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Strategy Management in ITIL

Updated: Mar 15

Introduction to ITIL's Strategy Management Practice



A picture of strategy management as a concept

Strategy Management plays a pivotal role in setting the direction for service management and ensuring that an organisation's IT services are aligned with its overarching business goals.


The essence of ITIL's Strategy Management practice lies in its ability to formulate organisational goals, outline actionable strategies, and allocate the necessary resources to achieve these goals.


The practice establishes the organisation's direction, focuses efforts, clarifies priorities, and provides consistency and guidance in response to changing environmental conditions. It is a foundational element that supports the seamless integration of IT services with business objectives, thereby driving value and fostering sustainable growth.

 

Strategy Management Maturity Scale

Maturity Level

Description

Criteria for Evaluation

1 – Ad-hoc

Strategy management processes are unstructured and reactive. There is a lack of formal strategy or inconsistently applied across the organisation.

  • No clear strategic objectives.

  • Ad hoc and reactive decision-making.

  • Minimal stakeholder engagement in strategy formation.

  • Lack of alignment between IT and business strategies.

2 - Basic

Basic strategy management processes are in place but are not fully developed or consistently applied. Efforts are project-based and not fully integrated into business operations.

  • Defined strategic objectives, but inconsistently achieved.

  • Occasional strategic planning activities.

  • Limited stakeholder engagement and feedback.

  • Some alignment between IT and business strategies, but integration is partial.

3 - Structured

Strategy management processes are formalised and documented. Strategic objectives are clear, and there is an effort to align IT and business strategies.

  • Clear and documented strategic objectives.

  • Regular strategic planning and review cycles.

  • Good stakeholder engagement and communication.

  • Efforts to align IT and business strategies are evident and mostly successful.

4 - Managed

Strategy management is integrated into organisational culture. There are clear metrics for measuring strategy effectiveness, and continuous improvement processes are in place.

  • Strong alignment between IT and business strategies.

  • Comprehensive metrics and KPIs are used to measure strategy effectiveness.

  • Active and continuous stakeholder engagement.

  • Regular strategy reviews and adaptive strategic planning.

5 - Optimised

The organisation exhibits advanced maturity in strategy management. Strategy is dynamic and continuously improved based on metrics, feedback, and market conditions. Innovation is driven by strategic objectives.

  • Dynamic and flexible strategy management that adapts to changes quickly.

  • High level of integration and alignment between IT and business strategies.

  • Advanced use of metrics and KPIs for continual improvement.

  • A strong culture of innovation is supported by strategic objectives.

 

 

Purpose and Objectives of Strategy Management

The primary purpose of Strategy Management within the ITIL framework is to articulate an organisation's goals and develop a coherent approach to achieving these goals through the effective use of IT services. This involves deeply understanding the organisation's context, defining desired outcomes, and establishing criteria and mechanisms for prioritising resources, capabilities, and investments.


The ultimate aim is to ensure the strategy is defined, agreed upon and maintained and achieved over time. 


Key objectives of Strategy Management


  • Defining the Organisation's Direction: By establishing a clear vision and setting strategic goals, Strategy Management provides a roadmap for the organisation, guiding decision-making and efforts towards achieving long-term success.

  • Focusing Effort and Clarifying Priorities: It helps prioritise initiatives and align resources to maximise efficiency and effectiveness, ensuring that every effort contributes towards the strategic goals.

  • Adapting to Environmental Changes: With the rapid pace of technological advancements and shifting market dynamics, Strategy Management ensures that the organisation remains agile and responsive, capable of adapting strategies to meet new challenges and opportunities.


Purpose of strategy management diagram
Purpose of strategy management


By aligning IT services with the organisation's strategic objectives, Strategy Management enhances operational efficiency and also drives innovation, improves service delivery, and ensures that IT investments generate maximum value for the organisation and its stakeholders.


The Stategy Creation Steps
The Stategy Creation Steps


Processes within Strategy Management Practice


Strategy Management Processes

The Strategy Management practice in ITIL is centered around two core processes: Strategy Generation and Continual Development, and Ad Hoc Strategic Decision-Making. These processes ensure the dynamic and responsive nature of strategic planning and execution within an organisation, adapting to both the expected and unexpected shifts in the internal and external environment.


