Tuesday, April 7, 2015

Is IT Strategy Equal to Digital Strategy

The two types of strategies can be integrated, but it is important to understand that responsibility, objectives and needed resources to be successful.

The biggest challenge now is the increasing rate of change, and this isn't going to change! The current strategy making methodologies are out of date mainly because digitalization is driving unpredictability, demanding a more rapid strategy methodology that quickly can adjust to new market conditions. So how relevant is the Digital Strategy for the organizations today? And is IT strategy equal to digital strategy?

A digital strategy is a business issue, not just an IT issue: The digital strategy is essential for companies in the digital era and requires a new way of viewing the organization (collaboration instead of silos). What is interesting with the digital strategy is that the soft aspects (culture, leadership, and people management) are as important as the harder aspects such as technology and marketing tools. Digital organizations are often characterized by a continuous transformation correlated with the changed customer behavior and technical evolution. But before the business can make decisions, they need to understand the capabilities that exist to deliver. Building the UI requires the back office "orchestration" of data and information to create an outcome for the user. The historical "mess" in IT may make this a daunting project, so there needs to be some new thinking in the use of IT that focuses on the dynamic front end of the business.

Digital Strategy needs to look outward, and the issue is that most IT departments look inward: A digital strategy has the purpose of driving customer engagement and experience as a cross-functional responsibility. In a traditional setting, IT’s main focus is to develop and maintain internal systems. Digital Strategy needs to look outward - to have a good grasp of the external trends and consumer behaviors. Companies that are gaining such perception and are creating digital teams that incorporate technology, marketing, and product expertise are excelling and gaining a faster competitive advantage than ones trying to maintain the corporate IT status quo. And IT strategies, services, and solutions, absolutely need to be able to respond in an agile way and change themselves!

The IT Strategy life cycle has progressively shortened for many business models: This is a process of evolution. Different departments or divisions within an organization have different speeds. That makes the overall governance tricky since each department needs to align to its own speed in the market. Even in the simplest organizations, industrial 'speed' is not homogeneous across the enterprise, because there are differences between 'front office' and 'back office'; enterprises with multiples businesses and associated business models. But IT more often plays a pivotal role in digital transformation, so IT strategy needs to focus on the fastest speed available - because that is where the main threat is to competitiveness. Also, it is necessary to understand that no department will suffer from being challenged too often. Challenging does not mean replacing strategy but rather quality assuring the strategy.

From an ownership perspective, IT strategy is completely managed and executed by IT leaders whereas Digital strategy has many stakeholders. There is a clear difference in definition between a digital strategy and a traditional IT strategy. The digital strategy is not bound by one functional area (such as IT), but rather included the whole organization with a mission to increase customer experience and engagement - and hence increased market shares and revenue. The IT strategy as a subcomponent of corporate strategy, on the other hand, focus more on how the IT department can increase business value (and in some cases productivity). But digital blurs the functional boundary. These days executives are well aware of the business areas where IT including digital/social can be beneficial to business needs. This is an era of collaboration where information is in the hand (smartphone, tablet or computer ) of the user. Therefore, IT or digital strategy is not the sole domain of CIO, it is the collective efforts of IT and other business departments deciding in line with the strategy and in the interest of the organization.

The CIO is not simply the leader of the enterprise's IT departments, but the senior leader who cocreates digital strategy: Because IT is in the unique position to capture the oversight of business processes, many CIOs also take responsibility to drive the digital strategy bloating above the organizational structure - uniting all silos to contribute to great customer experience. The CIO is the enterprise executive responsible for leadership of the information agenda, which includes driving customer engagement and experience as a cross-functional enterprise responsibility. However, the fact is that many CIOs don't yet undertake the full challenge, the CIO role is often down to grade inflation and limited individual aspirations and capabilities. The answer to this is not to create additional C-level roles, but to develop enough folk with full CIO capability, vision, and aspiration. The CIO is responsible for the information agenda from a provider perspective but not from a usage perspective. In other words, the CIO is to provide accurate information and applications to store and allow the modeling of information. But, departments such as marketing, finance, HR, and business - are responsible for applying the information to their businesses with an aim of generating revenue growth, motivated employees, customer experience, and engagement. There are different departments, with different roles and ways of leveraging the data in the organization. But in all such relationships, the CIO needs to have a very good grasp of the overall business, its strategy, the marketplace, business model and competitive distinctiveness to ensure that the IT-enabled services supplied to the enterprise deliver maximum value at acceptable cost with optimum service

It is the time with the digital perspective that requires a new agile approach to making a strategy. The traditional understanding of IT strategy has been shifted from supporting the functional level of business strategy, to be at the core of designing business strategies and creating and capturing business value. While the digital strategy is also not equal to marketing strategy or website strategy, it’s an overarching digital blueprint to include both hard factors and soft components. The two types of strategies can be integrated, but it is important to understand that responsibility, objectives and needed resources to be successful.

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