Strategic Planning: Be Nimble, Be Quick

BOSTON (06/15/2000) - Cynthia Egan, president of Fidelity Investments Inc.'s Charitable Gift Fund, knew she had to trim transaction costs and make it easier for contributors to manage their accounts, or they would choose a competing fund. Donors don't want their money going to overhead, so low administrative costs are a big selling point for any charity. When a routine customer survey revealed that at least two-thirds of Fidelity's fund donors had Internet access, "we realized we had a tremendous opportunity" to both cut costs and improve customer service, Egan recalls. In just nine months, the fund established a website through which donors can set up accounts, get advice on how to be a philanthropist and manage their donations. Since Fidelity launched the site last September, donors have made 32 percent of their contributions online. It takes the company only a day to cut the checks for these donations, compared with as much as a week to process paper contributions. Cost are down, and customers are happier, Egan says.

How did Fidelity do it so quickly? The project was not envisioned in the fund's three-year IT strategic plan, which focused on maintaining mainframe-based accounting and investment tracking systems. But it was considered so urgent that Lorraine Hubrich, senior vice president of technology and donor servicing for the Boston-based fund, dedicated an 11-member team, which was working on upgrades to legacy systems, to quickly craft a Web business strategy and build the new systems. "We changed how virtually every transaction comes in here and how it was going to be done," Egan says.

The fund's IS staff built the infrastructure and applications that support the site by both adapting solutions that were being used by other Fidelity units and designing some functions from scratch. In the process, they also transformed how the fund plans its IT investments. "We do more in phases, so we can roll out something every quarter or every couple of months," Hubrich says.

As a result, she now revisits her strategic plan more often. The company's IT strategic plan still looks ahead three years, but instead of updating it annually, Hubrich and other top executives now review it twice a year.

Fidelity's example is just one of many that might make you think that, with IT requirements changing so rapidly, long-term plans no longer have any use. And indeed, some make that argument. But they're only partly right. True, the days are gone when you could map your technology growth path for five years, making only annual course corrections, and assume your basic infrastructure and applications wouldn't change much. Now, business plans and technology are in constant flux. Nevertheless, strategic planning is more important today than ever before, and it is the very speed of change in today's business climate that makes it so.

"It would be death to the organization to not have an IT strategy," says Esther Delurgio, CIO with the shipping company BAX Global in Irvine, California. The rise of electronic commerce has made most companies dependent on IT, "so if you're just in maintenance or caretaker mode, the competition will go in front of you."

Fidelity's Egan agrees. "Customers have very high expectations for service [and] a bird's-eye view of how [account] administration is supported and served," she says. The company couldn't meet customers' demands for better, faster service without a plan to put the right IT resources in place.

The nuts and bolts of strategic planning haven't necessarily changed. But there are new techniques and approaches for developing the plans you need in the time you have. Here, CIOs and experts share their tips.

KEEP IT GENERAL By now, it's old news that you need support from business-line executives for any IT project to succeed. But it doesn't necessarily follow that your strategic plan for IT lines up with your company's business strategy.

If you're basing your IT plan on what your internal customers are asking for right now, you're always going to be playing catch-up, says Michael Grant, who heads the global strategic information technology practice for Chicago-based consulting firm A.T. Kearney. In nimble companies, especially those that are moving their business online, the IT strategic plan and the business strategic plan are now often one and the same, and they lay out broad principles rather than prescribe specific action.

"The things we try to put in granite are the principles we're trying to achieve and the drivers that are pushing us toward them," says Gregor Bailar, CIO with the National Association of Securities Dealers, which owns the Washington, D.C.-based Nasdaq stock market. "We use that as a guiding light, as opposed to a step-by-step map. That's more consistent with the way this world works."

One of Nasdaq's principles, for example, is that the Nasdaq network be modular, so that the company can add capacity as trading volumes increase. It's a goal that matches up closely with Nasdaq's business plan, which anticipates trading--now averaging almost 2 billion shares daily--to continue to expand exponentially.

