables that are consistent with one another, carrying through from business strategic intentions to the

IT projects and budgets that produce action. Figure A shows the 12 deliverables, and Table A lists them. (See Appendix Table 4

on page 33 for definitions of these deliverables.)

When integrated with the existing Angus management processes such as budgeting and annual planning, the five practices

(listed above) give Angus a sound set of management processes that satisfy the goal of translating business strategy into IT

actions that produce the right business results. The five practices are used in a connected set of management processes and

enable management to control IT spending and improve IT’s impact on the bottom line.

The value chain emphasizes that each management process about the planning and execution of IT needs to produce deliver-

ables that connect between processes consistently and that are used consistently in all other processes. For example, a busi-

ness strategic intention defined as part of the first deliverable (business strategic intentions) in Table A should be used in the

strategic IT plan (item 4), the business plan (item 7), and projects budget (item 10). The connections include the following:

Assessedportfolios

(alignment,service/quality,

technology)

Businessstrategicintentions

(strategic business

plan)

Strategic IT planning

Projects

Performance measurement metrics

Annual IT planning

ActionStrategic IT

requirements

Strategic ITagenda

Strategic IT plan

The IT enterprise: four lights-on asset pools

IT plan(annual)

Business plan(annual)

Project plan(annual)

Projectsbudget

“Lights-on”budget

The business enterprise: lines of business, departments

Effective planning

Workable budgets, projects, and operational plans

Performance measurement, metrics

Deliverablesin the

Strategy-to-Bottom-LineValue Chain

1

12

42 11

10

86

9

7

5

3

Appropriate resource decisionsBusinessstrategies

Bottom- line

results

ITaction

Figure A — Overview of deliverables in the Strategy-to-Bottom-Line Value Chain.

(Sidebar continues on next page.)



� The connection from the information on one deliverable to the creation of the next deliverable in the value chain

� The connection of information from business sources (strategic intentions, business plans) to IT sources (portfolios and, within

those portfolios, information from enterprise architecture and related technical planning processes)

� The connection to the budgeting business processes (and related processes of performance measurement)

For example, the information on strategic intentions drives the creation of the strategic IT agenda, which drives strategic IT

requirements, which are then turned into projects, and so forth. It is the connections that are important.

MANAGEMENT DECISION MAKING

The key, however, is the decision making that takes place. For example, while the annual project plan is a valuable deliver-

able, the decisions of the senior leadership team in prioritizing the projects to be included in the annual project plan are

more important. While the strategic intentions for the use of IT set the direction for IT, what is most important point are

the decisions of the senior leadership team about how IT can influence and support the success of the underlying business

strategic intention.

Therefore, the value chain is an important framework defining deliverables and process. But its true value lies in the decisions

made at each point, focusing management attention on the key variables and priorities leading from strategy to IT action

and, hence, to impact on the bottom line.

FOUR MANAGEMENT PROCESSES OF THE VALUE CHAIN

In practice, most companies use four basic management processes that (hopefully) connect their strategic goals and objec-

tives to the day-to-day actions of managers. These processes typically have specific, often annual, time cycles and clear

beginnings and endings.


Basic Processes Management Practices Involved

Intermediate and Value Chain Deliverables

Strategic planning to strategic IT requirements

Strategy-driven planning

Innovation planning

Alignment (application portfolio)

Performance measurement

1. Business strategic intentions, which includes:

— Mission

— Business-technology drivers

— Strategic business initiatives

2. Assessed application portfolios

3. Strategic IT agenda for the use of IT

4. Strategic IT plan

5. Strategic IT requirements, which includes:

— Strategic IT initiatives

Strategic IT requirements to projects


Alignment (application portfolio)

6. (New) individual projects, which include:

— Individual project assessments with risk, architecture, etc.

Projects to annual plans

Prioritization

Lights-on alignment

Alignment (IT portfolios)

7. Business plan (annual)

8. Project plan (project book) (annual)

— Also uses deliverable number 2, assessed portfolios

9. IT plan (annual)

Annual plans to budgets (to action)

Alignment assessment


10. Projects budgets (annual and capital)

11. Lights-on budget (annual)

12. Performance measurement metrics

Table A — Strategy-to-Bottom-Line Value Chain Deliverables

THE STRATEGY-TO-BOTTOM-LINE VALUE CHAIN (continued)



EXECUTIVE REPORT 99

From the value chain perspective, these four basic processes can create and apply value chain deliverables. The outcomes of

one process (the strategic IT requirements, for example) become the input for another process (the initiative and project

development process, for example). (See Figure B.)

Briefly, the following are the four basic processes:

1. Strategic planning (for IT). This process describes the company’s strategic intentions, assesses the as-is performance and align-

ment of current IT activities, provides innovation input, and produces a strategic vision for the use of IT in the business (the

strategic IT agenda), the strategic IT plan, and the strategic IT requirements that go on to become initiatives and projects in the

second process.

2. Initiative and project development. This process picks up from the strategic plans and strategic IT requirements and results

in prioritized initiatives and projects. With it, the company can translate its strategic plans into potential initiatives and projects.

3. Annual planning. This process establishes exactly which projects will be considered for implementation and creates a project

plan, translates business-unit strategies into annual plans, and establishes the IT annual plan. In this way, the company can

create a plan for certain projects and the business and IT annual plans that supported them. (For some companies, the project

development and planning is done more frequently than annually. Also, the processes for identifying, prioritizing, and planning

new requirements during the year or some other time period are part of this process.)

4. Budgeting-to-action plans. This process connects the annual plans to Angus’s budget and capital funding processes and

results in the financial and operational plans for carrying out the projects and annual plans. This also provides for the meas-

urement context for executing the action plans. In this way, the company can produce budgets consistent with its strategic

plans and directions and consistent with the project plan.

A major lesson from company experiences such as Angus International’s is that making the connections among the four

management processes — to ensure that the outputs of strategic planning in fact drive projects, annual plans, and budget-

ing processes — is often difficult or nonexistent. One purpose of this report is to show exactly how the connections can be

made and to show through example and in practical terms how decisions at one point, such as those about strategy, do

affect projects, plans, and budgets.

MANAGEMENT ROLES IN THE FOUR PROCESSES

Angus chose to use three leadership teams for the exercise, with their activities extending over the period of a calendar year.

The senior leadership team consisted of the CEO, the COO, the CFO, and the senior vice presidents of operations, human

Businessstrategicintentions

(strategic business plan)

Projects

Actionandbottom-lineresults

Strategic IT

requirements

Strategic ITagenda

(use of IT)

Strategic ITplan

(supply of IT)

Project plan

(annual)

Projectsbudget

Lights-onbudget

Budgeting-to-action plans

Annual planningInitiative and project

development

Strategic planning (for IT)

Assessedportfolios

(alignment,service/quality,

technology)

Strategic IT planning Annual IT planning

Performance measurement metrics

IT plan(annual)

Business plan(annual)

Figure B — Management processes and the Strategy-to-Bottom-Line Value Chain deliverables.





to identify IT’s value, potential

contribution, and strategic IT

requirements.

� Step 1: what goals are impor-

tant for Angus to accomplish

in the coming three years?

� Step 2: what, roughly, are the

levels of importance for each

of these imperatives?

� Step 3: define Angus’s strate-

gic intentions.

� Step 4: establish the relative

importance to Angus of the

strategic intentions.

� Step 5: identify strategic objec-

tives and related metrics.

� Step 6: identify strategic

initiatives.

The primary outcome is a simple

statement of strategic intentions

and, in general, of where IT is

deemed to be an important com-

ponent of meeting those intentions.

The business strategic intentions

are the core element of the strate-

gic planning management process.

Strategic intentions express what

management wants to accomplish

and the relative importance of

those accomplishments. Once

resources, legal affairs, and sales. The business leadership team was made up of the direct reports to the senior leadership

team, about 15 individuals who were functional department heads (e.g., the controller, the vice president for product devel-

opment, etc.). The IT leadership team was the CIO and his direct reports.

Table B shows the role of each team in the four processes; the right-hand columns correspond to the four management

processes.

Deliverables in the Business Strategy-to-Bottom-Line Value Chain

Senior Leadership Team

Business Leadership Team

IT Leadership Team

Pro

cess

On

e

Pro

cess

Tw

o

Pro

cess

Th

ree

Pro

cess

Fo

ur

1 Business strategic intentions Perform Review Review X

2 Assessed application portfolios Review

Perform (business)

Perform (IT risk) X

3 Strategic IT agenda for the use of IT

Approve Review Perform X

4 Strategic IT plan Approve Perform Review X

5 Strategic IT requirements Approve Perform (business)

Perform (IT) X X

6 Individual projects Review Joint Joint X X

7 Business plan (annual) Approve Perform X

8 Project plan (annual) Approve Perform (schedule)

Perform X X

9 IT plan (annual) Approve Review Perform X

10 Projects budget (annual and capital) Approve

Perform (costing)

Perform X

11 Lights-on budget (annual) Approve Perform Approve X

12 Performance measurement metrics

Approve Joint Joint X

Table B — Angus Leadership Team Roles in the Four Management Processes and the Strategy-to-Bottom-Line Value Chain


(Text continued from page 6.)