Strategy Generation and Continual Development


Definition and Purpose

This process is foundational to Strategy Management, focusing on the ongoing development, agreement, and communication of the organisation's strategy. It is designed to support the practice's purpose and Practice Success Factors (PSFs) through a continuous cycle of assessment, planning, implementation, and review.



Strategy Generation & Continual Development Process
Strategy Generation & Continual Development Process

 

Workflow:


Strategic Assessment

This initial stage thoroughly analyses the organisation's current state, including its vision, principles, policies, business strategy, and external factors. The aim is to understand current strategies' existing strategic position, performance, and relevance. This assessment often involves strategic analysts and key stakeholders to ensure a comprehensive evaluation.


Strategy Planning

Based on the insights gained from the strategic assessment, this stage focuses on defining or updating the organisation's vision, principles, and objectives. Strategic initiatives are developed to support these objectives, with extensive consultation among executive leaders, key managers, and stakeholders. The results are documented and communicated widely for discussion and approval.


Strategy Discussion and Approval

The proposed strategy is scrutinised and discussed among stakeholders. Decisions are made based on the organisation's decision-making framework, with unresolved issues or concerns leading to further reassessment.


Strategy Communication and Implementation

Once approved, the strategy is communicated across the organisation for consideration and implementation, integrating with other practices to ensure coherence and alignment.


Strategy Review

This stage involves evaluating the progress and effectiveness of the strategy execution. It may lead to recommendations for corrective actions or trigger a reassessment of the strategy to ensure it remains aligned with the organisation's objectives and external environment.


Ad Hoc Strategic Decision-Making

Definition and Purpose

This process addresses the need for strategic direction under extraordinary circumstances not supported by the current strategy. It is activated when internal or external crises push the situation beyond the tolerances of the established strategy, showcasing the need for resilience and adaptability.



Ad Hoc Strategic Dcision-Making Process
Ad Hoc Strategic Dcision-Making Process

 

Workflow

Detection of a Strategic Exception

This initial step involves recognising a situation of strategic importance that deviates from the planned course, necessitating escalation to strategic decision-makers, typically the executive leaders.


Situational Orientation and Assessment

Decision-makers assess the reported situation to determine if it can be managed within the current strategy or if a new course of action is required.


Discussing and Agreeing on Decision

A course of action is proposed after a thorough discussion among decision-makers and stakeholders, considering complexity, risks, urgency, and available information. Strategic analysts may also contribute to this discussion.


Decision Communication and Implementation

The strategic decisions are communicated to relevant stakeholders for execution, with oversight retained by the decision-makers or appropriately delegated.


Review

The situation and decisions are reviewed for their effectiveness and relevance. The outcome of this review feeds back into the strategy generation and continual development process as necessary.

 

The Importance of External and Internal Factors

External and internal factors significantly influence the effectiveness of strategy management. Understanding and adapting to these factors is crucial for successfully implementing strategic initiatives.

Factor Type

Description

Examples

External Factors

Factors outside the organisation that affect its strategic direction and performance. These include broad environmental changes, industry trends, and other influences the organisation cannot control but must adapt to.

  • Political (e.g., changes in government policy)

  • Economic (e.g., economic downturns, inflation rates)

  • Social (e.g., changes in consumer preferences, demographics)

  • Technological (e.g., new technologies, digital transformation)

  • Legal (e.g., new regulations, compliance requirements)

  • Environmental (e.g., climate change, sustainability concerns)

Internal Factors

Factors within the organisation that influence its capability to formulate and execute strategies. These include aspects of the organisation's culture, structure, processes, and internal resources that can be managed or altered to support strategic objectives.

  • Organisational Culture (e.g., innovation, risk-taking)

  • Structure (e.g., hierarchical vs. flat organisations)

  • Processes (e.g., decision-making, communication)

  • Internal Resources (e.g., skills, knowledge, capabilities)

  • Stakeholder Engagement (e.g., employee involvement, customer feedback)

 

 

Implementing Strategy Management

Implementing Strategy Management effectively requires a structured approach, beginning with the clear articulation of the organisation's vision and strategic objectives. It involves the alignment of IT services and capabilities with these objectives, ensuring that IT investments and initiatives directly contribute to the achievement of strategic goals.



Strategy Management Implementation Process
Strategy Management Implementation Process


1. Articulating the Organization's Vision and Strategic Objectives

The foundation of effective Strategy Management lies in a clear understanding and articulation of the organisation's vision and strategic objectives. This involves:


  • Defining a Vision: Crafting a compelling vision statement that reflects the future the organisation aspires to create. This vision should be inspirational, guiding strategic efforts and decision-making.

