By Brickendon Director Geoff Cooper
Strategy is important regardless of whatever area of financial services you’re in, but it is frequently not well thought through, particularly when it comes to technology.
An unclear strategy can lead to all sorts of problems, including misinterpretation and the inefficient deployment of resources. An incommunicable strategy will cause valuable time and resources to be wasted on translation and clarification, and a strategy that is not business-aligned, will fail to deliver the desired results. So why then is technology strategy often ignored? Most likely due to innovation and a failure to embrace the changes it brings.
Innovation is fuelling the evolution of the technology world, not only driving change in how technology is delivered, but also changing the careers, roles, and responsibilities of the people who deliver it. Developments and processes are often so nascent that strategy goes out of the window. Tried and tested frameworks, processes and methodologies for devising, executing and governing business strategy are ignored and Chief Technology Officers (CTO), who have often followed an unconventional path to get to the pinnacle of their career, fail to acknowledge the importance of proper planning, execution and governance.
Formulation of Strategy
So how should this issue be addressed? There is no doubt that a clear, communicable, business-aligned vision of the future state is paramount to the successful execution of technological strategic plans. Corralling a broad set of potentially conflicting business requirements, technological innovation, people leadership, financial justification and risk management is no easy task. Transforming that into a strategic plan which all stakeholders will sign up to is even more difficult.
Technology must be run like a business, with customers, product development, marketing, finance and operations all combining to make a successful strategy. In the same way, strategic business analysis tools, such as SWOT Analysis or Porter’s 5 Forces and Value Chain can be used to help formulate the technology strategy.
The output from such tools enables the management team to understand the current state and key initiatives to be highlighted and prioritised. Ultimately, the management team needs to formulate a plan with options that are not overly complicated but can adapt appropriately within a given time horizon.
For a strategy to be clear, the end-point or vision also needs to be clear. Whilst it’s distillation may be a complex process, a strategic vision that is clear, easy to understand and easily communicable across the organisation is far more likely to succeed. Sometimes, vision and mission statements are confused. Simply put, vision is the future state and mission guides how to get there.
There are a series of strategic influences such as business alignment, innovation, architecture, communication and values, which can significantly impact the implementation of any strategy.
A strategic vision aligned around cost leadership and product differentiation with appropriate and clear goals makes a healthier business. As already mentioned, innovation is a critical component of any successful strategy and given that technologists generally strive to
find new ways of doing things, new processes or products will regularly feature in evaluations of the strategy and strategic progress. Innovation is also a disruptor and its impact should not be ignored. Architecture, and more specifically Enterprise Architecture (EA), also takes a leading role in shaping the future state of the business. With the increased dependency on digital platforms that support the customer experience end-to-end, EA helps define how people, processes, information and technology will be organised to support the future state.
Moreover, strategic progress and success (or failure) must be communicated if the message is to be believed and continuously supported. Too often a grand plan is communicated without subsequent updates.
Strategy into Execution
Having decided on the optimal business strategy, the focus pivots to transforming it into an executable plan. Some helpful techniques to assist with documenting and communicating the plan include workshops, roadmaps and the Agile visualisation tool Kanban.
Other useful facilitators are SAFe, a framework to enable the delivery of Agile practices in larger enterprises, and LeSS, a software delivery practice that enables many teams working on one product to deliver using Scrum methods. Portfolio & Programme Management (PPM) execution methods also help support strategic execution when roadmaps and dependencies are clear. The CTO will need to decide how invasive any new methodology needs to be and how it will integrate with existing methodologies across the wider enterprise.
One advantage of traditional methods of PPM is that responsibility for delivery is clear. In newer frameworks such as SAFe, responsibility is delegated across the team, which requires a fundamental shift in trust and the way teams work. This is the same for DevOps, a progeny of agile development practices, which as well as encouraging a more collaborative approach also reduces running costs and produces a more industrial, scalable application.
Execution guided by Governance
Governance basically provides the organisation with a conscience. When designed, measured and executed well, it can provide valuable inputs into the strategic execution. When not fit-for-purpose, it can create tension, slow down delivery and be expensive.
Running technology like a business implies the existence of financial management and controls, which enable the organisation to understand the cost and value of any technology stream. Financial management provides transparency and enables effective decision-making, prioritisation, change and accountability. Without it, firms will make the wrong choices, focus on the wrong things and ultimately lose money.
Some options for optimising costs are to create shared services, standardise procedures, use the cloud, adopt zero-based budgeting and where appropriate, re-evaluate the location strategy.
Although not always recognised, location strategy is an important part of the overall technology strategy. Getting the right people at the right price at the right time in the right location can save businesses time and money. Increased cultural diversity also brings new ideas to the team and can be particularly beneficial in a creative environment such as application development.
It is however not without its challenges. Roles and responsibilities (particularly in global coverage situations) need to be explicitly defined to avoid gaps or expensive overlaps or damage to the customer experience.
As we have seen, technology strategy is not something to be ignored. Having a business-aligned, well-communicated framework in which to develop the organisation’s technology strategy can be the difference between thriving or just surviving. After all, innovation is here to stay, and failing to embrace it and the benefits it brings, is simply not an option. Now is the time to take technology strategy seriously.