EXECUTIVE REPORT 1111

defined, the strategic intentions are

drivers for the development of the

strategic IT agenda and the strate-

gic IT plan.

Note that many companies do not

complete Steps 5 and 6 at this

point. Recall that a specific Angus

objective is the alignment of

departmental plans with Angus

plans. However, identifying spe-

cific strategic objectives and

functional organizational units is

a very productive task; it results in

a further grounding of the result-

ing strategic IT plans and ultimate

projects. In effect, if these things

aren’t done at this point, they

must be done when projects are

developed, prioritized, and incor-

porated into annual plans and

budgets. As we’ll show below,

for Angus the identification of

department-level strategies was a

vital step in identifying the precise

role that IT should play in the

achievement of Angus’s strategic

intentions.

Step 1: What Is Important? Step 2: What Are the Levels ofImportance for Each Imperative?

To begin the development of strate-

gic intentions, the CEO and execu-

tive staff were asked to list what

was important for Angus to accom-

plish in the upcoming three years.

The senior leadership team created

a list of nine imperatives. A busi-

ness functional area was also iden-

tified as the key responsible party

for each imperative.


then asked to identify which

imperatives were the most impor-

tant. They did so individually and

then consolidated their views

as a group.

Table 2 lists the three (out of the

total nine) imperatives that led

to the adoption of the profitable

market share strategic intention,

which is the example used

throughout this report. Table 2

also shows the relative impor-

tance of each imperative, with

the number 5 representing the

highest level of importance.

These steps engaged the leader-

ship team in half a day’s worth

of facilitated discussion. During

that time, the team brainstormed,

reviewed marketing reports,

heard comments from the CEO

and other senior leaders, and

examined the latest industry con-

ditions. The emphasis was on the

necessary accomplishments for

the next three years, thus iden-

tifying the “outcome” of what

needed to be done rather than

the “how” — that is, the “strategy”

involved. The CEO was particu-

larly interested in this focus on

outcomes because he believed

that it was important to connect

early on to concrete statements

of what each part of the business

needed to accomplish. He was

outspoken in declaring that soft

or high-level statements of strat-

egy combined with no account-

ability was not acceptable.

More than 50 candidate impera-

tives were identified, discussed,

and ultimately reduced to the

nine that went on to the next

step. A key part of the discussion

centered on the question “Whose

problem is this?” as a vehicle for

fully describing the imperative and

for identifying common themes

from the original list of 50.

After the exercise, the executive

team was asked for its view of

the resulting nine imperative

Stage IIIStage IIStage I Stage IV

Establishmanagement’s

strategic intentions

Create thestrategic agendafor the use of ITin the business(demand for IT)

Create thestrategic IT plan

(supply of IT)

Derive thestrategic

requirementsfor IT

initiatives

Businessimperatives

Strategicintentions

Strategicobjectives

Departmentstrategies

Where can ITcontribute?

Assessedportfolios(business)

Strategicintentions forthe use of IT

Assessedportfolios

(technology)

Strategicintentions for

the supply of IT

Strategic ITrequirements:

IT

Strategic ITrequirements:

business

Figure 2 — The four stages of strategic planning.



statements. Remarks included the

following:

� Is this strategic review missing

anything (perhaps product

development)?

� How can we corral (i.e., orga-

nize and control) knowledge

management across business

units?

� Some imperative statements

are too complex or too much

of an umbrella statement. We

need simple statements that

everyone can understand.

� Have we sufficiently accounted

for sales and forecasting, focus-

ing on the demand side?

� This exercise meets the test

of communications and

appears to be comprehensive.

� This is excellent because

we have done this as a team

representing all parts of the

company.

In general, the CEO and senior

leadership team believed they

had made progress in identifying

important accomplishments for

the future. That the results were

produced across organizational

silos was highlighted.

Both the CEO and the individual

leadership team members under-

stood that a main purpose of the

exercise was to set the stage for

strategic IT planning. By identifying

the strategic imperatives, they

were told, they could move on

to identifying how IT could be

effectively used to accomplish

them, as well as to prioritize their

IT investments to ensure linkage

to what was important to them.

In this way, they understood why

the next three steps were under-

taken (establishing strategic inten-

tions, their relative weight, and

ultimately the business initiatives

necessary to accomplish the

strategic intentions). In addition,

the CEO remained steadfast in

wanting to use the process to

ensure that each department fully

understood what its accomplish-

ments needed to be and that all

departments understood how

their activities worked together to

achieve the strategic intentions.

Step 3: Statements ofStrategic Intentions

Based on the insight about what

is important, the senior leadership

team broke each of the nine

imperative statements into its

parts and recombined them into

six strategic intentions. The parts

were based on (1) which depart-

ments had to do something to

carry out the intention; (2) the

way in which outcomes could be

measured; and (3) the intermedi-

ate results necessary to carry out

the overall intention.

The team reconstituted the state-

ments of what is important based

on (1) the outcomes desired (the

goals); (2) the means for produc-

ing those outcomes; and (3) the

metrics that measure the out-

comes. Table 3 lists the resulting

six strategic intentions for Angus.

This table is used again and again

in assessing existing portfolios; pri-

oritizing strategic IT requirements

and projects; and establishing the

annual business, IT, and project

plans.

The six strategic intentions dif-

fered from the imperatives in

that they established a concrete

goal along with key metrics for

tracking progress. With such state-

ments, the leadership team said

Imperative Importance Department

To clearly identify sales opportunities and develop programs to optimize long-term profit growth.

5

To effectively communicate the availability of our products and have an adequate platform for advertising and promotion of products. To establish programs and actions to achieve this.

1 Sales

To become viewed by prime customers as the supplier of choice through efficient and effective methods of delivering high-quality products to each of these customers. To ensure that Angus is highly responsive to external customer needs.

3

Operations

Table 2 — Strategic Imperatives That Led to the Strategic Intentionof Profitable Market Share




clearly, “This is what we intend to

accomplish” and, by extension,

“This is what our strategies and

organizational efforts are intended

to accomplish.” For example, prof-

itable market share was the result

of discussing the three strategic

imperatives listed in Table 2.

The leadership team believed that

the real accomplishment lay in

the increase of business with

prime customers and the increase

in the number of prime cus-

tomers. In the facilitated discus-

sion, the team realized that the

three imperative statements were

the means for accomplishing the

underlying profitable market share

strategic intention.

The CEO and the leadership team

understood that by defining these

strategic intentions, they were lay-

ing the foundation for identifying

IT opportunities and establishing

priorities. In addition, the CEO

made it clear that he expected

that the strategic intentions would

also define his expectations for

each department’s performance.

Step 4: Relative Importance of Each Strategic Intention

This exercise weights the

six strategic intention state-

ments according to a spread of

US $100 million to be invested in

Angus and according to an impor-

tance for management attention

in the coming three years. The

senior leadership team is first

asked to imagine how it would

most effectively spread a “free”

$100 million and then how it

should spend its attention across

the six intentions; the idea is to

determine the relative importance

of the intentions. The weights

themselves are then established

through further discussion of

the results. The process is

intensely facilitated and works

well to produce a result with

which the senior leadership team

is comfortable.

To illustrate the weighting process,

all six strategic intentions are

listed in Table 4.

Both dollar amount and impor-

tance rankings resulted in the

same top strategic intention: prof-

itable market share. Those ranked

2-4 by dollars (expense control,

market-driven product develop-

ment, and Angus company devel-

opment) scored equally when

attention weights were used as the

measure. (Note: these three inten-

tions all rank 2 due to the tie.)

An examination of the results

for strategic intentions 2 and 6

Strategic Intention

Strategic Intention Goal Key Metric

Profitable market share

To increase the number of prime customers and increase the percentage of house-brand products supplied to each.

Number of prime customers and percentage market share for each and for the group.

Market-driven product development

To expand the number of high-demand products for prime customers.

Percentage of reordered products.

Angus company development

To grow the capabilities of Angus people and operate as a team with common purpose.

Percentage (general and administrative).

Regulatory and legal compliance

To reduce exposures to product safety and financial disclosure.

Dollars of claims and settlements and percentage of regulatory actions.

Expense control

To reduce unit cost of product and all forms of administrative overhead.

