Feeling overwhelmed by the sheer number of enterprise software solutions on the market today? You can shorten the list and save your sanity by building an IT strategy.
The right strategy will help you sift through the options to reveal the best ERP vendor for your needs. You can also rely on your strategy when weighing the pros and cons of different integration strategies, deployment options, and advanced technologies.
Not sure where to begin? Today, we’re breaking down the components of a solid IT strategy, as well as actionable steps to help you get started.
What is an IT Strategy?
An IT strategy is a roadmap that guides a company’s technology investments. It defines an organization’s short-term and long-term goals and the ways it plans to use IT to achieve them.
Without such a blueprint, it can be challenging to understand exactly how technology should be used to support your business. As a result, you might be tempted to invest in a new ERP solution simply because of the bells and whistles or the industry hype. Then, you’ll expend time, money, and resources implementing it only to realize it doesn’t meet your needs.
When an IT strategy is done right, the result is the alignment of business and IT capabilities, where both functions drive one another. Put simply, this means that tech budgets are spent on activities that create value for the business.
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Is it Time to Redefine Your IT Strategy?
Chances are that your organization is already working with some type of IT strategy. However, unless it’s fresh, you might be following an outdated or unclear roadmap.
An IT strategy is an ongoing process, not a point-in-time event. It should evolve as your company does. For this reason, it requires incremental changes that ensure it’s still serving your business and helping you reach your goals.
Here are a few signs that your strategy needs a refresh:
1. You’re Working With Old Enterprise Technology
Still rocking the same enterprise software you implemented ten years ago? If so, your IT team is likely fielding a litany of support and troubleshooting requests.
Even the sleekest systems become obsolete as time goes on, so it’s important to replace and upgrade yours when it has run its course.
Most organizations do a major IT overhaul every ten years or so. If you’re not replacing your enterprise technology every decade, you can rest assured that your competition is.
There’s no better time than now to determine if it’s time to replace your legacy systems with more modern solutions.
2. Your IT Strategy and Business Strategy Aren’t Aligned
When a CIO introduces the idea of new ERP software, their intentions are usually good. However, sometimes, those intentions aren’t aligned with the organization’s goals.
For example, an organization may want to reduce capital costs, while the CIO wants to implement a SaaS solution instead of an on-premise solution.
The way to solve this challenge? Start by defining your strategic business objectives. Then, work with your CIO to define IT objectives that support those goals.
3. You Haven’t Considered Strategic Options Beyond ERP
While an ERP implementation is one way to execute your IT strategy, it doesn’t have to be the only option you consider.
Instead of ERP, your company might be better suited for a different type of enterprise technology, such as HCM or CRM software.
Before jumping into a project, take the time to understand your current and future state. Map your existing business processes and look for ways to reengineer or improve them to solve pain points and improve performance. Then, decide what type of technology you need to implement to enable this strategy.
4. There’s No Actionable Plan
Without an actionable IT roadmap in place, you might be stuck with your legacy systems for decades. You need an actionable plan that team members can follow as they make strategic decisions.
When creating this roadmap, be sure to involve key stakeholders and business leaders. Together, you should develop a multi-year plan that includes actionable steps for how IT should be used to achieve the organizational vision.
5. Your IT Strategy Doesn’t Meet Your Organization’s ROI Thresholds
The philosopher Socrates famously summed up his philosophical commandments with one mantra: “Know thyself”. When it comes to IT investments, this advice rings true. Before you can move forward with a strategy, you must know your organization from the inside out.
What type of costs are you comfortable taking on? What’s your risk tolerance level?
For example, if you’re a risk-averse organization in a mature industry with very low margins, then it’s poor business sense to implement a high-risk, high-cost solution.
Once you know the limits you must operate within, you can create a clearer, better-defined strategy.
7 Steps for Developing an IT Strategy
Creating a strategy from scratch can be an overwhelming prospect, so it’s helpful to break it into small steps that you can approach in sequential order.