  • Setting Strategic Objectives: Identifying specific, measurable, achievable, relevant, and time-bound (SMART) objectives that translate the organisation's vision into actionable goals. These objectives should address critical areas such as growth targets, market positioning, innovation, customer satisfaction, and operational excellence.

2. Aligning IT Services and Capabilities with Strategic Objectives

Once the strategic objectives are set, aligning IT services and capabilities to support these goals is the next step. This entails:


  • Service Alignment: Reviewing current IT services and determining how they support the strategic objectives. This may involve modifying existing services, retiring services that no longer align with organisational goals, or developing new services.

  • Capability Enhancement: Assessing and developing IT capabilities, including skills, technologies, and processes, to ensure they are equipped to meet current and future strategic needs.

3. Engaging Stakeholders in Strategy Development

Stakeholder engagement is critical to the success of Strategy Management. Engaging a wide range of stakeholders ensures that:


  • Diverse Perspectives are Incorporated: Engaging stakeholders from various parts of the organisation and external partners can provide valuable insights and foster a comprehensive approach to strategy development.

  • Alignment and Buy-In are Achieved: Regular communication with stakeholders about strategic plans and their role in achieving them helps to secure their commitment and support for the strategy.

4. Defining Strategic Initiatives and Allocating Resources

With strategic objectives in place and stakeholders engaged, the organisation must then define specific initiatives to achieve its goals. This involves:


  • Initiative Planning: Identifying projects, programs, and actions directly contributing to strategic objectives. Each initiative should have clear outcomes, timelines, and ownership.

  • Resource Allocation: Ensuring adequate resources (financial, human, technological) are allocated to strategic initiatives. This includes prioritising initiatives based on their expected impact on strategic objectives and available resources.

5. Establishing Monitoring and Review Mechanisms

Organisations must establish mechanisms for ongoing monitoring and review to ensure the strategy remains relevant and effective. This includes:


  • Performance Metrics and KPIs: Developing and implementing key performance indicators (KPIs) that measure progress towards strategic objectives. These metrics should be regularly reviewed to assess the effectiveness of strategic initiatives. (See section on KPIs).

  • Adaptive Strategy Processes: Instituting a process for regularly reviewing the strategy to respond to internal and external changes. This may involve adjusting strategic objectives, realigning IT services, or reallocating resources to ensure the strategy continues to support the organisation's goals.

Roles and Responsibilities

Successful strategy implementation relies on the active participation of all organisational levels, from executive leaders responsible for defining the strategic direction to individual team members contributing to strategic initiatives.


It is crucial to define clear roles and responsibilities, ensuring that the strategy is communicated effectively and that everyone understands their part in its execution.


Challenges and Solutions in Strategy Management

Organisations face numerous challenges in managing strategy, including aligning IT services with business objectives, adapting to rapid technological changes, and engaging stakeholders effectively. Solutions to these challenges include adopting a flexible, agile approach to strategy development, leveraging technology to support strategic decision-making, and fostering a culture of continuous improvement and innovation.


By understanding these challenges and employing strategic best practices, organisations can navigate the complexities of the modern business environment, ensuring that their ITIL Strategy Management practices drive value, support organisational goals, and foster long-term success.


1. Aligning IT Services with Business Objectives

The rapid pace of business and technological change can make it difficult to maintain alignment between IT services and the evolving objectives of the business.


Solution

  • Strategic IT Planning: Implement a strategic IT planning process that regularly revisits and realigns IT services with business objectives. This involves close collaboration between IT leaders and business executives to ensure that IT initiatives directly support business goals.

  • Business-IT Alignment Frameworks: Utilise frameworks like ITIL to systematically align IT services and business strategy. These frameworks provide structured approaches to aligning IT processes, roles, and metrics with business outcomes.

2. Adapting to Rapid Technological Changes

The pace of technological innovation can outstrip an organisation's ability to adapt, potentially leading to missed opportunities or misalignment with industry standards and practices.


Solution

  • Agile and Flexible IT Strategy: Adopt an agile approach to IT strategy, allowing for rapid pivots and adjustments in response to new technologies and market conditions. This agility can be supported by iterative planning cycles and feedback loops.

