Introduction

Strategic planning is the process of developing the strategy or direction and action plan to
achieve the goals of an organisation. Strategic planning may be characterized as a systematic
effort to produce fundamental decisions and actions that shape and guide what a business
organization is, what it does, and why it does it. The objective of strategic planning is to develop
a map by which to manage an organization's positioning.

Strategic planning tools for IT

Common tools for performing an assessment of the internal and external factors impacting on
strategic decisions are SWOT, and PEST or PESTEL analysis.

SWOT

SWOT (strength, weaknesses, opportunities, threats) analysis is a method for analysing the
internal strengths and weaknesses, and the external opportunities and threats facing the
enterprise.

Strengths include a company’s capabilities and resources that enable it to provide value and
generate competitive advantage.

Weaknesses are issues that limit a company’s ability to exploit its strengths.

Opportunities provide an organisation with the chance to improve its competitive position.

Threats may come from competitors, individuals, organisations, regulatory bodies or other

factors in the greater business environment.

A SWOT analysis helps evaluate where a company stands in a competitive market and what
steps need to be taken for further strategic planning, helping decision makers draw a future
roadmap for the company.

SWOT is an important tool to understand the health of an organization. It allows decision makers
to identify not only where an organization stands, but also where they need to improve. This

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gives them the ability to be a proactive player in the market while helping them remain
competitive.

PEST

PEST (political, economic, social, technology) analysis is a macro framework for expanding a
SWOT analysis to include political and regulatory issues, economic factors, social norms and
attitudes as well as demographics, and technological developments.

Some organisations expand the PEST analysis to include legal and environmental concerns
(PESTEL).

The PEST analysis is concerned with the outside environment. Within each criterion are some
elements such as the law, physical environment, and perhaps even the mores and ethics of the
population. Those who are doing business in a foreign country would find the results of the
analysis extremely valuable. Information can determine whether there should be an expansion, or
just consolidation of business within the borders. As regulatory restrictions collapse around the
world, companies are looking for new markets that have not been probed before. The PEST
analysis can help make the decision whether or not a particular country or region holds any
potential for profitable business. Any market has the potential for good or bad, and the analysis
helps weigh things in a very objective balance. It goes without saying that PEST analysis
encourages strategic planning and provides the necessary data.

A significant amount of information has to be collected to make this worthwhile. Decision-

makers should plan ahead of time from what areas information is going to be extracted. PEST
concerns itself with only the external environment. It is therefore a tool to be used in
collaboration with other data sources such as the internal capabilities of the company. The data
may be entirely interesting, but may lead to considering factors that are important. That can
result in a paralysis by analysis which a company does not want to have happen.

With the caution is at stake in consideration the value of PEST for assessing the outside
environment cannot be denied. It too often happens that leaders and managers will deal with
guesses or assumptions in making very important decisions which makes leadership and
management training so important. Data supplied by this form of analysis allows better focus on

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what needs to be done. Companies definitely want optimise their presence in any foreign market.
That requires knowing more than just what a geography textbook will supply. Properly done, a
PEST analysis gives strangers a better view of where they wish to do business. It is the kind of
clarity that leads to more cost-effective decisions and better allocation of funds. It also improves
the ability of doing successful business.

Porter's Five Forces

Use Porter's Five Forces as a strategic planning tool to identify the economic forces that impact
your industry and determine your business' competitive position. The five forces include:
Competition in the industry; Potential of new entrants into the industry; Power of suppliers;
Power of customers; and Threat of substitute products

Research in IT area has shown that organizations exhibit different characteristics based on
factors related to IT adoptions. The competitive advantages of these organizations are dependent
on different factors. IT research by Thong et al. (1994) has indicated that success of IT
implementation largely depends on execution issues such as change management, defining
critical success factors, etc. Research indicates that these implementation issues impact degrees
of success for large and small organizations differently. Organizations also differ from each other
in terms of process maturity, meaning level of compliance to defined benchmarked processes.
Larger organizations are found to be following defined processes and exhibit high level of
compliance (Prananto et al. 2003). These large organizations have implemented IT systems and
have been able to align their business goals to IT. This has resulted in higher business benefits
and consistent results.

Every success needs to be celebrated; this is true even for IT systems being implemented. For
successful IT systems implementation, results need to be published all over the place which will
lead to self-satisfaction and an urge among other colleagues to implement these systems at their
place and be part of the celebrations (DeLone 1988). To achieve this, the organizations can
implement the IT applications and systems in some parts of the organizations in a pilot model.
These success celebrations will encourage employees to implement and use IT systems which
will simplify processes, integrate applications, and improve productivity of the organizations
while satisfying customers. Customer satisfaction will lead to further business orders (repeat

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business) and increased market share. Hence, this factor can be an additional consideration
which will determine competitive position for an organization

With the adoption of IT, organizations have been able to innovate and become more competitive
(Lefebvre and Lefebvre 1993). In the research paper it has been reported that innovation has
become a key strategy for many organizations to beat competition. Organizations in all industries
use innovations to bring new products and services that would provide value for money to
customers. Using IT, innovations and “product to market” cycle time has reduced.

Conclusion

IT has become important in all industries and has revolutionized the way different forces impact
characteristics of business models. The question is not the degree of impact, but when and how
IT will change these characteristics. The managers who can anticipate these impacts will emerge
as winners. Those who cannot foresee these changes will have to follow leaders and will find
themselves at a competitive disadvantage. Hence, firms need to plan and get ready for these
changing times.

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References

Ackermann, J., Yeung, M. A., van Bommel, E. (2007). Better IT management for banks. The

McKinsey Quarterly – Extracts from the original article IT operations of bank in Asia, Europe

and Latin America, by authors.

Chakravarthy, B. (1997). A new strategy framework for coping with turbulence. Sloan

Management Review, 38(2), 69.

Joseph, G. S. J., & Mohapatra, S. (2008). Managing information system in knowledge economy.

New Delhi: PHI