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To make fruitful use of technology, we need to align our technology
thinking with underlying business plans. A technology strategy can drive this
alignment, providing it properly integrates business and
technology. We have developed a conceptual framework to help us with this
based on recognizing common aspects of strategic initiatives, leading
us to identify eleven prevalent strategic directions. For each
direction we outline the key business questions that they raise, and the
investigations that we need to do to explore the technology implications.
We’ve found that this framework leads not just to more effective technology
strategies, but allows technology to inform business thinking, developing new
08 August 2023
How do you create a technology strategy? The conventional approach suggests you start with your current state, determine your future state and build the roadmap to get there. But there is a nuance in that approach that isn’t quite right. What often results from following this is a big wish list of all the things that could be done. A powerful technology strategy is as much about what is left out as it is about what is included. Furthermore, technology strategies are often created in isolation, separate from business or product strategies. They are commonly created after the business strategy has been agreed upon. The result being infeasible business strategies which can not be achieved without considerable cost or time.
The challenges with this conventional approach shouldn’t be too surprising. After all, if you were to build a health strategy your doctor wouldn’t start with a full body scan and tell you how to fix all the symptoms. They would start with your health objectives and the outcomes that you are after, then investigate if your body was capable of achieving your goals, and if not put a remediation plan in place.
I would like to challenge this conventional approach to creating technology strategies, and offer up a different way to create yours. Start with the objectives and outcomes of your organisation. As the organisation considers the different strategic directions that they could traverse to achieve the goals, follow specific lines of inquiry to investigate if your current environment is capable of achieving the proposed strategic direction. The recommendations that result from the different investigations inform the feasibility of that direction, and can be used to formulate a remediation plan. Additionally, because technology is considered as the business strategy is being formed, technology itself can be the driving force behind ideas for new revenue streams. In doing so, your technology strategy will be integrated with the business strategy because it is born together with the business strategy.
In this article, we look at eleven prevalent strategic directions that organisations traverse, grouped into four broad categories.
|Growing the business||Expand to complementary products|
|Expand to new markets or regions|
|Expand customer segments|
|Building a strong foundation||Accelerate time to value with improved efficiency and productivity.|
|Increase customer satisfaction with improved product quality|
|Reduce Cost and Minimize Operational Risk|
|Enhanced competitive advantage by enabling data driven decision making|
|Supporting the people||Culture|
|Internal and back office systems|
|Responding to the ever changing future||Emerging technologies and market trends|
For each strategic direction identified, we provide examples of the lines of inquiry that you can use to investigate how feasible the strategic direction is. We also provide activities that you can do to help answer the lines of inquiry. Many activities span across many lines of inquiry, which allow you to concentrate your efforts into the synthesis of the activity rather than the activity itself.
Here’s the format we use for these directions:
This is the implication on technology for this strategic direction
Description of the investigation
Some questions to ask that will guide your investigation
A description of things to look out for
Activities: Activities that may help the investigation
More questions to ask that will guide your investigation
A description of things to look out for
Activities: Activities that may help the investigation
By selecting the relevant line of inquiry, and using the example questions as a springboard to guide your investigation, you will be one the right tack to creating your own integrated business and technology strategy.
There are just a few key avenues for business growth:
Organizations typically focus on one or two of these growth strategies at a time, while maintaining and growing their existing business. This is often achieved through organic growth, but at times, the growth is accelerated through mergers and acquisitions, joint ventures or other strategic alliances (ie inorganic growth), which accelerates value realization along one or more of these growth strategies.
Offering new products to your customers could result in significant changes throughout your systems, from the customer buying experience to shared-service backend systems such as payments and invoicing, distribution and warehouse management, and business reporting. How different the product is from your existing product suite will impact how large the change needs to be.
The representation of product types in the code base can have a big effect on how easy it is to add new ones or adjust the categories as new products appear.
How are product categories represented in systems?
The representation of product types in the code base can have a big effect on how easy it is to add new ones or adjust the categories as new products appear. Look for assumptions in other systems for the product line information. Product codes may be hard-coded elsewhere, some systems may only assume certain kinds of product. Look for changes throughout the stack, from the UI as you offer different customer experiences and navigation through your site, to new entries in your domain model and potentially new table structures in your database.
Activities: Code inspection • Database inspection • Domain modeling
Business processes may not be suited for future products under consideration. As a result, expanding into complementary products might necessitate larger system changes. If the blast radius is wide, how easy is it to make large changes through the system?
How many other systems need to change if a product change occurs in one system?
Business processes may not be suited for future products under consideration. Changes may be need to be made to shared-service back-end systems such as payment and invoicing systems, distribution and warehouse management systems and business reporting
Activities: Business process mapping
As you add complementary products to your offering, you will need to identify which capabilities should be shared across the products and what special treatment is required to shared capabilities. Moving toward a digital platform architecture will allow you to reuse shared capabilities if you expose them via APIs.
