Original article from the Flevy business blog can be found here: http://flevy.com/blog/when-did-you-last-have-a-critical-look-at-your-it-service-strategy/ The CIO and the IT Department need to position themselves as a premium provider of IT services and focus on value to cost. Nowadays, IT’s significance is often challenged: “Do we really need a CIO and IT department to bother us with technology when we can use the cloud?” To avoid this line of questioning, the CIO has to ensure that the business strategy and business objectives are supported by IT (from a Business and IT architecture perspective). IT Strategy needs to support Strategy Execution, “Time to Market,” Cost Effectiveness, and stakeholder expectations from an Executive, Business Unit, IT Management, and IT Risk Management perspective. To deliver business value with IT, we need to focus on the business’s bottom line. How fast can we get our products and services to market (i.e. “Time to Market”)? How can the IT department support the business from a Cycle Time and Cost Effectiveness perspective. The IT bottom line is that up to 40% of current IT spend occurs outside the IT budget (CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and effectively address emerging needs, market opportunities, and demonstrate that the current Business Model is supported effectively. The IT department should facilitate the access to IT services to support new and current business initiatives. The business strategy emerge out of a number of initiatives that are successful or not. The IT department need to support the “Run” of day-to-day operations as well as new projects. The Cloud might particularly be of interest within this frame. We believe that in order for the CIO and the IT Department to position themselves as a premium provider of IT services and focus on value to cost, we need to understand the Business (IT) Strategy and how the IT department can deliver effectively to business objectives. That is, to deliver business value with IT: • What is the Business’s strategy and plans? • What is the current business model that IT has to support? • Where could IT make a significant impact on the business? • Are there any further opportunities to use IT? • How do we provide IT Services as we meet demand and cost drivers where the decision is to make (internal) or to buy (external service provider)?

1. When Did You Last Have a Critical
Look at Your IT (Service) Strategy?
Contributed by Martin Palmgren on August 11, 2013 in Information Technology
The CIO and the IT Department need to position themselves as a premium provider of IT
services and focus on value to cost.
Nowadays, IT’s significance is often challenged: “Do we really need a CIO and IT
department to bother us with technology when we can use the cloud?” To avoid this line of
questioning, the CIO has to ensure that the business strategy and business objectives are
supported by IT (from a Business and IT architecture perspective). IT Strategy needs to
support Strategy Execution, “Time to Market,” Cost Effectiveness, and stakeholder
expectations from an Executive, Business Unit, IT Management, and IT Risk Management
perspective.

2. To deliver business value with IT, we need to focus on the business’s bottom line. How fast
can we get our products and services to market (i.e. “Time to Market”)? How can the IT
department support the business from a Cycle Time and Cost Effectiveness perspective.
The IT bottom line is that up to 40% of current IT spend occurs outside the IT budget
(CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and
effectively address emerging needs, market opportunities, and demonstrate that the current
Business Model is supported effectively. The IT department should facilitate the access to IT
services to support new and current business initiatives. The business strategy emerge out
of a number of initiatives that are successful or not. The IT department need to support the
“Run” of day-to-day operations as well as new projects. The Cloud might particularly be of
interest within this frame.
We believe that in order for the CIO and the IT Department to position themselves as a
premium provider of IT services and focus on value to cost, we need to understand the
Business (IT) Strategy and how the IT department can deliver effectively to business
objectives. That is, to deliver business value with IT:
 What is the Business’s strategy and plans?
 What is the current business model that IT has to support?

3.  Where could IT make a significant impact on the business?
 Are there any further opportunities to use IT?
 How do we provide IT Services as we meet demand and cost drivers where the
decision is to make (internal) or to buy (external service provider)?
We have identified 2 key trends for the CIO to focus on:
 Differentiation – That is, how does IT provide a competitive advantage for the
business.
 Cost – How does the IT Department deliver IT Services cost effectively.
This author covers a wide range of IT-oriented topics, from IT Service Strategy to Cloud Strategy , in his selection of
IT methodologies on Flevy .
To do so, we need to build an effective IT Delivery Model to meet business needs and
expectations, as we leverage business strategy execution and business processes supported
by an IT Service strategy (ITIL; IT CMF; CobIT 5 – ValIT, CobIT 4.1, RiskIT; ISO 38 500;
TOGAF and ISO 9001; ISO 27 001; COSO) delivered in a Business IT roadmap. In other
words, we need to support business objectives and processes leveraged by IT and an

4. effective IT Services strategy. Within this scope, we would address how we execute the IT
service strategy (ITIL):
 Design - Spell out IT Activities from a demand and supplier side;
 Build - Set IT processes and key performance indicators; and
 Run - Aligned to described ITIL activities and processes and full IT Financial
Management (supported by delivery capability IT CMF, COBIT 5).
Once services are defined, we can then decide where to run the application that support the
IT and or Business Services (server / internal / external cloud / outsourced provider).
Within the frame of an acquisition, up to 80% of the value realization is (can be) on the IT
side. The failure to address IT and the IT strategy can be an additional (1 out of 3) reason to
M&A failure.
If we assume that to deliver business value with IT we need to support business objectives,
the integration of a new entity is an optimization of the current IT strategy (how we support
business objectives and processes). We would obviously need to understand (and hopefully
have the opportunity) how the current IT run before the purchase (IT due diligence) with

5. full IT Financial Management to figure out the actual cost of delivered IT services (cost,
consumption, chargeback). Once services defined we can then decide where to run the
applications that support the IT and or Business Service (server / internal / external cloud /
outsourced provider). We also need to define the purpose of the purchase (invest / divest) in
the overall corporate strategy where it is of little use and a significant cost to integrate all
systems in to a common backbone if the company is to be divested only a few years later. We
could use a an IT Scorecard to ensure that stakeholder expectations are met from an
executive, business line, IT and IT risk perspective.
The CIO and IT department needs to support the run of the current business activities as
well as new emerging initiatives that will eventually form the business strategy. The cloud
(internal or external) would be particularly well placed to develop new services that can then
be institutionalized as the success of the initiative is confirmed.
The CIO and IT Department that sit around and wait for the Business Strategy to be
formalized to build an IT strategy and vision might not make the 18 months magic mark.
The IT Bottom line is that the IT Strategy should support business objectives, with new
technology as needed as the IT department delivers effective IT Services and innovative
technology solutions to improve competitiveness, demonstrated and articulated.

6. To learn more about this topic, consult this document here .
Read what others have said about the author’s book series, Deliver Business Value with IT , here:
http://deliverbusinessvaluewithit.wordpress.com/what-the-reviewers-said/ .
About Martin Palmgren
Martin Palmgren is a seasoned Senior Business / IT Strategy and Transformation Executive that has
addressed Strategy formulation and roll out for Fortune 500 businesses internationally with a focus on
how to ensure that the business strategy and objectives are supported by IT with an effective IT Strategy
and Governance (that is how do we support business objectives and processes leveraged by IT and an
effective IT strategy). He also has a large and growing collection of documents available on Flevy, which
you can view here .

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