Year-over-year unit-cost change and percentage (general and administrative).

Customer relationships

To maintain and improve long-term performance and relationship with prime customers.

Percentage market share for each and customer satisfaction index.

Table 3 — Angus’s Strategic Intentions



implies that Angus senior execu-

tives believe that the issues sur-

rounding product development

and customer relations will not

require as much of a dollar invest-

ment to achieve the desired result

as, say, profitable market share

(strategic intention 1). This is

arguable and would benefit from

further discussion and outside

expertise to validate.

Strategic intention 4 (regulatory

and legal compliance) has the

least allocation of dollars shown,

though the company is devoting

considerable resources to it —

perhaps the most of any of the

strategic intentions (via an enter-

prise resource planning [ERP]

project). Either the priority of

intention 4 is understated, or

perhaps Angus is expending

too many resources on it. Alterna-

tively, if the ERP investment is also

expected to address, say, inten-

tions 2 and 6, then Angus should

pay more of its management

attention to getting the results

of intention 2 and intention 6 (in

particular) from the ERP project.

The leadership team found that

the method of setting weights

added further understanding

of what was important for Angus

to accomplish. For example, sev-

eral members expressed concern

that the first strategic intention,

profitable market share, could

encompass the other five. How-

ever, once they identified the goal

of this intention (to increase the

number of prime customers and

increase the percentage of house-

brand products supplied to each),

they agreed that most of the initia-

tives to accomplish this goal were

separate from those that fell under

the other five intentions.

Step 5: Identify the StrategicObjectives Relating to EachStrategic Intention

The senior leadership team identi-

fied a total of 17 strategic objec-

tives to be accomplished. It then

determined which of the organiza-

tional units should begin to pre-

pare detailed strategic initiatives

to achieve those objectives. Table

5 shows the three objectives that

relate to profitable market share.

The Angus senior leadership team

adopted the three-level strategic

structure defined in the Strategy-

to-Bottom-Line Value Chain:

1. Strategic intention: what the

company needs to accomplish

2. Strategic objective: a time-

boxed expression of specific

goals and metrics

3. Strategic initiative: the

specific actions to be taken

by departments

This structure allowed the team to

clearly identify what its planning

should accomplish, oriented to

individual departments and their

activities.

Step 6: Identify Strategic Initiatives3

Each organizational unit’s busi-

ness leadership team considered

the six strategic intentions and

resulting 17 strategic objectives

and then created a set of specific

strategies it believed it needed to

3For some companies, these are called

detail strategies.

By Dollars By Attention

Strategic Intention Spread of

$100 Million

Rank Order

Weight/ Importance

Rank Order

Final Weight

1 Profitable market share 41 1 27 1 29

2 Market-driven product development 11 3 18 2 22

3 Angus company development 10 4 18 2 21

4 Regulatory and legal compliance 4 6 9 6 12

5 Expense control 27 2 18 2 9

6 Customer relationships 7 5 11 5 7

Table 4 — Determining the Relative Importance of Each Strategic Intention




achieve in order to attain those

objectives. These 17 strategic ini-

tiatives represent what each orga-

nizational unit expects to do over

a three-year period to accomplish

the strategic objectives and

thereby the strategic intentions.


asked the following: (1) whether it

was satisfied that enough energy

was being devoted to each strate-

gic initiative; (2) whether current

effort was underway and in what

form; and (3) whether there was

IT support for the strategy. Table 6

shows the answers to these ques-

tions, as well as the number of

strategic intentions supported by

the initiative, for the two of the

17 initiatives that relate to the

profitable market share strategic

intention.

We’ll look specifically at Table 6

below; in general, however, the

areas where the senior leadership

team didn’t know whether suffi-

cient energy was being applied

appear to be the ones most con-

nected to the actual strategic

intention statements. This

suggests that executive attention

is needed to ensure that proper

energy will be devoted to the

items most likely to achieve

success in the directions Angus

wants to take.

The CEO and leadership team

were very surprised to find that

almost none of the 17 strategic

initiatives had sufficient energy

devoted to them, in spite of the

finding that some work was being

done on all of them and that each

had some degree of ongoing IT

investment. This led to several

comments and questions:

� CEO: “Does this mean we’re

spending money across the

board but are unlikely to be

successful in any initiative?”

� Operations Vice President:

“Now that we’ve formally

identified these as strategic ini-

tiatives, we really have to moni-

tor expenses and progress.”

� CIO: “We need to prioritize

and concentrate on the most

important initiatives.”

� CEO: “Are we spending enough

on the important initiatives?”

Overall, for all six intentions

and 17 initiatives, the analysis

demonstrated that each strategic

intention is supported by several

strategic initiatives. However, it is

interesting to note that in looking

at all six strategic intentions, the

most important strategic intention

(number 1) appeared to be the

least well supported by initiatives.

And the second most important

(number 2) was also insufficiently

supported.

During the process of conducting

the exercise with the senior lead-

ership team, individual senior

executives voiced opinions that

varied considerably regarding the

strategic initiatives that support

each strategic intention. This

variation may be a function of

incomplete information about the

implications of each strategic ini-

tiative. However, it is important for

the senior leadership team to have

a common view of the strategic

initiatives and implications for IT

support. The variation suggests

Strategic Intention Strategic Objectives Operational

Metric

1. New and existing market opportunities

To identify, develop, and exploit new and existing market opportunities.

Number of prime customers

2. Production and distribution excellence

To achieve efficient and effective production, distribution, and inventory of all product sectors.

Current operations index


3. Sustained market leadership

To protect and sustain Angus market leadership within consumer products — house-product sectors.

Market share for each prime customer

Table 5 — Example of Strategic Objectives for Profitable Market Share, Including Metrics



that additional attention can be

given to this issue. After this exer-

cise, the Angus CEO was deter-

mined to devote a future senior

leadership team meeting to further

discussion of exactly what the

company was planning to do in

each strategic intention area.

Table 6 shows the initiatives for

just one strategic intention (prof-

itable market share) and looks at

the connection between strategic

initiatives and the strategic inten-

tion statements, in the opinion of

the senior leadership team.

All 17 initiatives sorted the depart-

mental strategic initiatives in the

order of the number of strategic

intentions that the senior leader-

ship team believed the statement

supported. The example in Table 6

demonstrates this. Here, the first

initiative was viewed to support

five (of the six) statements of

strategic intention. Note that this

count includes “minor” support

as well as “major” support

responses.

Also shown in Table 6, the senior

leadership team was asked to

estimate the amount of IT support

needed to meet the requirements

of the strategic initiative (note the

scale is as follows: 0 is none; 1 is

based on existing support; 2 is

minor project(s) required; 3 is

major project(s) required). In

the view of the senior leadership

team, both initiatives in Table 6

require major IT projects. In

examining all 17 strategic initia-

tives, more than half suggest that

major projects may be needed

to meet the requirements. This

is daunting and underscores the

need to have a good IT strategic

plan to sort out the priorities

and the necessary resources

and/or allocations.

Now let’s take a closer look at

Table 6, which serves as our

example for accomplishing the

major task of Step 6: identifying

the strategic initiatives. For each

strategic intention, the team must

identify exactly which initiatives

each department within the com-

pany plans to undertake.

For the first strategic intention of

profitable market share, two initia-

tives were identified. For each of

those two initiatives, the leader-

ship team answered the following

five questions:

1. Is the senior leadership team

devoting enough management

energy and resources to ensure

success of the initiative? For

the two shown in Table 6, the

answer is “not sure (or no).”

2. Is the department currently

working on the initiative? For

Department Strategic Initiatives

Is Enough Energy

Applied?

Is Dept. Working

on It?

Is IT Working

on It?

Support of Strategic Intentions

Total IT Needed Score

Operations

New Process — ongoing product quality and review: to assess whether product development and product quality are maintained as well as meet future needs through technical support and innovation, defined quality systems, consistent measurement standards, and management oversight.

Not sure (or no)

Ongoing Ongoing

Five intentions

are supported

3

(Major projects needed)

Sales

New Process — geographic and prime customer sales analysis: to analyze sales trends and develop/maintain product offerings in identified geographies that return established volume and profit objectives.

Not sure (or no)

Ongoing

A possible enterprise resource planning (ERP)

solution

Two intentions

are supported

3

(Major projects needed)

Table 6 — Example of Strategic Initiatives for Profitable Market Share




the two shown, the answer is

“yes” (work is ongoing).

3. Is IT currently working on

projects related to the initiative?

For the two shown, the answer

is “yes.”

4. How many of the six strategic

intentions does each depart-

ment’s initiative actually sup-

port? One initiative supports

five, the other supports two.

This result supported the

importance of the initiatives,

particularly the first one.

