Every IT Should Have a Strategic Plan

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From the course by CentraleSupélec

Two Speed IT: How Companies Can Surf the Digital Wave, a BCG Perspective

123 ratings

CentraleSupélec

Two Speed IT: How Companies Can Surf the Digital Wave, a BCG Perspective

123 ratings

Transform or disappear, the Darwinism of IT: In order to adapt to a digital world, a two-speed IT is needed. Despite the importance of IT in today’s digital world, Chief Information Officers (CIOs) often struggle to get their voices heard by executive committees. Faced with this challenge, IT departments are being forced to reinvent themselves to adapt their companies to the fast paced evolution of technology. The Boston Consulting Group has developed a business approach that allows IT to shed off its appearance of a heavy cost center and to adopt a new, more realistic persona as a quality service provider, partnering with users and the management. Would you be a professional, a student in engineering, a student in a business schools or would you just be interested in digital transformation and its implications on IT, Learn with three BCG experts why and how to manage an IT department as a business in order to transform a company and adapt it to a digital world. Join the conversation: #2SpeedIT

From the lesson

Steer the Balance Sheet

The first new role of the CIO in the digital world is to manage both the P&L and the balance sheet to position IT as a business partner.

Introduction 2:11

Every IT Should Have a Strategic Plan5:22

Measure How Much IT Can Spend With the Income Statement4:06

Determine Timeframes With the Balance Sheet2:46

Understand the System Dynamics6:31

Manage Uncertainty6:27

Key Takeaways2:13

Meet the Instructors

Antoine Gourévitch
Senior Partner and Managing Director at The Boston Consulting Group
Vanessa Lyon
Partner and Managing Director at The Boston Consulting Group
Eric Baudson
Managing Director at The Boston Consulting Group

[MUSIC]

The fact that every IT should have

a Strategic Plan may be of use to some of you.

A bit of to others.

Now the question is, what is a Strategy Plan?

To illustrate, let me tell you a story.

In a company, the new boss or CEO has been appointed.

So person was from R and D.

He's been head of R and D for a long time.

Extremely smart person.

He decided to go to the Silicon Valley with his team

to have a tour to understand what was possible.

And at the end of the tour, the organizer to the seminar

in a very nice place in the valley where it is said to his team,

let's brainstorm and think about the strategy plan of fighting.

Everyone was thrilled now we're gonna build a plan and the birth of IT.

So both of the says ask a few questions.

First question was, how much do we spend on IT?

The answer from the team was simple, we spend one billion Euro.

The second question of the new was.

Is it enough?

Or is it too much?

This looks like a simple question and an easy one.

Actually it's one of the most difficult I know about IT.

What is the right amount of spending?

Because how to answer this question?

You could think, let's do benchmark.

We spend 1.5%.

How does the competition spend?

How much do they spend?

Between those ads, comparing with the competition is a bit difficult.

It depends on the technology cycle.

It depends on the product cycle.

So it's hard to compare.

So starting with that we begin to add new questions.

Another question that could help answer this one was,

how much of this billion euros will be useful to transform business?

The answer was 10%, 100 millions euros.

The next question was of use, and I'm sure you can guess what it is.

The new boss said ok, what do you do with the $900 million?

How do you use it?

And the answer was, with the $900 million we run the IT.

IE we buy PCs, we buy servers we run applications, we run customer service.

This is not just for running the patients.

Is it the right amount?

That was another question.

Then, the [INAUDIBLE] two things.

I will give you two inputs,

based on the strategies accompanied First input is a business strategy.

The main goal of the company was to increase the number of cars

they were selling by 50% in new countries.

New countries like China, India, Brazil, and Russia, that was one of the goal.

Second goal was, if you want to maintain the economical equation of the company,

1.5% for IT is too much.

You have to go for 1.2%.

So these were the two inputs of the two constraints of the strategy plan for IT.

No more cost than 1.2% I'm going for

50% percent of increase in car production and car sales in new countries.

Based on these two inputs, then it was clear what strategic plan was.

A strategic plan was to do three things.

One is, going with a business goal.

Building that would support the new country, sans the government.

The second ones, going also for the whole company customer satisfaction.

When you increase car sales and

cost productivity you should make sure people are happy with your IT system.

So you have to have a plan about increasing customer satisfaction.

And the last one was about costs.

How do you go from 1.5% to 1.2%?

Some of it will go with the growth after but some of it will also need to come

from productivity increase, increasing productivity in unit cost.

Unit cost of designing application, Unit cost of producing services and

this was a plan and you can see that the plan is quite comprehensive.

It starts with a business goal, it takes into account IT constraints and

then produces a plan that can be explained to everyone.

Everyone within the IT department and everyone outside the IT department.

All the business lines.

And the executive committee.

It was the first time that this company when the plan was presented that

the executive committee members said now we understand what that is about and

what you want to do.

Having a plan is extremely important

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