1. Define Your Overall Business Strategy
Before you spend too much time on your IT strategy, make sure you have a basic business strategy in place, first. This is the roadmap that defines where your business is headed and how you’ll get there.
Once you create this plan, it’s easier to see how IT investments fit into the bigger picture. Starting with IT is putting the cart before the horse – you might make decisions that don’t align with your long-term goals.
2. Understand the Role of Your IT Department
What role does IT play in your organization? There isn’t a right or wrong answer, but you need to know where you stand.
In some companies, IT teams are viewed as a commodity. In others, they’re a mission-critical competitive differentiator that’s required to provide the level of service that customers expect.
Depending on your situation, you might choose to outsource your IT functions to a third-party provider, or you might decide to retain those competencies in-house. This decision also will affect the type of technology you consider.
3. Assess Your IT Department’s Competencies
Consider the level of IT expertise your IT team possesses, as well as how your company’s physical infrastructure is set up.
If your IT department is highly sophisticated, it might be able to handle an on-premise, best-of-breed ERP strategy. However, if your team is less sophisticated, a software-as-a-service (SaaS) ERP system may be a better fit.
Failing to consider how much your employees can realistically bear could mean overloading them with complex systems that they aren’t prepared to manage.
4. Consider All Your Options
Just a few years ago, businesses could only choose from a few large ERP vendors. This usually meant agreeing to a solution that didn’t fully meet your needs, which led to expensive and time-consuming customizations.
Now, however, you have almost too many options. In addition to basic ERP platforms, you have a variety of point solutions focused on certain functions and industries.
Don’t limit yourself to a full ERP system, and don’t limit yourself to technological solutions alone. You may want to simply reengineer your business processes or redesign your business model.
5. Think Long Term
It’s easy to get caught up in the excitement of an ERP project and rush into making a technology decision that benefits your company in the short term but doesn’t exactly set it up for long-term success.
As you develop your IT strategy, it’s best to take a big-picture perspective. One critical part of this is making sure the system you select seamlessly integrates with your existing systems.
For instance, some CRM platforms don’t work well with certain ERP systems. If you plan to eventually install both types of technology, it’s smart to be aware of the limitations before locking yourself into a particular solution.
6. Don’t Forget Non-Technical Aspects
One of the biggest reasons for ERP failure is that business leaders hyper-focus on the technical aspects without giving enough thought to the people and processes affected by the change.
Organizational change management focuses on the reasons employees push back against new technology and looks for ways to mitigate this risk. From end-user training to a clear communication plan, there are many ways business leaders can ramp up interest around a change and encourage user adoption.
Unless change management is part of your IT strategy, you could implement the top ERP system on the market and still fail to meet your business goals. As important as it is to choose the right technology, it’s even more important to empower your workforce to use it.
At the same time, don’t underestimate the importance of business process reengineering. Holding rigidly to your familiar workflows could be a major downfall if the system you’re implementing doesn’t fit within those parameters.
Rather than developing an IT strategy focused just on technology, be sure to also define a plan for tackling the people and process aspects of your IT journey.
7. Lean on Your IT Strategy When Confronted With Vendor Sales Tactics
During ERP selection, don’t forget that vendors are more apt to offer you a solution that benefits them rather than one that works for you. Many software sales reps push hard to sell their ERP, eCommerce, CRM, or warehouse management systems without considering if they’re a good fit for your needs.
This is why it’s important to get an unbiased perspective as you sort through your software options. Otherwise, you could be swayed by a savvy vendor who offers you advanced technologies, none of which will alleviate your immediate pain points.
Every Organization Needs an IT Strategy
You wouldn’t set off on a road trip without using a map, so why would you undergo a massive, enterprise-wide project without first setting your course?
The key to a successful ERP implementation is ensuring that every IT decision you make ties back to your organizational capabilities, risk tolerance, and goals.
It can be hard to maintain this long-term perspective when you’re focusing on the day-to-day operations that keep your business afloat. Our ERP consulting team can help you take a step back and develop a strategy that ensures today’s decisions contribute to the organization you want to become. Contact us below for a free consultation.