The Corona pandemic is a drastic experience for the society and for many companies and the people working there. To overcome the crisis, many companies have had to make a great leap in digital transformation in order to adapt to the new conditions. Technologies had to be integrated quickly, important projects had to be stopped and others had to be brought forward. As a result, the Corona Pandemic has thrown many strategic roadmaps into confusion. The same applies to business: some business models came to a standstill and digital channels have suddenly become more important for companies of all kinds. And many CEOs, CDOs and CIOs are now confronted with the question of what “The New Normal” will be and how digitization and IT strategy will respond to it. So what does the way ahead look like?
Olaf Terhorst, manager at mgm consultung partners and a consultant specializing in IT and digitization strategy, has supported companies from a wide range of industries in realigning their strategy. Here he answers the most important questions.
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1. What effects does the corona crisis have on the medium and long-term IT / digitalization strategy of companies?
As this is of course always dependent on how badly the company has been hit by the crisis, it is unfortunately not possible to give a general answer to this question.
If no project had to be stopped or brought forward or other adjustments had to be made despite the difficult conditions because the business – despite the change in the general conditions – continued unrestricted as before, I would say: Nothing.
However, most companies will very likely have felt the effects. Perhaps projects that were running during the crisis had to be stopped or previously missing projects had to be started quickly. Or the company’s entire business model “crunched”, the IT organization came up against its limits and the systems could not react flexibly and agile enough to the crunch or crucial systems were even completely missing. If this is the case, then there is definitely a need for action. How this should look like needs to be analyzed individually.
2. How can companies quickly and pragmatically conduct an analysis of their needs for action within the framework of their IT / digitization strategy?
The first step is not about strategy, but about the survival of the business. In most cases, the primary goal is to reduce costs by re-prioritizing the project portfolio in order to use the available resources correctly. In order to find out in the second step what action is needed in terms of the IT and digitization strategy, the first step should be to prioritize the business issues. Here we always use our Review Canvas, which has been tried and tested many times and has proven its worth. This allows us to collect theses on the current situation of the company very quickly in a structured way and in a second step to determine the largest and most urgent fields of action. From an IT perspective, the Review Canvas is revealing in that it shows that the business may need other capabilities from IT than those actually provided by IT. But it is not only the IT viewpoint that is considered; common important fields of action between IT and business are also revealed.
3. How can concrete digitization measures be identified to ensure medium and long-term survival?
The findings of the analysis are then used as the basis for a pragmatic Business Capability Mapping. This visualizes the company’s capabilities in the ACTUAL and TARGET, as well as links between business and IT architecture.
The first step is to focus on the skills that the business or specialist area urgently needs in order to be successful in the market. In the second step, the IT contribution required for this, i.e. the contribution it needs from IT, is then identified. In the third step, the necessary IT capabilities are derived from this. It is determined whether these IT capabilities need to be built up in a company-specific way or whether they should be based on market standards or on services from providers.
These first two steps of Business Capability Mapping sound more time-consuming than they actually are. With the right commitment and the right people involved, it can be worked out pragmatically in a few days. We have even managed to do this in just one afternoon session for one customer.
Afterwards, a fit-gap analysis is used to identify and prioritize measures – of course always with a consistent focus on business needs. It is important here that business and IT go hand in hand, because digitalization is not a pure IT project, but a task that affects the entire company.
4. How do companies quickly get these measures into their strategic IT roadmap?
Here one must face the truth. Depending on the state of the company’s health, the only way out is to prioritize hard and fast and possibly even cancel projects that you have grown fond of. There are many different, established methods, but to do this we would have to go deep into project portfolio management, which is another issue in itself. The advantage of pragmatic Business Capability Mapping is that the connection “Business Need – IT Project” is closely connected and easy to understand. In order to avoid an emotional banging and stinging, especially in times of tight budgets, we rely on very experienced consultants who moderate these conflict-laden steps.
5. And how do the companies get these insights into their IT/digitization strategy? And: how fixed is the strategy then?
A large part of the questions that are answered in most strategy frameworks are already asked during the analysis and action planning. If the analysis reveals major, necessary adjustments to components of the strategy, e.g. in the IT architecture, a strategic project should be included in the roadmap to close this gap or remedy the shortcoming. Here it is important to act pragmatically and quickly and not to lose too much time by definitions down to the last detail. The times of digitization strategies defined down to the last screw are over anyway. This is no longer up-to-date in our VUCA world. The new normality after the crisis, also nicely called “the New Normal”, which is rather characterized by uncertainty, requires an agile approach in strategy development. This means greater involvement of all levels of the company, a shift from planning-based approaches to event-driven initiatives, ongoing strategy development as an iterative process using design thinking, flight levels and OKRs. Many complex business situations, such as crises, only allow the use of model solutions (blueprints, best practices) to a very limited extent. However, the particular situation of a crisis tempts to use supposedly under-complex, well-known patterns for the solution – and this often makes the problem even worse (actionism). An agile, iterative approach and the abandonment of supposed planning reliability of proven methods is clearly preferable here.
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mgm – consulting services in IT strategy / digitization strategy
- Review Canvas Workshops: Assessment of the existing corporate strategy / IT strategy / digitization strategy with the current framework conditions or to the adapted corporate goals
- Revision of the existing strategy to realign or adapt to new requirements
- Set up and establish an agile strategy development process
- Development and update of IT and digitization strategies
- Support in the operationalisation of strategic goals (e.g. via business capabilities)
- Development of strategic concepts for the implementation of strategies in executable projects
- Implementation of IT strategies / management of strategic projects
- Prioritisation of projects for (short-term) restart
- Prioritization of projects for medium/long-term corporate success
- Review of the IT organization, costs, vertical integration, IT landscape
- Variable costs, reduction of investment costs (more sourcing, more cloud)
- Rightsizing the organization
- Modernization of the IT landscape