5. Is further IT investment

required to complete the

initiative? Both require major

IT projects.

In sum, these results were

extremely important for the senior

leadership team and to the proc-

ess of developing the strategic IT

plan. The team was confronted

with facts that its most important

intentions were not getting

enough attention, that (despite

this) work was ongoing on initia-

tives, and that future IT investment

was required to complete the ini-

tiatives. This created a sense of

urgency to complete the next

steps of the strategic planning

process. The team was concerned

that previous decisions about IT

investments on behalf of the 17

initiatives had been made from a

largely tactical rather than a strate-

gic perspective and that the need

for further IT investment was a

“creeping commitment” that

flowed from the (strategically

untested) assumption that the

initiatives were all-important. This

sense of creeping commitment

was also reflected in the team’s

judgment that it was likely that

insufficient non-IT resources were

also devoted to the initiatives.

Summary of Stage I

At this point, the senior leadership

team had three basic documents:

(1) a statement of strategic inten-

tions with each weighted for rela-

tive importance; (2) a statement

of strategic objectives, which car-

ries out each strategic intention

with specific goals and metrics

with targets; and (3) a statement

of strategic initiatives, which

establishes exactly what each

department intends to do to

achieve the goals of the strategic

intentions.

For Angus, these documents

were published in a formal report

of 15 pages. It was used as a

beginning point for departmental

planning, annual planning, and

budgeting for that fiscal year. It

was also used in the subsequent

steps of strategic IT planning.

Rather than include all 15 pages

in this report, we chose to show

only those documents relating to

the intention of highest priority —

profitable market share.

Tables 5 and 6 detail the strategic

objectives and initiatives for the

profitable market share intention.

It might appear that Angus’s

departments have relatively

sparse strategies for the highest-

priority strategic objectives. This

is something the Angus senior

leadership team noted, and the

team expected some improve-

ments in subsequent planning

cycles. During the departmental

planning cycle that followed,

this was emphasized, and depart-

ments were expected to produce

additional initiatives and plans.

Also, the leadership team noted

that profitable market share is

probably directly influenced by

success in the other strategic

intentions. For example, if market-

driven product development is

successful, it should have some

positive influence on market

share. In subsequent steps, we’ll

see that the strategic intention 1

and its objectives and initiatives

will focus on the development

of prime customers and product

performance, as well as business

intelligence about competitors.

This will focus heavily on manage-

ment understanding of current

and future performance and will

not overlap with the initiatives in

the other strategic intention areas.

Stage II: Develop the Strategic

Agenda for the Use of IT

in the Business

The goal now is to identify the

key IT requirements necessary

to meet the strategic objectives.

Angus’s senior leadership team

did this by following three steps:

1. Determining where IT can

contribute

2. Assessing the as-is application

and service portfolios from the

business perspective



3. Establishing the strategic

agenda for the use of IT in

the business

The result is a concrete state-

ment of exactly what must

be accomplished with the use

of IT in the business. This allows

the Angus leadership team to

define exactly where IT should

fit in — a combination of strategic

intentions matched with the

specific departmental activities

intended to carry out the strate-

gic intentions (see Figure 3).

Ultimately, this leads to the finan-

cial decision of whether to invest

in development or enhancement

of IT applications or, in some

cases, to reduce investment

and redeploy those resources

to other areas.

Originally, Angus’s senior leader-

ship team had expected to move

directly from the strategic inten-

tion statements to a consideration

of the specific technical invest-

ments required. Instead, the team

first determined exactly how IT

could help. The team focused

more on how its internal opera-

tions could exploit IT rather than

on the bells and whistles of the

technology.

Step 1: Determine Where ITCan Contribute4

The Angus senior leadership team

was asked to list which specific

strategic intentions had the great-

est potential for IT investment for

the purpose of improving the like-

lihood of achieving the strategic

intention’s goals. At the same

time, the team was asked which

intentions appeared to be the

most difficult to achieve.

The first question began with a

review of the results of Step 6

described above. These results

included the 17 strategic initiatives

and whether further IT investment

was necessary to complete the

initiatives. The question now,

however, was whether the team

believed that the IT investments

were an indication that the team

could be a major contributor to

the achievement of the strategic

intention.

This produced an energetic and

lengthy discussion about exactly

how IT (that is, IT-enabled infor-

mation and process automation,

as well as Web-enabled customer

and internal activity) could be a

critical part of the company’s

2

Application Portfolio

Strategic Intentions

IT’s (Potential) ContributionManagement establishes which strategic

intentions have the greatest potential for IT contribution. This encourages them

to think about how IT should be used to advance their strategies.

Strategic Intentions for the Use of IT

Strategic Intentions for the Use of IT

Management expresses their specific intentions to use IT to achieve

intentions, strategic objectives, and departmental strategies. This formalizes

what IT needs to accomplish and what the business needs to plan to do.

Business Application Assessment Management assesses the existing application

portfolio for (a) how well each application supports strategic intentions and (b) performance

and quality. This identifies where changes in existing applications are needed

to match intentions to use IT.

1

32

Business-Assessed Application Portfolio

Figure 3 — Angus’s logic for producing strategic intentions for the use of IT.

4The innovation practice can be used here to

further develop new strategic intentions and

specific areas for possible IT utilization.




approaches to the 17 initiatives.

The discussion included expert

input provided by subject matter

experts, as well as industry/

competitor practices and

input from the IT staff about

possibilities.

Based on these discussions, the

senior leadership team was asked

to rank the six strategic inten-

tions in terms of what they now

believed were the greatest areas

of possible IT impact. Table 7

shows the results (1 is greatest

possible impact, 6 is least possible

impact).


also asked to rank the strategic

intentions on the level of difficulty

in actually achieving the hoped-for

results. This focused not so much

on IT but on the overall challenges

of developing solutions and the

related change-management

issues within Angus. A rating of 1

indicates the greatest difficulty

(problematic), and 6 is the

easiest.

It is interesting that the two strate-

gic intentions with the most

potential for IT are also the most

problematic for Angus (profitable

market share and expense con-

trol). This suggests that decisions

about IT’s deployment should be

made carefully and with the full

support of Angus executive man-

agement. It also suggests that sim-

ply employing the IT investment

would certainly be insufficient for

achieving the results; considerable

business and departmental issues

would also have to be effectively

addressed. That is, executive

management must pay close

attention to these areas and fully

support the IT initiatives.

In Table 7, two strategic intentions

that rank low in potential techni-

cal impact (regulatory and legal

compliance and customer rela-

tionships) also do not have a cor-

respondingly high dollar ranking

in Table 4, as measured by man-

agement’s inclination to spend

money on them. This suggests

that, although IT investment was

called for in the strategic initia-

tives examined in Step 6, it would

be much less important to actually

do so for these intentions.

This step was important to the

senior leadership team. From

a strategic perspective, it oriented

the team’s thinking toward where

exactly the company should direct

its IT investments. It allowed the

team to understand where it

should spend its time and energy

and in what areas it should expect

to further develop the strategic

IT plan.

Step 2: Assess the As-Is

Application Portfolios5 fromthe Business Perspective

At this point, the senior leadership

team had two tasks:

1. To assess the existing applica-

tion portfolio for how well each

application supports strategic

intentions

2. To consider how well the exist-

ing applications perform

This sets the stage for identifying

the changes and investments

needed to match the strategic

intentions to the use of IT.

IT’s Impact Rank

Problematic Rank

Strategic Intention Weight Rank

1 2 Profitable market share 1

4 5 Market-driven product development 2

3 6 Angus company development 3

5 4 Regulatory and legal compliance 4

2 1 Expense control 5

6 3 Customer relationships 6

(For IT’s impact rank, 1 = greatest possible impact; 6 = least possible impact. For problematic rank, 1 = most difficult, 6 = easiest.)

Table 7 — Example of IT Impact and Problematic Status for Strategic Intentions

5IT services assessments are not included in

this Executive Report.



The basic issue is twofold. First,

from the strategic perspective,

how does the existing IT applica-

tion portfolio perform? Are there

significant threats to the accom-

plishment of specific strategic

intentions? If the answer is that

there are considerable risks, or

if the portfolio does not perform

well, the Angus senior leadership

team determined it would need

to examine why and take appro-

priate investment action. Second,

again from the strategic perspec-

tive, is Angus spending the right

amount on IT? Should Angus

spending (both on projects and

on “lights-on” functions) be signifi-

cantly changed? If the answer to

the question is no, the Angus

senior leadership team would

consider how best to allocate the

level of spending to maximize its

impact in terms of supporting the

company’s strategic intentions. If

the answer is yes, the senior lead-

ership team would consider

where spending should be

adjusted, again in terms of best

supporting the company’s strate-

gic intentions.

