What Is a Technology Strategy?

First just to be clear, there is only one strategy in business.

All types of strategies that you may have come across within business are just part of the one and only strategy. So, marketing strategy, sales strategy, IT strategy, finance strategy, supply chain strategy, HR strategy, etc. are all examples of strategies that are part of the business strategy. And so yes, technology strategy is also just another part of the single strategy for business.

According to standard English dictionary strategy is the way or an approach in which a business, government, or other organization carefully plans its actions over a period to improve its position and achieve what it wants (i.e., its goals and objectives). The sole purpose of the business strategy is to maximize value to the stakeholders of the business, that is, increase the value for their customers, partners/suppliers, employees, and shareholders.

Nowadays with the deluge of new technologies and ease of their adoption, most businesses are creating business strategies to leverage the new technologies to change or even transform their business models to provide increasingly superior products (goods and services). There are many names coined in business literature for this trend – digitalization, digital modernization, digital business strategies, etc.

Read the articles “Strategies for Digital Business” – PART I and PART II for some examples of the leading new business strategies that leverage the new tech.

In all the examples of latest technology-based strategic trends the business sets goals to accomplish very specific objectives that require adoption of combination of new technologies. The planners must identify the right new business capabilities that leverage the new technologies to provide new and improved ways of creating products.

Note that, in essence a capability is the ability of the business to perform a business function. So a capability is described with people with the right skills performing various activities by following a specific process to deliver some service to the stakeholders using the right information and technology.

The business capabilities are of the following two types –

1. Operational: The capabilities that a business has supporting various business functions that are necessary for the business to conduct all its core operations. These capabilities may utilize variety of technological solutions that provide support to achieving the operational tasks more effectively and efficiently.
2. Development: The capabilities that enable the business to build (and /or buy) the new solutions; typically, these capabilities belong under various support organizations. Delivery of technology solutions clearly fall under IT organizations.

The operational capabilities allow the business to differentiate itself in some specific ways with adoption of the new tech. The development capabilities are technical capabilities required within IT organizations to develop and maintain the new technology-based solutions that support products (goods and services).

The technique applied for identifying the two types of capabilities by the planners is called capability-based planning and usually the people involved in this activity have background in business strategy planning and enterprise / business architecture. The technique involves identification of various capabilities necessary to meet the stated objectives based on analyzing real business scenarios. Capability-based planning is an important architecture topic and will be the focus of future article, so stay tuned.

Businesses ought to be following the capability-based planning but unfortunately most do not. Except a few mature businesses, most do not seem to be aware of this technique or do not have the dedicated resources who can apply it during strategic planning process.

This should give the enterprise and business architects out there a hint to do something about this issue, for example, consider socializing the notion of business capability models and capability-based planning and encourage and evangelize their use within the business.

Some businesses usually reach out to external business consultants and have them perform business strategy planning on their behalf and develop their target business and operating models. Unfortunately, oftentimes the details of the actual approach taken by the consultants and the outcomes of assessments mostly remain hidden from IT and architecture folks, due to various reasons.

You may also want to read the article – “The Business Model and Operating Model, Why Architects Must Care”.

Anyway, back to the original question,

What exactly is a technology strategy? and is it same as the IT strategy?

Well, the answer is these are two different parts of the overall business strategy. Most people conflate the two, as there are some similarities, however, the two address very different objectives.

The technology strategy focuses on identifying the right business capabilities that leverage one or many ‘fit for purpose’ new and innovative digital technologies that can drive intended changes in the business model for transforming the business to be more efficient and be able to create value in form of new products and provide better customer experience.?

The IT strategy, on the other hand, focuses on how IT organizations will get ready by standing up the right technical capabilities within the IT organizations to build and/or buy the necessary solutions based on the foundational new technologies identified in the technology strategy and be able to maintain them which are crucial for maintaining business continuity and smooth operations.