So the principles hold steady, but how Bailar goes about executing his plan can change on a dime. A technology steering committee composed of IS and business executives meets monthly to talk about the status of current projects and to bring up new requirements. "We don't assume that the budget is the budget for the year," he says. When Nasdaq decided last fall to extend afternoon trading by two and a half hours daily to accommodate investor demand, Bailar had 30 days to prepare five systems to record the extra stock trades and report prices to dealers and financial information services. Bailar had planned to make these upgrades eventually, but business needs dictated that he make the necessary changes earlier.

"This is absolutely not a new situation," says A.T. Kearney's Grant. "An IT strategy is supposed to be based on business value, and there's no business strategy that doesn't go through a constant realignment process. A lot of CIOs are getting closer to the real world, rather than coming up with some sort of hypothetical IT architecture that can go anywhere, anytime."

PICK YOUR TOOLS CAREFULLY There's no doubt that traditional planning tools are still useful, but CIOs no longer have time to break out the entire toolbox, says Richard Swanborg, president of consulting firm Icex in Boston. "They don't want a real formal methodology," he says. "Many CIOs pull out the components of a formal methodology that are most relevant" to the problem they need to solve--establishing a process for making capital improvements, for example.

Swanborg calls these "mini methods." Once they get beyond the basics of where to invest in infrastructure, [they realize] there isn't a need to go through a full-fledged strategy methodology."

Instead, CIOs can focus as needed on what competitors are doing, exploiting new technologies, improving internal operations, evaluating supplier relationships or other components of a traditional IT strategy.

General Dynamics' Advanced Technology Systems (ATS) group had to craft a brand-new IT strategy after the division of the defense giant was purchased from Lucent Technologies two and a half years ago. "Lucent is a very centralized company," says Lou Von Thaer, senior vice president of ATS in Greensboro, N.C. Planning used to be a matter of satisfying corporate demands for data, with little input from line executives.

After the acquisition by General Dynamics, ATS developed a new IT strategic plan that is driven by its product strategy and employees' collaborative work styles. The division produces custom communications software and electronics for the U.S. Navy, and has, since joining General Dynamics, been pursuing commercial contracts for similar types of products. ATS has dispensed with much of the data collection that AT&T demanded. Philippe Wiener, vice president of strategy and development, says the division still uses traditional strategic planning methods--such as comparing ATS's IT portfolio to industry benchmarks and surveying where key technologies are heading--"but we don't have people filling out gobs of data [sheets], and we're not doing it for anybody but ourselves. We have a short set of metrics pertinent to our business."

When an urgent need arises, the ATS IS staff can act quickly because they don't have to do lengthy studies before deciding what types of systems to deploy.

Last December, executives decided they needed an e-commerce system to speed transactions with vendors that supply components for the division's products, and they gave the IS staff six months to deliver. A system for electronic funds transfer and online transmission of purchase orders and engineering drawings is planned to be deployed this month.

It wasn't a surprise to ATS's IS planners that they would be automating purchasing of components one day: Modernization of the division's procurement systems has been going on for "the past few years," according to Wiener. But when executives realized e-commerce was critical to meeting manufacturing deadlines demanded by their customers, they put the project on a fast track.

Planners had to design a system almost from scratch.

Although they used tried-and-true strategic planning methods--assessing their current procurement process, evaluating the state of e-commerce technology and checking for compatibility with their suppliers' systems--Wiener says they were able to do this quickly because they did not have to follow a one-size-fits-all process. The experts on procurement and e-commerce from ATS's supply chain team and the IS group focused on the aspects of planning that were most relevant to the project, without much corporate oversight. "The only drive was to do it, not satisfy me with paperwork," says Wiener.

SET YOUR IMAGINATION FREE In such a volatile environment, it's not enough to revisit your strategy frequently and adjust it to fit current business conditions. Jim Herman, senior vice president with consulting firm Nervewire in Boston, says it's crucial to imagine multiple scenarios and give some thought to how you would respond to them. "You look at multiple ways your environment might change and you use that to create a framework about the future that takes more kinds of discontinuous change into account."

