Strategic Planning for Technology Investments: A well-crafted technology plan can help governments maximize the value of their technology investments. This article outlines the factors to consider in developing an IT strategy.

• Author: Raumer, Ronald J.

The looming recession is putting downward pressure on the budgets of both governments and businesses everywhere. Although total IT spending in the United States has not yet declined, it is growing at a much slower rate than years past. (1) Capital spending for hardware and software has actually fallen in the past year, while funding for e-business, e-government, and Internet initiatives has been especially hard hit.

As a result of the changing economic and political environment, the IT function must again demonstrate how it adds value to the overall organization. Technology initiatives that have been rubber stamped in recent years must now be justified empirically before funding is approved. As such, governments need to be able to answer several key questions about their IT efforts:

* Is the organization doing the "right" things in terms of information technology?

* Is IT spending consistent with the organization's mission?

* Is the organization getting its money's worth from IT investments?

* Does the organization have the requisite resources (i.e., people, processes, skills, tools, technologies) to accomplish its goals and objectives?

* Are these resources organized and managed appropriately so as to maximize efficiency, effectiveness, and accountability?

* Is the organization properly managing risk?

* What should the organization do going forward to improve services and to anticipate and prepare for change?

A well-conceived IT strategy can help answer each of these questions. This article describes the concept of strategic planning and the factors to be considered in developing an IT strategy.

What is an IT Strategy?

An IT strategy defines how information technology is to be used across an organization in the future. It describes how information technology will support the organization's mission, goals, and strategies, thereby aligning IT with the organization's overall direction (Exhibit 1).

An IT strategy considers the internal and external changes an organization is facing and the potential opportunities for using IT to adjust to those changes. The opportunities for using IT are weighed against the strengths and weaknesses of IT capabilities--both technological and organizational--to measure the gap between current capabilities and the desired future position. The IT strategy lays out the broad strategic directions that must be pursued to close the gap and balance information technology capabilities with opportunities and risks.

An IT strategy defines the future IT architecture and the initiatives and projects necessary to close the gap. A strategy also determines the degree of change that will be required of the IT organization in terms of its mission, culture, structure, staffing, skills, and processes.

IT Strategy Illustration

To illustrate the development of an IT strategy, consider the simplified example of a regional parks authority, one that has sufficient funding for acquisition and development of new parks, but limited funding for operations and maintenance. One relevant external factor is that the regional population is growing rapidly, creating greater demand for park services. The parks authority has set a goal to develop additional parks, while bolding the line on spending for park operations and maintenance.

In formulating its IT strategic plan, the parks authority would first identify opportunities to use IT to support its goal. Opportunities might include automating park maintenance processes or implementing an e-government park reservation system. The IT strategy might include plans to enhance existing systems to facilitate the...