IT Strategy

An IT strategy explains what technology will do for the business over the next few years and how it will get there. It starts from the organization's goals, such as growth, efficiency, customer experience or risk reduction, and translates them into technology priorities: which capabilities to strengthen, which systems to build, buy or retire, how the IT function should be organized and how much to invest. A good IT strategy gives leaders a basis for saying yes to some requests and no to others.

Without a clear strategy, technology spending tends to follow whichever project has the most persuasive sponsor. The result is a growing set of systems that serve individual needs but do not add up to a coherent whole. An IT strategy aligns investment with business priorities and gives enterprise architecture, portfolio management and finance teams a shared reference for their decisions. For IT finance, it is the basis for budgets, investment cases and the balance between running existing systems and building new ones.

Definition of IT Strategy

An IT strategy is a documented set of decisions about how technology will support and shape an organization's business strategy. It typically covers a period of three to five years and is reviewed at least once a year.

It is closely linked to enterprise architecture, which describes the structure of business, data, applications and technology that the strategy aims to create, and to the technology roadmap, which sequences the work.

Common Components

The strategy usually begins with a summary of business goals and the role technology will play in achieving them. It then assesses the current state, including strengths, weaknesses, risks and costs.

Core sections cover technology priorities and principles, target capabilities and architecture, sourcing choices such as cloud and outsourcing, the IT operating model and the skills required.

The strategy closes with an investment plan, a high-level roadmap and measures that will show whether it is working. Some organizations also include a short list of things the strategy will not do, which helps teams decline requests that fall outside it.

IT Strategy and Business Strategy

An IT strategy should follow from the business strategy, not exist alongside it. Every major technology priority should trace back to a business goal.

In many organizations technology also shapes business strategy, by creating new products, channels or ways of working. In these cases the two strategies are developed together.

Some organizations no longer write a separate IT strategy, instead treating technology as part of an overall business or digital strategy. The same questions still need answers, whatever the document is called.

Importance of IT Strategy in Enterprise Architecture

An IT strategy gives enterprise architecture its direction. Target architectures and roadmaps are only useful if they support goals that leaders have agreed.

It helps allocate limited budgets. By setting priorities, the strategy makes it easier to fund the projects that matter most and to stop or defer others. Without it, funding tends to be spread thinly across many projects, few of which receive enough to succeed.

It also provides continuity. Technology decisions often have effects that last a decade or more, and a stated strategy helps successive leaders and teams make consistent choices.

Balancing Run and Change

Most IT budgets are dominated by the cost of running existing systems. An IT strategy should set a deliberate balance between running the business and changing it.

Frameworks such as run, grow, transform help classify spending and track whether the balance is moving in the intended direction.

Reducing run costs through application rationalization, automation and better sourcing is often the main way to fund new initiatives without increasing the total budget. Strategies that ignore run costs usually struggle to find money for their ambitions.

Common Weaknesses

Many IT strategies are lists of projects rather than choices. A strategy that tries to do everything gives no guidance on priorities.

Others are written once and then ignored, because they are not connected to budgets, portfolio decisions or performance measures. Within a year, actual spending can drift far from the stated priorities without anyone noticing.

Strategies that describe technology without explaining business outcomes struggle to win support from business leaders who must fund and adopt the changes. Clear links to revenue, cost, risk or customer measures make the case far stronger.