The multitude of enterprise software options available in the market today overwhelms most organizations. They often realize they need to go back to the drawing board and define an IT strategy so they can narrow down their choices.
Not only do organizations need to decide between ERP vendors, but they need to weigh the costs and benefits of different deployment options, integration strategies and digital technologies, like IoT and artificial intelligence.
Do you already have an IT strategy? It doesn’t hurt to reevaluate it to determine if it’s really meeting your organization’s needs, both now and in the future. Here are five signs you need to redefine your IT strategy:
1. Your enterprise technology hasn’t been updated in the last decade. Most organizations replace their ERP systems every ten years – at minimum. If you’re not replacing your enterprise technology every decade or so, you’re falling behind your competition. While it’s wise to make the most out of your current IT investments, you should also be able to discern when systems become outdated.
2. Your IT strategy isn’t aligned with your overall business strategy. When CIOs decide to implement new ERP software, they have good intentions, but sometimes, those intentions aren’t aligned with the organization’s overall strategy. For example, an organization may want to reduce capital costs, but the CIO wants to implement a SaaS solution instead of an on-premise solution. Before selecting ERP software, you should first define your strategic objectives, and then define specific IT objectives that support those overarching business goals.
3. You haven’t considered all the strategic options. You may think an IT strategy entails a full-scale ERP implementation. However, ERP software is just one of many technology solutions that can improve your operations. Digital technology such as IoT, artificial intelligence and business intelligence are also viable options.
4. You don’t have an actionable plan for replacing your enterprise technology. You may have completed steps 1 through 3, but your IT strategy is useless without an actionable, strategic plan. This plan should include a multi-year roadmap for how you’ll achieve your organizational vision.
5. Your IT strategy doesn’t meet your organization’s ROI thresholds. Your IT strategy should fit the cost, benefit and risk tolerances defined by your organization. For example, let’s say you’re a risk-adverse organization in a mature industry with very low margins. Do you really want to implement a high-risk, high-cost solution?
How to Develop an IT Strategy
1. Define your company’s overall strategy. If you don’t currently have a well-defined company strategy, you should define and document a vision for where the organization is headed in terms of growth and transformation. This should influence how you move forward with your IT strategy.
2. Define IT’s role and purpose in your organization. Does your organization view IT as a commodity or as a competitive differentiator that provides unique value to your customers? The answer to this question will lead to one of two decisions: outsourcing IT functions or building IT competencies in house. This will also determine the types of technology you consider – cloud, SaaS, on-premise, best-of-breed, etc.
3. Assess your IT department’s competencies. If your IT department is sophisticated, your organization may be equipped to handle a best-of-breed, on-premise ERP system. A less sophisticated IT department may want to implement a SaaS ERP system instead. When assessing your competencies, be sure to consider your overall physical infrastructure.
4. Consider all your digital transformation options. The enterprise technology industry has evolved from just a few large ERP vendors to several vendors offering a variety of point solutions. Instead of implementing a single ERP system, you can now choose from industry-specific solutions and point solutions focused on certain functions. Aside from technology, you can transform your organization by reengineering your business processes or reimagining your business model.
5. Develop a long-term strategy. Some organizations rush into a short-term technology decision without considering the long-term impacts. For example, if you implement a CRM system without considering how it fits into your long-term strategy, you may find it doesn’t integrate well with certain ERP systems. This limits your options when you decide to implement other technologies. Be sure to have a long-term view even when embarking on short-term initiatives.
6. Consider the non-technical aspects of your digital strategy. Many organizations focus on the technical aspects of their IT strategies without considering the people and process aspects. Your IT strategy should address business process reengineering and organizational change management – both of which will help you realize the full benefits of digital transformation.
Every Organization Needs an IT Strategy
Defining an IT strategy before selecting an ERP system ensures your technology is aligned with your organizational vision. While this may sound like an expensive ordeal, you don’t have to be a large, billion-dollar organization to afford the luxury of an IT strategy – you just need to find the right consulting partner.