  • Continuous Learning and Innovation: Foster a culture of continuous learning and innovation within the organisation. Encourage experimentation and the exploration of emerging technologies through dedicated innovation labs or cross-functional teams.

3. Engaging Stakeholders Effectively

Engaging diverse stakeholders, including executives, employees, customers, and partners, can be challenging, especially in large or complex organisations.


Solution

  • Comprehensive Communication Strategies: Develop and implement comprehensive communication strategies that include regular updates, feedback mechanisms, and inclusive decision-making processes. Utilise a variety of communication channels to reach different audiences effectively.

  • Stakeholder Involvement in Strategic Planning: Actively involve stakeholders in strategic planning. This can include workshops, surveys, and focus groups to gather insights and feedback. Ensuring stakeholders feel heard and valued can increase buy-in and support for strategic initiatives.

4. Fostering a Culture of Continuous Improvement and Innovation

Building a culture that consistently drives improvement and innovation is challenging but essential for long-term strategic success.


Solution

  • Recognition and Reward Systems: Implement recognition and reward systems that incentivise continuous improvement and innovation. Celebrate successes and learn from failures in a way that encourages taking calculated risks.

  • Empowerment and Autonomy: Empower employees with the autonomy to pursue innovative ideas and improvements. Provide them with the resources and support needed to experiment and implement new approaches.

 

KPIs & Performance Metrics

KPI

Description

Method of Calculation

Percentage of Strategic Objectives Achieved

Measures the proportion of strategic objectives successfully achieved within a specified timeframe.

(Number of Achieved Objectives / Total Number of Objectives) * 100

Stakeholder Satisfaction Score

Assesses the satisfaction levels of key stakeholders with the strategy's formulation, communication, and outcomes.

Average stakeholder satisfaction survey scores on a predefined scale (e.g., 1-5 or 1-10).

Return on Investment (ROI) for Strategic Initiatives

Calculates the financial return on investments made in strategic initiatives against the planned objectives.

(Net Profit from Strategic Initiatives / Cost of Strategic Initiatives) * 100

Time to Market for Strategic Initiatives

Tracks the time taken from the conception of a strategic initiative to its implementation and operation.

Average time (days or months) from initiating to deploying strategic initiatives.

Strategic Alignment Score

Evaluates the degree of alignment between IT projects and services with the organisation's strategic objectives.

The percentage of IT projects and services directly linked to strategic objectives is assessed through strategic alignment reviews.

Number of Strategic Revisions

Counts the times the strategy has been revised or updated in response to internal or external changes.

Total count of formal revisions made to the strategic documents within a given period.

Employee Engagement Score

Measures employees' level of engagement and involvement in the strategic planning and execution process.

Average score from employee engagement surveys regarding their participation and influence on strategic processes (e.g., 1-5 or 1-10 scale).

Innovation Index

Quantifies the contribution of new ideas, products, or processes to the organisation's strategic objectives.

(Number of Innovations Contributing to Strategic Objectives / Total Number of Innovations) * 100

Risk Management Effectiveness

Assesses how effectively strategic risks have been identified, assessed, and mitigated.

Number of identified strategic risks successfully mitigated or avoided / Total number of identified strategic risks.

Strategic Initiative Completion Rate

Measures the percentage of strategic initiatives completed on time and within budget.

(Number of Initiatives Completed on Time and Budget / Total Number of Initiatives) * 100

 

 

Conclusion

ITIL's Strategy Management practice provides a comprehensive framework for aligning IT services with organisational objectives, navigating the complexities of the digital age, and driving sustainable growth. Organisations can enhance their strategic management capabilities, adapt to changing market conditions, and achieve their business goals by focusing on the key components, processes, and implementation strategies outlined in this article.


As the role of IT continues to evolve, the importance of effective Strategy Management within the ITIL framework will only increase, underscoring the need for organisations to adopt, adapt, and excel in their strategic planning and execution efforts.



 

This article discusses concepts and practices from the ITIL framework, a registered trademark of AXELOS Limited. The information provided here is based on the ITIL version 4 guidelines and is only intended for educational and informational purposes. ITIL is a comprehensive framework for IT service management, and its methodologies and best practices are designed to facilitate the effective and efficient delivery of IT services. For those interested in exploring ITIL further, we recommend consulting the official ITIL publications and resources provided by AXELOS Limited.

 

 

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