Angus has 25 basic applications

in its portfolio (see Table 8).6 The

Angus senior leadership team

commissioned the assessment of

these applications by its direct

reports, a group of roughly 15

managers. (We use the term

“business leadership team” for

this group; it included functional

directors such as the controller,

sales managers, manufacturing

managers, human resources

division managers, and so forth.)

The team did the assessments

with the assistance of the IT lead-

ership team (the CIO and his

direct reports).

The business assessments

covered the following areas:

� Strategic alignment. To assess

how well each application sup-

ports each strategic intention,

including whether the appli-

cation may be an impediment

to achieving the strategic

intention

� Service level and quality.

From the business perspective,

to assess how well the applica-

tion performs in terms of accu-

racy of data, availability of

required functionality, and

availability and reliability of

the application’s operation

� Dependency and breadth. To

assess whether the application

is actually used in the business

� Technical risk. To assess the

degree to which applications

threaten increased costs or

failure

In its assessments of each appli-

cation, the business leadership

team was asked the following

specific questions. Figure 4 shows

Accounts payable General ledger and financial consolidations

Production planning and management

Accounts payable, receivable systems

Human resources planning Quality examination system

Customer information Maintenance management Retail shipment data warehouse

Design/build specification relay Marketing customer support systems

Sales decision support

Electronic bill tracking Marketing geographic planning Sales force automation

Financial consolidations Merchandising payment systems Sales marketing database

Financial planning/forecasting Order-processing systems Sales, use, federal, and state tax systems

Finished goods inventory Prime customer Internet portal Warehouse replenishment system

Five-year customer history

Table 8 — Angus’s Current Application Portfolio

6Here we report only on applications and

not on specific modules within an ERP.

Angus management also limited the granu-

larity of analysis to 25 applications. For our

examples in this report, we further limit to

12 applications.




the results for each application in

the portfolio.

� Support of strategic inten-

tions. Does the existing appli-

cation portfolio appropriately

support strategic intentions

and/or pose any threats to the

accomplishment of strategic

intentions, strategic objectives,

and strategic initiatives? A

related question is this: from

the strategic perspective, are

Angus’s IT resources being

invested in the right strategic

areas? In Figure 4, the six detail

columns under the Strategic

Alignment heading indicate the

relative support each applica-

tion has for each strategic

intention. (The six columns

correspond to the six Angus

strategic intentions and are

labeled with the name of

the strategic intention.) The

Alignment column, to the right

of these six, is the weighted

total (the sum of -5 to 5 scores

times the weight for each

strategic intention). The higher

the total, the better aligned the

application is with Angus strate-

gic intentions.

�� Service level and quality. In

terms of how it functions, does

the existing application port-

folio pose any threat to the

accomplishment of strategic

intentions, strategic objectives,

or strategic initiatives? Each

application is assessed for

service level and quality on a

0-to-5 scale. The results are

listed under the Functional

Alignment heading in Figure 4.

� Breadth and dependency. Is

the application portfolio actu-

ally used (i.e., does the com-

pany depend on it)? How

widely is the application used

(i.e., is use restricted to an indi-

vidual, or is it company-wide)?

Each application is assessed on

a 0-to-5 scale, and the results

are under the Functional

Alignment heading in Figure 4.

� Technology risk. In terms of

technical risk, does the existing

Strategic Alignment Technical Risk Functional Alignment

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1 Customer information $4.00 4 0 0 3 0 3 173 4 1 3 4 3.25 2 2 5 5

2 Electronic bill tracking $2.25 4 0 3 3 3 3 236 4 3 2 4 3.25 4 5 5 2

3 Sales force automation $1.00 3 3 -1 -3 -1 -3 75 2 3 1 2 2.00 3 2 5 4

4 Sales/marketing database $2.00 3 -3 -1 -3 -1 3 -57 2 2 1 1 1.50 2 2 4 3

5 Sales decision support $2.50 2 -1 -1 -3 -1 3 -42 2 2 1 2 1.75 3 2 5 3

6 Accounts payable $4.00 0 -3 -1 -3 -1 3 -144 2 2 1 1 1.50 2 2 4 3

7 Design/build specification relay

$2.75 0 0 3 3 3 3 120 4 3 2 4 3.25 4 5 5 2

8 Financial consolidations $1.00 0 -3 -1 -3 -1 -3 -144 2 2 1 1 1.50 2 2 4 3

9 $0.75 0 0 0 -1 0 -1 -19 2 2 1 1 1.50 3 3 4 2

10 General ledger $1.75 0 0 0 3 0 3 57 2 2 3 3 2.50 4 4 5 3

11 Human resources planning $3.00 0 0 0 3 0 3 57 1 2 3 3 2.25 2 2 5 2

12 Marketing geographic planning

$3.00 0 4 0 3 0 3 145 1 2 3 2 2.00 2 3 5 2

Five-year customer history

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Figure 4 — The detailed application assessment, ordered by support of profitable market share.

application portfolio pose risks

of increased costs or threat-

ened failure that relate to

strategic intentions? Each appli-

cation is assessed for each of

four types of risk on a 0-to-5

scale, and the results are

shown under the Technical

Risk heading in Figure 4. For

this assessment, a high risk

(defined as risk of future

increased costs or possible

application failure) is scored

as 0, and a low risk is a 5.

�� Further investment. Depend-

ing on how IT can support

future business initiatives with

respect to strategic intentions

(see Step 6 discussed previ-

ously and Step 1 in this sec-

tion), is it warranted to invest

further in the application set

that relates to these business

initiatives? From a strategic per-

spective, do significant areas

require long-term investment

to repair or replace significant

portions of the application

portfolio? By examining the

combination of current strate-

gic intention support, technical

risks, and service and quality,

the business leadership team

begins to analyze the desirabil-

ity of abandonment (e.g., the

application simply doesn’t sup-

port company strategic inten-

tions and/or has lousy quality

and service level) or further

investment (e.g., the applica-

tion is important, is depended

on, but has bad service level

and quality).

Figure 4 shows the detailed

assessments for 12 of the applica-

tions in the portfolio. Each assess-

ment is done on a scale of –5 to 5.

The list displayed in the figure is

sorted in the third column: sup-

port for profitable market share

(the highest-priority strategic

intention). This sorting shows

that the customer information

application (in bold in the table)

is one of two applications that

strongly supports profitable mar-

ket share (the other is electronic

bill tracking, also in bold), as

reflected by the rating of 4 in

the strategic intention column.

However, the customer informa-

tion application has one signifi-

cant technical risk (vendor

stability and support) as reflected

by the rating of 1 in that column; it

also has a bad service level and

poor quality (as reflected by the

rating of 2 in those columns).

The business leadership team

examined the first application

(customer information) and con-

cluded that it had the following

characteristics.

Support for strategic intentions

(the Strategic Alignment

heading in Figure 4):

� Scored a rating of 4 — “strong

support” for profitable market

share

� Scored a rating of 0 — “no

support” for market-driven

product development, Angus

company development, and

expense control

� Scored a rating of 3 —

“medium support” for regu-

latory and legal compliance

and customer relationships

Technical risk:

� Scored a rating of 1 — “high

risk” for vendor stability and

support


“medium risk” for internal

support

Performance (the Functional

Alignment heading in Figure 4):

� Scored a rating of 2 — “poor

performance” for service

level and quality


“very high dependency”;

the company depends on

the application

� Scored a rating of 5 — “high

breadth”; use of the application

is company-wide despite poor

performance

The business leadership team

examined all applications in this

fashion. To provide input for the

strategic planning process, the

applications were scored accord-

ing to each strategic intention.

The purpose was to understand

how well existing application port-

folios support the strategic inten-

tions. Low levels of support, or

high risks and poor performance,

could result in the adoption of

strategic IT investments to repair

the gaps in support.




In Figure 5, for example, this

scoring information is shown for

all four applications that received

a score of 3 or 4 (strong support)

for the strategic intention of prof-

itable market share. The business

leadership team reviewed the

results and prepared a presenta-

tion for the senior leadership

team with observations and rec-

ommendations for further invest-

ment in support of the strategic

intention.

Based on the analysis, Angus’s

senior leadership team concluded

that some applications strongly

support the strategic intention of

profitable market share, but with

considerable technical risk and

poor performance. Clearly a

change was necessary. The result

was to add to the strategic require-

ments for IT.

Note that these application port-

folio assessments focus on the

future strategic aspects of IT.

They will also be used in two

other aspects of the Strategy-to-

Bottom-Line Value Chain: (1)

for the IT strategic plan, issues

related to cost and effectiveness

will be addressed using the

assessment; and (2) for the IT

annual plan and lights-on budget,

issues related to costs, service

levels, and quality are addressed

using this assessment. In that dis-

cussion, technical risk is a main

point of interest as well.

