As with any business strategy effort, at its core, developing a successful IT Strategy is about exercising decisive choice. More specifically, it’s about IT leaders and stakeholders across the enterprise making deliberate, targeted, and aligned choices that prioritize the simplification (optimization, centralization, and virtualization) of IT resources in order to achieve better performance at the lowest possible cost, while exposing the business to the least amount of risk, and enabling new strategic capabilities.
Although technology itself and its relationship to the core business are innately complex, IT stacks, new competency additions, and regulatory and data compliance don’t have to be. And, in the age of rapid technology evolution, innovation, and constant disruptions that businesses confront daily, it is best to minimize complexity. In fact, complexity can diminish operational productivity and undermine compatibility with emerging technologies, in addition to creating unnecessary resource intensity across both IT and the business.
Yet decisive simplicity is not an easy outcome. In the words of Steve Jobs, “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”
So, what does a simplified IT strategy–that aligns with the overall goals of the core business strategy and drives business performance–look like? Here’s a high-level overview:
Streamlined infrastructure and application layers, and standardized business processes.
These can be elusive targets for even the most seasoned IT team to realize. It is essential that a firm start foundationally if one hopes to avoid multiplicative complexity. Even before you’ve identified the organization’s internal and customer needs, short and long-term goals, and performance and technology gaps, a firm’s leadership must make IT simplification a stated goal. In the infrastructure layer, this will include efforts around hardware standardization, operating system standardization, server cloud migration and virtualization, desktop and hardware outsourcing; in the application layer, modernizing and replacing legacy applications with end-to-end solutions and minimal customization; and within business processes, standardizing and clarifying disparate practices across functional areas and business units–piece by piece–to avoid diverse needs for non-parallel processes in a distributed entity. This simplification is multi-year, but if not envisioned and articulated upfront, all the other inputs on a firm’s internal and customer needs, goals, and gaps, will be overlaid on unstable ground.
Integration of new technology competencies and regulatory/industry requirements.
These can include upgrading or incorporating new cybersecurity measures and regulations, inculcating new AI and data analytic capabilities, digitizing a variety of incumbent tools, moving those tools to the cloud, and addressing any industry IT and technology skills gaps among your employees. All of the above are an order of magnitude more addressable with a solid and simplified IT foundation. If the IT management team hasn’t simplified the infrastructure, application, or business process layer (above) beforehand, these areas will often waste substantial time and resources, with rework and outright project yield loss a typical outcome.
Large-scale simplification has large-scale outcomes.
If you have simplified your technology stack layers and overlaid with new competencies and data/regulatory requirements, only then is your firm capable of realizing:
- True alignment between your business leadership and IT
- Appropriate budgeting for new IT capabilities and innovation, alongside incremental enhancements and Keep-the-Lights-On (KTLO) spend
- Mutually beneficial expectation between IT and the business on annualized investments in technology-based innovation
Until this point, the firm may otherwise view IT exclusively as a medium for further efficiency and budgeted cost containment. This view is not incorrect if an IT organization is shouldering mass complexity.
If you’re questioning the value of simplifying your IT strategy, the business case itself is simple: Across nearly every projection and implementation, HPA has shown that budget savings are realizable (within a maximum 2-3 year window) for ongoing total cost of ownership, annual maintenance fees, and corresponding integration fees, e.g., it’s far less expensive to own and maintain one application versus 16 legacy applications. In addition to increasing operating expenses, IT complexity can pose widespread compatibility issues and risks across the enterprise. And then there’s this: Stuff just breaks. The fewer IT elements your business relies on, the less likely it will experience functional disruptions related to outdated, redundant, or divergent technologies.
Just as large technology (FAANG) firms have established step-change leadership in consumer data, supply chains, and monetization, we are seeing two tiers of companies in IT capability: one set that has simplified technology and can appropriately adopt newly realizable and turnkey technology innovations; and others that are a generation behind due to overly complex IT infrastructure. We anticipate this IT capability gap–rooted in foundational IT layer simplification principles–will widen further.
You can read more about the benefits of simplifying your business’ IT in HighPoint Associates’ blog posts, It’s Complicated: Inheriting a Complex IT Structure and How Complex IT Breeds Chaos and Cost.
Richard Berger is a Partner at HighPoint Associates, a strategy consulting firm headquartered in El Segundo, CA. Prior to joining HighPoint, Richard was a principal at Katzenbach Partners, a boutique management consulting firm. His professional experience also includes leading acquisition and consumer marketing for the largest customer segment within AT&T Wireless, consumer and customer development at Financial Engines, and brand management and finance roles at Procter & Gamble. Richard holds an MBA from the Stanford Graduate School of Business and a BS from Washington University.