Such scenario planning can help CIOs cope with surprises by anticipating both obstacles and opportunities that could affect how their companies achieve their goals. Herman's organization, for example, guides clients through a "future mapping" process, during which executives describe events that might occur in the not-to-distant future (say, five years) that would affect their business or industry. Then they define several "end states," or visions, of what their companies might be doing at the end of the period. Executives then construct a path toward each end state, which they can use as the foundation for strategic planning.

The process "allows you to think through the critical path of what you have to get right in order to succeed, and what must be prevented from happening," Herman says. "Being future oriented [also] creates pull" for CIOs, who can use the scenarios to set investment priorities, rather than give in to pressure from business units to fulfill a backlog of small requests. He says it helps to put distasteful or radical scenarios on the table to get you thinking about how your company can prepare for far-reaching changes in technology, markets or business models.

At Intel, outlining different business scenarios allows the IS organization to respond quickly to demands from both internal and external customers, as well as cope with surprises. IS executives at the company meet three to four times a year with different groups of Intel business executives and technology experts to talk about emerging technology, new business models and Intel's future.

Meanwhile, Vice President of Information Technology Doug Busch keeps a running dialogue with internal customers and talks "virtually weekly" with his staff to gather new information and adjust existing plans. Out of these discussions come ideas for how new technology might help Intel reach its corporate goals.

The company earmarks part of its IT budget for research and development, and Busch uses this money to test out these new ideas. "One of the strategies I've tried to introduce is establishing strategic intent. When we see a technology coming at us, we'll decide whether this is where we want to go and that we want to trigger it as certain criteria are met." One criterion might be whether his staff thinks the technology is stable enough to deploy; another may be how many end users want it.

Two years ago, Intel's IS staff did some research that concluded employees would be more productive if they weren't tied to their desks, so Busch started replacing desktop PCs with laptops. Wireless technology was starting to show promise as a mobile computing tool, and Intel executives asked Busch to consider it for future deployment.

Busch started a pilot project that would define a usage model for what was still an emerging technology and gauge its impact on Intel's network infrastructure. But it wasn't until a budget meeting last winter, where senior executives asked him about how some new corporate office buildings would be networked, that he started to consider broad deployment of wireless systems.

Within weeks, the company had decided to roll out the wireless networks by mid-June to a few groups of workers at its Folsom, Calif., facility, where the pilot had taken place. At press time, executives were getting ready to set a schedule for installing the technology in other locations. Busch says he'll fine-tune his deployment strategy every three months to account for new technology developments.

Busch and his staff were able to put together a wireless networking strategy quickly because they had taken the time to speculate about the company's use of the technology and test their theories. When business-side executives decided it was time for wireless networks, the IS organization was ready with company-specific metrics.

Mary Murphy-Hoye, Intel's director of IT strategy and technology, says scenario planning, along with research and development, prepares the IS organization to respond to business demands even when they seem to come out of the blue. (See "Acting Fast," Page 90.) "The surprises will come," says Murphy-Hoye. But "now we have a context for dealing with them. [If something] comes from left field, [we can ask,] 'does it fit into our overall strategic discussion?'" ALWAYS HAVE A BACKUP PLAN Mapping out the future can also help CIOs recover if they make the wrong bet. "You need to have your own sense of where things are moving, so if it becomes clear you're moving in the wrong direction you can make a change," says William Fulmer, a senior fellow at Harvard Business School in Cambridge, Mass., and author of the new book, Shaping the Adaptive Organization (American Management Association, 2000). "I would probably spend more time asking 'what if?'" Nasdaq's Bailar has his staff prepare a "Plan B" that describes alternative ways to meet their goals if a major IT initiative doesn't pan out. "We sometimes have projects that appear to be overlapping [because that] provides more maneuverability," he says.

Of course, most companies don't have to move as quickly as Nasdaq does.

Nevertheless, every company is facing an increasingly rugged landscape it has to map to survive.

Today, Fulmer says, companies are fighting guerrilla warfare. In a conventional war--like the old days of strategic planning--the generals spent lots of time reviewing the plans. "With a guerrilla war, you give [soldiers] the right tools and you hope they're going to be able to win. You don't have the same degree of control."