What capabilities are shared across product types? How do shared capabilities need to change to support new products?
Sharing capabilities across products allows you to focus on the value added differentiators of the new product. Consolidating the shared capabilities improves speed to market. However, be watchful over mandating the sharing of capabilities where the processes differ between product offerings as it may result in needless complication and debt within the capability.
Activities: Business capability mapping • Business process map
Should you build or buy the capability? Are there newer products on the market that can replace the undifferentiated capabilities that require significant change?
Capabilities that don’t add to product differentiation can safely be assigned to packaged software, either installed or SaaS. Developing a list of such capabilities can drive considering current vendor offerings. Changes in product line can help clarify what capabilities are important to product differentiation. Re-examine the vendors offering suitable products, both due to changes over time and from reevaluating differentiating factors.
Activities: Business capability mapping • Vendor product scan • Operating Model Quadrant from Enterprise Architecture as Strategy • Build vs buy analysis
As you expand into new geographies, you will be faced with the challenges of running a global platform that needs to cater for regional differences brought about by different local integration’s, differing buyer personas, and different processes. Some capabilities will need to be provided in a global platform, others need to have flexibility to allow for these regional differences.
You will also need to contend with government regulation requirements such as GDPR, data sovereignty and regulatory compliance like SOX and APRA. This impacts where your data is processed and where it is stored. It also might introduce new features to handle compliance requirements.
As you expand into new geographies, you will be faced with the challenges of running a global platform that needs to cater for regional differences brought about by different local integrations, differing buyer personas, different processes. Some capabilities will need to be provided in a global platform, others need to have flexibility to allow for these regional differences.
How does your platform support different capabilities? How do they change across the markets?
Identify the capabilities that can be diversified, replicated, unified or coordinated across the markets. Diversified and replicated capabilities can exist for each market, where you want to look to offering unified capabilities through a global platform.
Activities: Business capability mapping • Operating Model Quadrant from Enterprise Architecture as Strategy
You may need to contend with government regulation requirements such as GDPR, data sovereignty and regulatory compliance like SOX and APRA. This impacts where your data is processed and where it is stored. It also might introduce new features to handle compliance requirements.
How easy is it to replicate your infrastructure?Do you have one-click deployment of your infrastructure-as-code?
If you need to host your infrastructure in the new market due to regulatory, compliance or even performance reasons, you need to make deployment repeatable across your systems. This reduces inconsistencies across regions, which leads to high triage times when a fault occurs. It’s too common for organizations to set up separate teams to customize and operate each region, resulting in configuration drift / snowflakes as code, and manual maintenance. Equal emphasis needs to go to maintenance – cost, staff effort, and results (things are patched, consistent, old versions retired, fixes of all sizes rolled out quickly and comprehensively). The running costs to scale geographically becomes near-linear, and improvements and fixes are not distributed quickly or consistently.
Activities: Deployment strategy • Infrastructure as code
Does your infrastructure run in data centers or the cloud? How long will it take to commission a new data center in a new country?
Commissioning new data centers in new markets in order to be compliant may take a long time. If there is no repeatability in the process, and it takes a while to commission, you could consider a move to the cloud. Cloud-based infrastructure will be easier to adhere to data sovereignty requirements in new markets but you may need to look at ways to partition your database to be compliant.
Activities: Infrastructure architecture diagrams • Data storage
How do your third-party systems handle data? Will they make you non-compliant?
Look for any third-party systems which make you non-compliant by passing regulated information outside the country. This might include an examination of OLAs and SLAs.
Activities: 3rd party inspection, review of OLAs and SLAs
Expanding into new markets may introduce internationalisation changes such as languages, time, money and units. There may also be taxes to consider, and new timezone or daylight saving changes to be factored into.
How easy is it to translate language files and unit formats?
Look for UI frameworks that enable this by default. Retrofitting internationalisation into UIs can be a tiresome process. Content length can change across languages. Look for dynamic UI elements that can accommodate longer or shorter text elements. If the UI framework has already been configured for translation files, a nice experiment to run is to change all translations to something small like “XXX”, and to something very long to see how the page responds.
Activities: Code inspection
How easy is it to introduce new tax calculations, or date/time conversions? What assumptions does the code make about the units or the currency it uses?
Look for well factored code bases that isolate changes.
Activities: Code inspection
What is the process to translate the content? How does this process impact continuous delivery?
Will you need to add time into your development process to allow for an agency to translate your files? This extra wait time can affect your small feedback loops. Alternatively, will you need to introduce the translation process as part of the design process?
Activities: Path to production • Value stream mapping