Evaluating The IT Strategy

Throughout the IT diligence process, the primary goal is to learn as much information as possible in order to ensure a transparent understanding of Target’s IT function.  If done correctly, diligence helps reduce or eliminate any surprises after close.  One specific area to review is the IT Strategy.  Without a thoughtful IT Strategy, it is challenging for IT to transform from a reactive, technical organization to a proactive, service-oriented organization.  Below are six areas that can provide specific insight into Target’s IT Strategy.

1.  Lead with the simple question, Can I see the IT Strategy?  Often, the answer is, Well, I don’t really have anything documented….  This is a bad start and likely an indication that the IT function is reactive, doesn’t understand the business strategy, and maintains a cost center mindset. Without a formal IT Strategy, it’s difficult to understand if the company is prioritizing IT investments appropriately.

2.  If the company has an IT Strategy, you should then validate that the very first section is an articulation of the business strategy. Without it, it is impossible to develop a sound IT strategy. The IT Strategy should support the business strategy; accordingly, all key IT initiatives should align with the IT strategy, which can then be linked to the business strategy.

3.  Next, seek to understand how the IT function views itself. The IT Strategy should shed some light on this. Does IT play the role of a cost center, service center, or innovation center? What is the function’s identity?  The business strategy will, to some extent, shape this identity, but the IT function should have an ownership stake in how the company defines its role.

4.  The mobile movement is here, and it is changing facets of every business, particularly the customer experience.  The IT Strategy should articulate how mobile technology impacts the various stakeholders from the internal sales force to external customers and document a plan for capitalizing on this new technology medium.

5.  Data Management is the concept of identifying, capturing, storing, protecting, and mining company data for both internal use and potential external value. Does the company capture data that it could leverage as an external asset? While this may not be applicable for every company, data management should be addressed in every IT strategy.

6.  The Run, Grow, Transform framework is used to categorize IT investments, projects, or effort.  Once the identity (see above) is defined, the IT function should use this framework to categorize initiatives.  A typical allocation is 60 percent, 20 percent, 20 percent, but this can (and should) fluctuate each year based specific business priorities. Ideally, the IT Strategy should reflect this framework (or similar) in the way it categorizes and prioritizes IT initiatives. As an aside, this framework provides a great communication lexicon with the business.

Gathering the information above can help you assess the quality of Target’s IT Strategy.   Good luck!
Matt Sondag:  312.980.9446 or msondag@westmonroepartners.com

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