Seventeen years ago, researchers at IBM concluded that the anticipated value of Information Technology (IT) investment was not being realized because there was a lack of alignment between business and IT strategy.
“IT is transcending its traditional ‘back office’ role and is evolving toward a “strategic” role with the potential not only to support chosen business strategies, but also to shape new business strategies. Yet, there is increasing concern that the anticipated value of the investment in IT is not being achieved … We argue that the inability to realize value from IT investments is, in part, due to the lack of alignment between the business and IT strategies of organizations. We view strategy as involving both formulation (decisions pertaining to competitive, product-market choices) and implementation (choice that pertain to the structure and capabilities of the firm to execute its product-market choices).” — IBM Systems Journal, March, 1993; by John C. Henderson, N. Venkatraman
Within the nonprofit sector, the inability to realize IT value is due to the low priority that nonprofit organizations place on IT strategy. Simply put, IT is not considered to be a strategic asset within the nonprofit sector and the staff that support the organization’s IT functions are rarely involved in the organization’s strategic planning process.
Realizing IT as a Strategic Asset
As the quote above suggests, technology within the nonprofit sector has grown beyond the back office to play a more strategic role within the organization. It has become essential to the successful implementation of strategies that facilitate and improve stakeholder and constituent outreach, data collection, information management, and outcome reporting, yet IT is still not considered to be a strategic asset within the organization. Technology influences the way nonprofit organizations govern themselves, structure themselves, communicate, build capacity, and scale their operations, yet IT is often an afterthought.
In today’s economy, there is a great need to help nonprofits control cost, minimize risk, and accelerate revenue growth. While there are a number of ways to accomplish these objectives, very few nonprofits have a plan that explicitly states the role technology can play in achieving these objectives. As Business IT consultants, we believe that many, if not all of the organization’s strategic initiatives can be enhanced by developing an understanding for what IT can do, setting the appropriate expectations about what IT can accomplish, and executing a strategic plan that is enabled by, and aligned with, the organization’s IT portfolio.
As Business IT consultants, we help organizations understand the possibilities of using IT to effectively achieve its mission, but we also help set appropriate expectations for what IT can do given the organization’s constraints. Yet between the possibilities and the expectations, we believe there is an extraordinary opportunity to help nonprofit organizations successfully execute desirable changes and enhance the capacity for future results by making IT a greater priority within the strategic planning process.
Simultaneous Planning and Doing
Our experience suggests that strategic success demands a simultaneous effort toward planning and doing, and successful strategic outcomes are best achieved when those responsible for the execution are also part of the formulation process. In most nonprofit organizations, IT is responsible for a great deal of the “doing” when implementing the organization’s strategy, but it does not have a prominent role within the strategic planning process. IT can inform strategy formulation during the planning process and begin to align the organization’s information management capabilities with the organization’s strategic objectives.
IT needs to have a more prominent role within the strategic planning process so that it can to help the organization move from strategic planning to strategic management.
This conversation will continue later this month in Part II which details the role of technology in strategic management. Rob Jackson is a Senior Consultant with Community IT Innovators.