Figure 5 looks at the assessment

for the applications specifically

related to profitable market share.

The senior leadership team noted

that the technical risk for the

sales-related applications (items

3 and 4 in Figure 5) was assessed

quite high by the business leader-

ship team. Under the Functional

Alignment heading, service level

and quality also caused significant

concern. Yet Angus relies heavily

on these applications, especially

customer information and sales

force automation, which was

used company-wide. This raised a

red flag in team members’ minds.

When compared with the strate-

gic objectives and strategic initia-

tives, these findings created

substantial concern that the exist-

ing application set would be an

inadequate foundation from

which to move forward with the

strategic intentions. The leader-

ship team concluded that a sig-

nificant investment might be

necessary to replace current

applications and extend their

capabilities to meet the strategic

requirements.

In examining Figure 4, the leader-

ship team also noted that several

of the 12 applications that seemed

appropriate to the strategic inten-

tion of profitable market share

had little impact, namely five-year

customer history, marketing geo-

graphic planning, and design/

build specification. As shown

in Figure 4, these applications

received scores of 0 for support

of the strategic intention. The

team questioned whether it

should continue investing in those

applications and/or why company

departments weren’t taking

advantage of these applications.

Finally, the team noted that the

distribution of IT investments



Technical Risk Functional Alignment

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1 Customer information $4.00 4 4 1 3 4 3.25 2 2 5 5

2 Electronic bill tracking $2.25 4 4 3 2 4 3.25 4 5 5 2

3 Sales force automation $1.00 3 2 3 1 2 2.00 3 2 5 4

4 Sales/marketing database $2.00 3 2 2 1 1 1.50 2 2 4 3

Pro

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Application Portfolios

Figure 5 — Strategic assessment of applications for profitable market share.

in application areas seemed

disproportionate. In evaluating the

dollar amount directed toward

profitable market share, the team

discovered that the application

portfolio wasn’t as strong as the

other areas. This might be accept-

able if the application portfolios

were especially effective, but

given the above assessments,

perhaps this is not the case.

The Angus senior leadership

team put the overall results into

a management dashboard form,

as shown in Table 9 (although

we are describing the results for

only one strategic intention in this

Executive Report, it is interesting

to look at all six strategic inten-

tions together).

In Part II of this series, we will

consider these assessments again

when we discuss the remaining

two strategic IT planing steps and

in the annual plan and budget

steps.

The senior leadership team

used the dashboard shown in

Table 9 as the basis for an in-depth

discussion of needs. The CIO



Application Portfolio Assessments

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Support of strategic intentions. Does the existing application portfolio pose any threats to the accomplishment of strategic intentions, strategic objectives, and strategic initiatives?

High risk/ high need


Medium risk/ medium need




Investment in appropriate strategic areas. From the strategic perspective, are Angus’s IT resources being invested in the right strategic areas?





Low risk/ low need

Low risk/ low need

Service level and quality. In terms of how it functions, does the existing application portfolio pose any threats to the accomplishment of strategic intentions, strategic objectives, or strategic initiatives?



Low risk/ low need




Technology risk. Does the existing application portfolio pose risks to Angus regarding increased costs or threatened failure?




Low risk/ low need



Further investment. Depending on how IT can support future business initiatives with respect to strategic intentions, is it warranted to invest further in the existing application set relating to these initiatives, or should it be replaced/abandoned?







Long-term investment. From a strategic perspective, do significant areas require long-term investment to repair or replace significant portions of the application portfolio?

Yes No No Yes No Yes

Table 9 — Summary of Assessments for All Strategic Intentions


remarked that this was a highly

productive discussion in that the

issues turned on connection to

strategic intentions rather than on

simple needs. Team members

took specific note of the fact that

the most important strategic inten-

tions had the worst assessment

outcomes. This led to further dis-

cussion about where IT money

should be invested.

The outcomes of this assess-

ment were used in Step 3, out-

lined below, to identify where IT

could be used more effectively.

The outcomes were also used in

the development of strategic IT

requirements (to be described

in Part II of this series).

Step 3: Establish the StrategicAgenda for the Use of IT in the Business

From the overall perspective, the

strategic agenda for the use of IT

evaluates the need and direction

for investment from two areas:

(1) the analysis of Angus’s strate-

gic intentions through the strategic

initiatives, accomplished in Step 2,

above; and (2) the strategic analy-

sis of the as-is application portfo-

lio, also done in Step 2. Taken

together, the strategic agenda

represents the demand for IT.

The senior leadership team had

previously examined the role IT

should play in each strategic

intention (see Stage I, Step 6 and

Stage II, Step 1 above). Now the

team asked the business leader-

ship team to evaluate and further

elaborate on how each of its

departments should use IT to


In a work session, the individual

members expressed their specific

intentions to use IT to achieve

their strategic intentions, strategic

objectives, and departmental

strategies. This formalized both

what IT needs to accomplish and

what each part of Angus must

plan to do in order to be able to

use IT. The business leadership

team worked out specific depart-

mental goals and related appli-

cations developments that

they would need. Ultimately,

these would be reflected in the

annual business plans, IT depart-

mental plans, and business and

IT budgets. (Part II of this series

will detail how these results

were produced.) The business



Rank Strategic Intention Strategic Intention for the Use of IT

1 Profitable market share To make timely, integrated information and analysis tools available to all at Angus who can influence profitable market share.

2 Market-driven product development To apply integrated information about product, product testing, consumer response and complaints, and worldwide product content/specifications throughout product development.

3 Angus company development

To make information about jobs and job requirements, training and career development, and individual status against job development objectives available to Angus employees and potential recruits.

To make relevant IT-enabled training available to Angus employees.

To have departments use common systems throughout Angus.

4 Regulatory and legal compliance To gives executives and managers access to current litigation and compliance information.

To employ comprehensive record management.

5 Expense control

To give executives and managers access to appropriate information that bears on minimizing cost of processes.

To have departments employ a business review and assessment of application portfolio effectiveness.

6 Customer relationships To communicate electronically with relevant customers.

To give executives and managers access to information about customer performance and customer relationships.

Table 10 — Strategic Intentions for the Use of IT

leadership team then summarized

how it expected to use IT to

achieve each strategic intention

and reported its statements about

IT to the senior leadership team.

The senior leadership team then

established the strategic intentions

for the use of IT, as shown in

Table 10 on the previous page.

The senior leadership team then

asked the business leadership

team to examine each strategic

intention and break it out into

more detailed strategic objectives

for the use of IT. These are

reflected in Table 11 and make up

the strategic agenda for the use of

IT, in this case for the single strate-

gic intention profitable market

share. This activity helped specify

the efforts each department

should carry out for the use of IT.

Again, for brevity, we display the

results of only this exercise for

profitable market share, as shown

in Table 11.

Table 11 also adds to the strategic

agenda for the use of IT the

results of the application portfolio

analysis. In addition to the specific

objectives from each department,

the objectives for repairing the

problems in the relevant applica-

tions are also included.

By performing this task for each

strategic intention, the business

leadership team worked across its

organizational silos to develop the

strategic intentions for the use of

IT. The process highlighted several

cross-silo opportunities for gather-

ing and applying information. As

one departmental manager noted,

this was the first time the com-

pany actually considered how to

use information across depart-

mental boundaries.

CONCLUSION

We have described in detail

how Angus International’s senior

leadership and business leader-

ship teams progressed from their

business strategic intentions to

the development of strategies for

the use of IT in the business.

Part II will describe how this trans-

lated into a strategic IT plan (for

the delivery of IT to meet the

strategic demand), specific IT

projects, an annual business, IT

project, and IT plan, and associ-

ated budgets.

The examples shown illustrate

the details of each part of the

puzzle for the strategic intention

of profitable market share. To

see the effectiveness of the result,

Table 12 collects all parts for this

one strategic intention. The table

emphasizes the top-down devel-

opment of a strategic intention,



Strategic intention for the use of IT for profitable market share

To make timely, integrated information and analysis tools available to all at Angus who can influence profitable market share.

Strategic objectives for the use of IT for profitable market share

To use sales and customer information to focus Angus’s energies and attention on the consumers and distribution channels who are likely to buy product.

To put timely, integrated information and analysis in the hands of executives and managers.

To place information about sales in the hands of representatives.

To gain information about unvisited stores for promotional purposes.

To provide information on demographics, utilization, geographic areas, and ROI on promotions to sales.

To develop an information strategy to measure profitability of prime customers.

Strategic objectives related to the existing application portfolio

To attend to the technical risks of high-support applications (e.g., customer information).

To attend to the poor performance of high-support applications (e.g., customer information).

