Tactical Vs. Strategic

C Vision

Tactical vs. Strategic ? By: Rick Spair – Principal C Level Advisor

Knowing when a project has strategic implications makes the difference between meeting business expectations and project failure. This inability to differentiate is a key contributor to the rampant misalignment of IT and business in small- to mid-sized enterprises (SMEs). Improve IT’s success ratio by understanding from the outset whether a project is tactical or strategic in nature. Strategic Awareness Is a Manager’s Responsibility Every business has a strategy, even if it is not formally documented. The projects that a business engages in offer a clear reflection of strategic intent. Most SME businesses lack the time and resources required to capture and document a majority of the management decisions being made. The management team is too busy to get involved in most departmental project decisions. This puts the onus on executives and managers in every area of the company. Successful companies are run by a management team that understands project decisions required to keep the company moving in the right direction. Unfortunately, most IT decision makers are so caught up in day-to-day operations they cannot distinguish the difference between tactical and strategic projects. Strategic vs. Tactical Although few SME businesses can hand their IT managers a three-to five-year strategic plan, most will have a list of prioritized projects. The IT decision maker needs to obtain this information and understand the business drivers for each. This awareness helps IT add business value by:  Identifying technology solutions that satisfy multiple business objectives.  Minimizing future costs by addressing additional functionality and scalability.  Leveraging a project to introduce new ways of automating processes. Once the CIO has a list of projects and understands the business driver of each, he or she will have a good idea which are strategic and which are tactical. In general, strategic projects are long-term and drive the business forward, while tactical projects are short-term and maintain or improve current operations. The table below provides a rough blueprint for project profiling.

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Project Type

Strategic

Tactical

Project Goal

   

    

Time Frame Complexity

3 to 24 months High

Competitive advantage Decreased costs Increased revenue/profit Launch new product/service

Business continuity Satisfy regulation Security Strategic components System upgrades

1 to 6 months Low to medium

Case Study: Expanding ERP Functionality A prominent manufacturer recently deployed a large Enterprise Resource Planning (ERP) upgrade. The upgrade included the addition of accounts receivable and accounts payable modules, multi-currency handling, and integration with a Web-based, client-facing ecommerce solution. The project started when the CEO gave the green light to the finance department’s request for an accounts receivable module. Instead of immediately putting his nose to the grindstone and finding the best solution for the organization’s existing ERP system, the IT manager asked senior management about the project driver. Senior management revealed its plans to double revenue in the next two years. It would do so by expanding its product line and moving into foreign markets. It also wanted to provide clients with the opportunity to purchase items through the Web site. The strategic implications of the finance department’s project request were clear – automated invoicing would allow the enterprise to increase the number of transactions it could process without increasing head count. The IT manager realized that this ERP project was much more complex than adding an accounts receivable module. He posed some serious questions to senior management:  What if the current ERP system cannot handle the transactions required to double revenue?  Should the company use this opportunity to automate accounts payable?  Will the move into foreign markets require multi-currency handling? This was a strategic project, and the IT manager had the ear of senior management. He recognized three important ways IT could add substantial value to the business:  Upgrading the overall ERP system would satisfy multiple business objectives.  Adding an accounts payable module and multi-currency handling would give the organization leverage with the vendor and save costs.  Integrating the ERP system with the Web site. The senior management team was pleased with these synergies and the IT manager had little difficulty obtaining executive buy-in. Once IT received commitment, he broke the project into a series of smaller, manageable components. The strategic project became a series of tactical projects. In addition to addressing compliance, security, and disaster recovery, tactical projects provide the subset of milestones required to complete a strategic project. While ERP expansion was a long-term strategic project, IT would employ the following tactics to complete the project.  Complete a feasibility study of the current infrastructure to decide whether to upgrade the current system or buy a new system.  Develop a project plan.  Complete a Request for Proposal (RFP) and send it to the appropriate vendors.  Implement the upgrade or the new ERP system. In Summary Knowing the difference between a tactical project and a strategic project increases IT’s value to the business.

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