Yet there's the potential to be even more successful than before. So many five-year strategic plans end up on the shelf or, worse, result in systems that the business doesn't really need. "We're coming away from an academic perspective of IT strategy," says A.T. Kearney's Grant. "The more IT strategy gets tied to business direction, the higher the likelihood for success. Success will be measured in the businessman's eyes."

Senior Writer Elana Varon never goes anywhere without her planner but still keeps her fingers crossed. Share with her the IT planning strategies that work for your company at

A STRATEGIC STAFF Hiring trained strategists can help CIOs keep up General Dynamics' Advanced Technology Systems (ATS) group has put an executive in charge of strategy because planning is now done continuously. "It's somewhat like painting a bridge," says Vice President of Strategy and Development Philippe Wiener, in that as soon as you think your strategic plan is finished, it's time to start over.

ATS isn't alone. Intel has an IT strategic planning staff that reports to the company's CIO and works full time assessing the latest technologies and studying new business models. In today's fast-paced economy, "you can't afford to think once a year about where you're going," says Intel's Director of IT Strategy and Technology Mary Murphy-Hoye. "It has to be built into the fabric of what you do [because] events may be occurring that will have an impact on the vision you're describing."

Steve Berg, senior manager for consumer markets with KPMG Consulting in Radnor, Pa., says more CIOs are hiring trained strategists to take charge of their planning because having this expertise enables them to focus on what the business side wants and helps them sort through the long list of projects competing for funds.

At BAX Global, CIO Esther Delurgio says strategic planning is part of one manager's job description, and she's made trend-spotting a part of every other manager's job. "It's almost embedded in our day-to-day work," she says. Even so, Delurgio adds that she probably should have even more staff devoted to strategizing.

Meanwhile, Fidelity's Charitable Gift Fund has "facilitators" whose job it is to canvass external customers, internal end users and parent company Fidelity Investments' corporate IT group for ideas about future requirements and technology trends. Lorraine Hubrich, vice president of technology and donor services, says they're the people who "really understand where the business has to go" and can recommend whether the company should, for example, build a new system in-house or outsource it.

It's important for a company to have a senior executive whose job is to focus on strategy, according to ATS's Wiener, because this person communicates with every part of the organization. Not only does this high-level strategist convey the corporate vision throughout the company, he or she also helps the company line up its business units' plans with what they need to carry them out. -E.


ACTING FAST Don't like surprises? Strategic planning can help.

When executives at Intel heard that Ford Motor Co. and Delta Airlines would give PCs to all of their employees to use at home, they decided Intel had to get in on the trend. Three weeks later, Vice President of IT Doug Busch had put together a program offering home PCs and Internet access to more than 70,000 employees worldwide.

Busch says he was able to respond quickly because he is used to doing projects on the fly. "We've become a lot more agile over the past two or three years."

Rapid project development is possible, Busch says, if you make your own luck, thinking ahead about what your future needs will be and, when surprises come along, looking for ways these unanticipated projects can build on work you're already doing.

The PC project wasn't something Busch had planned for, but it dovetailed with another part of Intel's IT strategy. Shortly before the company announced the home PC benefit, Intel had launched a virtual private network to support remote access for its workers.

Busch's staff had already researched the kinds of equipment, services and support employees would need to work offsite, so they knew how to outfit home users.

From there, Intel managed the project like any other. Work got done quickly, Busch says, because the project team was allowed to make decisions and was in daily touch with executives to resolve problems or get approval when needed.

"Many decisions are made very quickly over e-mail," he says. Although the IS department was in charge of the project, Busch worked closely with finance and human resources executives who had to weigh in on how to pay for it and add it to Intel's employee benefits package. The three put together an eight-member planning team that included experts in technology, financing, employee benefits and public relations, while another 20 staff members were called into planning sessions as their knowledge was needed.

"The timing turned out to be excellent," Busch says. "IT was ready to go, and we were able to assemble a team with expertise."

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