Table 11 — The Strategic Agenda for the Use of IT for Profitable Market Share


and the left-to-right cause-and-

effect relationship between the

strategic intention — and objec-

tives and detail strategies — into

the related strategic agenda for

the use of IT. Consider, for exam-

ple, this excerpt from Table 12:

� Strategic intention: to increase

the number of prime cus-

tomers and increase the

percentage of house-brand

products supplied to each

� One strategic objective:

to identify, develop, and

exploit new and existing

market opportunities

� One strategic objective for

the use of IT: to use informa-

tion to focus Angus energies

on the consumers and distribu-

tion channels who are likely

to buy the product



Strategic Intentions, Objectives, and Departmental Strategies

Description Strategic Agenda for the Use of IT

Strategic intention:


To increase the number of prime customers and increase the percentage of house-brand products supplied to each.


Strategic objectives:

1. New and existing market opportunities

2. Production and distribution excellence

3. Protected and sustained Angus market leadership

To identify, develop, and exploit new and existing market opportunities.

To achieve efficient and effective production, distribution, and inventory of all product sectors.

To protect and sustain Angus market leadership within consumer products/house-product sectors.

To focus Angus’s energies and attention on the consumers and distribution channels who are likely to buy product.

To put timely, integrated information and analysis in the hands of executives and managers.

To place information about sales in the hands of representatives.

To gain information about unvisited stores for promotional purposes.

To provide information on demographics, utilization, geographic areas, and ROI on promotions to sales.

To obtain information to measure profitability.

To attend to the technical risks in the existing high-support applications (e.g., customer information).

To attend to the poor performance in the existing high-support applications (e.g., customer information).

Departmental strategy or strategic initiatives:

• Operations

• Sales

For Operations: to ensure that product development and product quality are maintained as well as meet future needs through technical support and innovation, defined quality systems, consistent measure-ment standards, and management oversight.

For Sales: to analyze sales trends and develop/maintain product offerings in identified geographies that return established volume and profit objectives.

To cultivate the ability of Angus executives and managers to think in data terms, to use the analysis tools.

Table 12 — Angus’s Strategic Plan for IT Demand

� One departmental strategy

for the use of IT: to build

the ability of executives and

managers to think in data

terms and use the analysis

tools

� One application portfolio:

to attend to technical risks

in high-support applications

(customer information, sales

force automation)

We use the term “strategic agenda

for the use of IT” to describe all

these activities, because together

they reflect Angus management

strategies for how IT should be

used to meet strategic intentions.

This is the core of the outcome —

the specification of exactly how

IT can and should contribute

to the business. In Strategy-to-

Bottom-Line Value Chain terms,

this defines the demand for IT.

In addition to giving an overview

of composite Angus International,

this report details how Angus

completed Stages I and II of the

strategic plan for IT under the

Strategy-to-Bottom-Line Value



Business Strategic Intention

IT and Business Action Bottom-Line Impact

Business: action in annual operational plans (for each department); these items are included in departmental plans:

1. Business process to put information in sales force hands.

2. Process to build complete awareness of customer and its products.

3. Plan to enhance call center to provide instant customer response.

IT: Action in annual plan; these items are included in the IT plan:

1. Project to replace inadequate sales force automation applications.

2. Project to install customer information warehouse.

3. Project for nationwide network availability to sales force and customers.

Business provisions included in departmental budgets:

1. Project for training and process change program in sales force.

2. New staff for customer data acquisition and validation.

3. Project for call center enhancement.

IT Provisions included in IT budget:

1. Project for infrastructure additions and upgrades, especially warehouse.

2. Redeployment of sales force system resources to warehouse and network.

Strategic intention:

Profitable market share — to increase the number of prime customers and increase the percentage of house-brand products supplied to each.

Strategic intention for the use of IT:

to make timely, integrated information and analysis tools available to all at Angus who can influence profitable market share.

Metrics employed to track impact of action:

• Number of prime customers added.

• Percentage increase in market share for each.

• Percentage increase in profitability by prime customer.

The leadership team expects that by placing superior information in the hands of sales force and other executives, the company can respond with proposals and concepts to each customer and to each customer’s requirements. This grows market share and profitability by customer.

Table 13 — Angus’s Results: From Strategy to the Bottom Line


Chain (see Figure 2 on page 11

for a review of all four stages).

Part II will complete the strategic

planning process discussion and

also cover the other management

processes outlined earlier: initiative

and project development, annual

planning, and budgeting to action

plan. As a preview of Part II, Table

13 on the previous page shows an

example of the detail outcomes,

focusing on the business plan and

budget. By using the Strategy-to-

Bottom-Line Value Chain, the

company established strategies

through analysis and prioritization

and created action in the annual

plan and budgets, which produced

the basis for bottom-line impact.

Metrics provided tracking of the

business benefit.

At the end of the process, Angus

management reviewed the results

of the strategic planning steps

described here. The CEO

remarked that it was now clear

that what the company needed to

invest in — applications and other

aspects of IT — were developed

from Angus’s business strategic

intentions. The result was a truly

business-driven IT strategic plan.

As the CIO commented, in some

ways, the company knew that

these were important things, but

just didn’t know why.



APPENDIX

The tables in this Appendix

provide the results of Angus

International’s strategic planning

work. In the main report, we

focused solely on the single strate-

gic intention of profitable market

share. In these tables, we show

the results for all six strategic

intentions.

Appendix Table 1 lists all the

strategic objectives for the use of

IT in the business. This is the best

expression of exactly how Angus

management might use IT to


In Part II of this report, we’ll

show how the strategic objectives

translate into business plans and

budgets.

Appendix Table 2 shows the high-

level strategic intentions for the

use of IT (expressing a demand

for IT) and links it to the IT organi-

zation’s plans to respond to the

demands (expressing the strate-

gies for the supply of IT). These

strategies are expressed as strate-

gic intentions for the supply of IT.

Appendix Table 3 shows how the

IT organization expects to deliver

IT and identifies which of the four

IT portfolios (applications, infra-

structure, services, or manage-

ment) are affected. In Part II of

this report, we’ll show how these

translate into specific projects and

investments as well as budget.

Appendix Table 4 provides a short

description of each of the 12 deliv-

erables in the Strategy-to-Bottom-

Line Value Chain. In this report,

we have focused on the first five;

in Part II, we’ll complete the des-

cription of the deliverables for

Angus International.

FOR FURTHER READING

Books

Benson, Bob, Tom Bugnitz,

and Bill Walton. From Business

Strategy to IT Action: Right

Decisions for a Better Bottom Line.

John Wiley & Sons, 2004.

Parker, Marilyn M., and Robert

J. Benson, with H.E. Trainor.

Information Economics: Linking

Business Performance and

Information Technology. Pearson

Education, 1988.

Cutter Consortium

Executive Reports


and Bill Walton. “Finding the IT

Improvement Zone.” Cutter

Consortium Business-IT Strategies

Executive Report, Vol. 6, No. 12,

December 2003.

Benson, Bob. “Business and IT: A

Gap Analysis.” Cutter Consortium

Business-IT Strategies Executive

Report, August 2001.

Cutter Consortium Business-IT

Strategies E-Mail Advisors

Walton, Bill. “Getting New

Business and IT Management

Roles Right.” Cutter Consortium

Business-IT Strategies E-Mail

Advisor, 3 December 2003.

Benson, Bob, Tom Bugnitz, and

Bill Walton. “The Strategy-to-

Bottom-Line Value Chain.” Cutter


E-Mail Advisor, 4 February 2004.


and Bill Walton. “Adopting

Strategic Intentions for the Use

of IT.” Cutter Consortium


Advisor, 3 March 2004.


and Bill Walton. “Assessing IT

Portfolios to Maximize IT’s

Bottom-Line Impact.” Cutter


E-Mail Advisor, 7 April 2004.


and Bill Walton. “Strategic Agenda

for the Use of IT: The Missing Link

in Business-IT Planning.” Cutter


E-Mail Advisor, 28 April 2004.


and Bill Walton. “The Strategic IT

Plan: The Supply Side of Business-

IT Planning.” Cutter Consortium


Advisor, 26 May 2004.



Strategic Intentions Strategic Objectives for the Use of IT

1. Profitable market share: to increase the number of prime customers and increase the percentage of house-brand products supplied to each.

To focus company energies and attention on the consumers and distribution channels who are likely to buy product. To place timely, integrated information and analysis in the hands of executives and managers. To provide information about sales to representatives (e.g., information about unvisited stores for promotional purposes). To provide information on demographics, utilization, geographic areas, and ROI on promotions to sales.