Technology strategy consists of description of the operational capabilities that are activated by operational value streams. IT strategy consists of the development capabilities that are activated by development value streams. The operational business capabilities contribute to the development of target business and operating models for various core business units; the development capabilities form the core of the target IT operating model design, together all the target operating models and their implementation roadmap make up the overall strategy and strategic plan for the business for the given strategic period.

Ok, so who is responsible for technology strategy?

In recent days, I published a poll on LinkedIn asking members about who is responsible for the technology strategy in their organization. I should have first clarified the difference between the technology strategy and IT strategy, oh well. Although the poll was still active as of writing of this article, the following results are statistically good indicator of people’s perspective regarding the reality in their organizations. I am not too certain if the people answering the question conflated IT strategy with technology strategy, which is highly likely but regardless, the answers are not that much skewed and should still provide good insight into the level of maturity of their IT and architecture organizations.?

The above results are not too surprising. Given that the CIOs/CTOs are accountable for both IT and technology strategies, the responsibility of creating the technology and IT strategies is usually delegated to IT leadership and architecture leaders, so the above numbers seem to speak to that.

However, it is a bit disappointing to see relatively fewer number of organizations seem to task their EAs to create the technology strategy, their IT leaders seem to own that responsibility. These numbers reflect the following possibilities, 1) some organizations do not have EA practice, 2) the EA practice is not mature enough and so it is not tasked to create the technology strategy, and 3) the EA practice is quite capable of creating technology strategy but for some reasons they are not tasked to do so.

The enterprise architects (if the organization has an established EA practice) certainly should contribute to the creation of both technology and IT strategies in collaboration with key business, innovation, and IT stakeholders, but more so to the creation of technology strategy, since EA’s primary responsibility should be to perform the capability-based planning. They have the right skills and as internal consultants they can facilitate discussions on business scenario analysis with various business stakeholders.

This puts EAs in the ideal position to identify the right operational and development business capabilities since monitoring of new tech trends is another of their primary responsibilities and they are responsible for evaluating many tech products, conduct PoCs, and evaluate vendor offerings for eventual recommendation and adoption (of course, again in collaboration with the IT and innovation leaders). ?

And finally, EAs are also responsible for creation of actionable capabilities implementation roadmap to help identify the right investments and plan and prioritize programs by collaborating with portfolio/program management to be approved by strategic governance committee which later can be implemented by the delivery teams to realize the business outcomes.

Documenting Technology Strategy

At the end of technology strategy formulation, the detailed future state or target state business and operating models for all business units must be captured. The technology strategy is documented concisely in a condensed PowerPoint deck or detailed in a form of a Word document and should typically summarize the findings from the business scenario-based analysis and outcomes of the capability-based planning providing rationale for the changes covering details of what needs changing and why.

In a typical technology strategy document, the following topics should be included –

• Executive summary of the technology strategy.
• Brief current state background of business conditions and rationale behind adoption of new technology, i.e., why it matters.
• Summary of relevant business goals and objectives that are addressed by the technology strategy (along with OKRs/KIPs)
• Recap of business vision, values, and principles as a reminder to ensure adherence and alignment to them.
• Summary of outcomes from the business scenario-based assessments which may also include business aspirations, drivers, constraints, directives, and policies.
• Summary of the strategic choices and decisions made during capability-based planning which helped the planners navigate through numerous options and to provide justifications for the choice of certain capabilities and rationale behind recommendations for certain products to be brought to market.
• Details of changes in the business model.
• Summary of the new technologies and example business scenarios where the new tech will help improve operations.
• Details of changes in the operating models. Description of identified operational and development capabilities in terms of changes to people, value streams/processes, and technologies and how they will be operationalized in terms of org structure, governance, funding, new partnerships, etc.

Note that technology strategy is part of the business strategy. For a large transformative change that has technology at the core acting as the main change agent, then the technology strategy document becomes the main business strategy document. In any case, the above topics are listed for the sake of completeness under technology strategy document however some of these sections are common with other strategy documents and usually covered under the main business strategy document and so need not be repeated again.

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Author: Sunil Rananavare, IT Strategy Planning and Architecture (CIO Advisory)

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