Utility computing: Just because you can, should you?

Almost two-thirds of companies have little or no strategic IT planning. That was the troubling conclusion of a recent survey conducted by analyst CSC, which also showed that only 7 percent of those questioned claimed to have a technology plan properly aligned with their corporate strategy.

Worrying stuff indeed, especially as the survey also showed that those companies who do think strategically are twice as likely to have high returns on technology investments as those without.

Intrigued by CSC's claims that most companies are stumbling around in the dark, I decided to seek out a second opinion to see if the survey was accurate or just analyst puff. Meta Group analyst Brian Burke wasn't surprised by CSC's results at all. He admitted that in his experience it seems the that the whole concept of strategic planning has fallen out of favour on a corporate level.

The idea of having a grand plan for the entire organisation with defined goals has been gradually phased out and replaced with a new imperative: Now! Ideals have been replaced by pragmatism with companies changing focus on a whim to harvest new areas of revenue in increasingly competitive markets.

"In terms of doing classic strategic planning, which is having a five-year plan, we are not seeing that. Most companies don't plan at a corporate level in this way so clearly it's impossible for IT to plan strategically," says Burke.

According to Meta Group's analysis, about 65 percent of companies have some kind of corporate strategy. That leaves about 35 percent of companies that do little to document strategy in any way at all.

Burke says that when he started in IT 20 years ago it was in a strategic planning group, quite common for the time. But for a variety of reasons this kind of long-term thinking has slowly been replaced by a fast-paced and reactive management culture.

"Most companies, and we don't advocate this approach, are driven by the need of the day. They are very pragmatic and very reactive in terms of how they are motivated; whoever comes screaming into the office making the most noise is going to be looked after," Burke says.

The recent history of the IT industry is littered with examples of companies who've listened to the loudest voice rather than thinking long-term. Three little words - customer relationship management - provide a clear example of new technology enthusiasm without overall strategic planning.

Companies have matured in their approach to CRM now but two years back millions was squandered on systems that staff and customers couldn't easily use. Analyst Gartner claims that rolling out CRM suites without clear long-term expectations has ended in misery for a lot of firms. "Many businesses in Europe have blindly pursued the nirvana of CRM without really using all of the elements involved," said Ed Thompson, research director at Gartner. "Enterprises employing a strategic framework for estimating, planning and promoting their CRM initiatives are twice as likely to achieve their business objectives as those that do not."

Another problem apart from the lack of strategic thinking in the company as a whole is the immense pressure IT managers are under from the vendor community. The likes of Microsoft, Sun, IBM and HP spend billions of dollars on marketing every year to ensure the products and services they want to sell are lodged in the minds of decision makers.

"Many IT management groups are simply victims. They allow themselves to be manipulated, they are victims to the vendor's hype, and they are victims to the business. Clearly when you are a victim and being manipulated by all these forces you are not going to act strategically. Occasionally, you'll get lucky and do the right thing but there is no guarantee of that," says Meta Group's Burke.

Burke claims that many IT departments don't do the basics right and don't provide an adequate level of service to the rest of the company. This has an impact on the way they are perceived, reducing their credibility to the point that they lose their place on the panel or board where the strategic decisions are made. "You have to get the basics right to begin with to establish a certain level of credibility in terms of providing services and projects on time and to budget. When you have that credibility then you can start to enter into strategic dialogue."

Another trend, the commoditising of software and the rise of utility computing means that strategic planning could be seen as less necessary than ever. Ditching a new software implementation that isn't delivering no longer necessarily means rip and replace but simply terminating a contract with a service provider. But this flexibility comes at a price. Signing up to an ASP might make rolling out a CRM system easier but how easy is it to backtrack on the agreement?

Being reactive and pragmatic can seem impressive in the short term but just because an option exists doesn't make it compulsory. As implanting new IT systems becomes ever easier, the ability for companies to experiment becomes more tempting: fine, as long as you have money to burn. Mistakes are still mistakes; all the move to virtualised computing has done is to make its simpler to implement the wrong systems.

Burke believes what IT managers should be doing is taking a more considered and strategic view of what a particular IT system will do for the company; factors such as return on investment and total cost of ownership have to be considered but also fundamental issues such as the company culture and the core strengths of the organisation.

"What we recommend is having a structured decision making process that allows you to select the greatest value opportunities - that essentially is what all strategy is about," he says. Taking time to consider all the ramifications of an action may slow down the decision making process but it will save time, money and pain in the long term.