2. Market-driven product development: to expand the number of high-demand products for prime customers.

To provide consumer preference information. To enable and encourage consumer contact for consumer responses to product. To work together across silos — IT-enabled. To ensure integrated and available R&D and other product development information.

3. Angus company development: to grow the capabilities of Angus people and operate as a team with common purpose.

To provide IT-enabled recruitment information. To cultivate comprehensive individual-focused capabilities for job, career, and training. To provide timely availability of company information. To create a company-wide focus on business systems and data. To ensure accountability in every department for data accuracy.

4. Regulatory and legal compliance: to reduce exposures to product safety and financial disclosure.

To make information about Angus litigation and compliance activities available to relevant executives and managers. To make current information about legislation, regulation, and public policy developments throughout the US available to relevant executives and managers. To enable record-management capabilities throughout Angus.

5. Expense control: to reduce unit cost of product and all forms of administrative overhead.

To engage in periodic portfolio review for replenishment; to modernize the applications to reduce cost. To track the effectiveness and use of software that has been installed.

6. Customer relationships: to maintain and improve long-term performance and relationship with prime customers.

To ensure that customers have easy access to Angus information.

Appendix Table 1 — Strategic Objectives for the Use of IT for All Six Strategic Intentions




Business Strategic Intentions

Business Strategic Intentions for the Use of IT

IT Strategic Intentions for the Supply of IT

1 Profitable market share: to increase the number of prime customers and increase the percentage of house-brand products supplied to each.


To establish industrial-strength, large-scale warehouse (capability to collect, manage, analyze, and access information) for all relevant aspects of Angus business that influence profitable market share.

2 Market-driven product development: to expand the number of high-demand products for prime customers.

To apply integrated information about product, product testing, consumer response and complaints, and worldwide product content/specifications throughout product development.

To install integrated data collection and analysis capabilities throughout laboratories, manufacturing, and consumer preference studies. To initiate steps to extend data warehouse to include the capability to collect, manage, analyze, and access information for laboratories, manufacturing, and consumer preference studies.

3 Angus company development: to grow the capabilities of Angus people and operate as a team with common purpose.

To make information about jobs and job requirements, training and career development, and individual status against job development objectives available to Angus employees and potential recruits. To make relevant IT-enabled training available to Angus employees. To ensure that departments use common systems throughout Angus.

To provide the capability for job and career development information, Web-based training, computer-based training, and measured progress. To enable access to relevant job, career, and training information to every Angus employee. To implement ERP software. To ensure that applications and development methodologies take enterprise perspective and apply appropriate enterprise-wide standards.

4 Regulatory and legal compliance: to reduce exposure to product safety and financial disclosure.

To ensure that executives and managers have access to current litigation and compliance information. To ensure that Angus employs comprehensive record management.

To enable secure, integrated data and record collection, analysis, and retention capabilities throughout Angus.

5 Expense control: to reduce unit cost of product and all forms of administrative overhead.

To ensure that executives and managers have access to appropriate information that bears on minimizing cost of processes. To ensure that departments employ a business review and assessment of application portfolio effectiveness.

To continuously renew and modernize the application portfolio. To eliminate poorly performing portfolio elements.

6 Customer relationships: to maintain and improve long-term performance and relationship with prime customers.

To communicate electronically with relevant customers. To ensure that executives and managers have access to information about customer performance and customer relationship.

To develop Web and electronic business capabilities for relationship with customers.

Appendix Table 2 — Linking Business Strategic Intentions (Demand) to IT (Supply)



Strategic Intentions Strategic Objectives for the Delivery of IT Portfolio

Profitable market share: to increase the number of prime customers and increase the percentage of house-brand products supplied to each.

To create a robust data warehouse with the capability to manage enormous amounts of data.

To provide access to data warehouse (e.g., timely, integrated information) to all in the company; to use methods to include all relevant data in the warehouse.

To cultivate the ability of Angus executives and managers to think in data terms and to use the analysis tools.

Infrastructure

Application, services

Services

Market-driven product development: to expand the number of high-demand products for prime customers.

To provide a warehouse for analysis and presentation.

To use the Web site for consumer responses.

To provide a collaborative environment.

To create the availability of data generated in R&D about product development.

Infrastructure

Infrastructure

Infrastructure

Information

Angus company development: to grow the capabilities of Angus employees and operate as a team with common purpose.

To provide Web-based and computer-based training.

To provide Web-enabled recruitment and job information.

To provide an integrated suite of human resources applications.

Services

Information

Application

Regulatory and legal compliance: to reduce exposures to product safety and financial disclosure.

To offer record-retention capabilities

To offer a case management database.

To offer billing tracking.

Application

Information

Application

Expense control: to reduce unit cost of product and reduce all forms of administrative overhead.

To provide information accessibility through warehouse and inquiry tools.

To strengthen ability to operate and integrated set of platforms, including mainframe, AS400, Unix, and NT.

To focus new development and acquisitions on smaller number of platforms (e.g., Unix and NT).

Information

Infrastructure

Infrastructure

Customer relationships: to maintain and improve long-term performance and relationship with prime customers.

To integrate information about customer performance.

To provide Internet-based access with/for customers.

Information

Infrastructure

Appendix Table 3 — Identifying Specific Strategies for the Delivery (Supply) of IT




Deliverable Name Deliverable Description

1 Business strategic intentions Mission plus weighted strategic intentions.

2 Assessed application portfolios As-is alignment, service, quality, technology, and use.

3 Strategic IT agenda for the use of IT

Strategic intentions to strategic initiatives.

4 Strategic IT plan Strategic intentions to strategic initiatives.

5 Strategic IT requirements Initiatives — three-to-five-year horizon — portfolio format.

Stra

tegi

c Pl

anni

ng

6 Individual projects Real, doable projects and their descriptions.

7 Business plan (annual) Documentation according to company practices.

8 Project plan (annual) One-year annual horizon — with portfolio format.

9 IT plan (annual) Documentation according to company practices.

10 Projects budgets (annual and capital)

Documentation according to company practices.

11 Lights-on budget (annual) Documentation according to company practices.

Ann

ual/T

actic

al P

lann

ing

12 Performance measurement metrics

Documentation according to company practices.

Appendix Table 4 — Strategy-to-Bottom-Line Value Chain Deliverables

Abou

t th

e Pr

acti

ce Business-IT StrategiesPracticeThe Business-IT Strategies Practice area focuses on the intersection of business and

IT. Through the subscription-based Advisory Service, the Business-IT Strategies team

of Senior Consultants guides companies to optimize their IT investments by ensuring

they validate business requirements prior to making investments in technology,

technology acquisition strategies, and day-to-day management of technology.

Consulting and training services within this practice area are customized to meet

your needs; they cover assignments such as harnessing IT as a competitive weapon

through sound business-IT alignment, developing an IT strategic plan, and

reorganizing and transforming your IT department.

The Business-IT Strategies Practice guides you to identify the IT investments that

make the most sense for your business, avoid those that fail to support your

business objectives, and position your enterprise so it can leverage IT for competitive

advantage.

Products and Services Available from the Business-IT Strategies Practice

• The Business-IT Strategies Advisory Service

• Consulting

• Inhouse Workshops

• Mentoring

• Research Reports

Other Cutter Consortium Practices

Cutter Consortium aligns its products and services into the nine practice areas

below. Each of these practices includes a subscription-based periodical service,

plus consulting and training services.

• Agile Project Management

• Business Intelligence

• Business-IT Strategies

• Business Technology Trends and Impacts

• Enterprise Architecture

• IT Management

• Measurement and Benchmarking Strategies

• Risk Management and Security

• Sourcing and Vendor Relationships

Senior ConsultantTeamThe Cutter Consortium Business-IT Strategies

Senior Consultant team includes seasoned

experts in the business technology arena.

Several are former CIOs; many have served

as business management consultants; others

have served as professors at prestigious

universities. Collectively, the Senior

Consultants on the Business-IT Strategies

team have decades of experience both inside

corporate IT and business groups, and

working with organizations in a consulting

capacity. The team includes:

• Steve Andriole

• Robert D. Austin

• Bob Benson

• Stowe Boyd

• Thomas Bugnitz

• David Caruso

• Mark Cotteleer

• Christine Davis

• Carole Edrich

• Don Estes

• Michael Guttman

• Ian Hayes

• Maxwell Hughes

• Tim Lister

• Michael C. Mah

• Jason Matthews

• Peter O’Farrell

• Ken Orr

• Wojciech Ozimek

• Helen Pukszta

• Ram Reddy

• Alexandre Rodrigues

• Michael Rosen

• Mark Seiden

• Richard Sneider

• Borys Stokalski

• Rob Thomsett

• William Ulrich

• Bill Walton

• George Westerman


Documents

Connecting IT to Business Strategy: Part I