Strategic Grid for IT

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Description of Strategic Grid for IT. Explanation.


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Strategic Grid (McFarlan)Definition Strategic Grid for IT. Description.

The Strategic Grid for IT from McFarlan, McKenney & Pyburn ('83) is a tool that can be used to assess the current operational dependence on information systems (low, high) versus the future potential strategic impact of information systems (low, high). Combining the 2 views in a matrix results in 4 possible combinations:

  1. Support (currently low, low in the future too). IT has little relevance and simply supports some processes. Firms or systems in this quadrant will place the least amount of emphasis on IT (planning) in terms of senior management concern and involvement.

  2. Turnaround (currently low, high in the future). IT will be a key feature of future strategic planning. Significant top management involvement in IT (planning) must be established.

  3. Factory (currently high, low in the future). It is important in terms of day-to-day operations but it is not felt that there are any major IT developments on the horizon that will fundamentally alter the nature of the business. The level of senior management involvement is decreasing.

  4. Strategic (high, high). IT Strategy is very important ands plays a critical role in the formulation of the overall business strategy. High level of involvement of top management in IT strategy.

One can use the McFarlan Grid to analyze the impact of information systems as a whole for an organization or for a division or department of an organization. But the strategic grid can also be used to analyze the dependence and impact of individual IT applications or systems.

Any organization would be wise to have an IT Strategy, even if it is in the support quadrant.

According to Professor Earl, there are nine reasons as to why any organization should have an IT strategy:

  1. IT involves high costs.
  2. IT is critical to the success of many organizations.
  3. IT is now used as part of the commercial strategy in the battle for competitive advantage.
  4. IT is required by the economic context (from a macro-economic point of view).
  5. IT affects all levels of management.
  6. IT has meant a revolution in the way information is created and presented to management.
  7. IT involves many stakeholders, not just management, and not just within the organization.
  8. The detailed technical issues in IT are important.
  9. IT requires effective management, as this can make a real difference to successful IT use.

Strategic Impact of IT Forum (8 topics) Help
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  Great Questions to Assess the Strategic Impact of IT
What are the right questions at a time when digital technologies are beginning to disrupt industries and mastering these technologies may be the key to long-term survival and success?
1. How will IT change the basis of competition in our industr...

Moving to the Cloud and Outsourcing Strategy

This is indeed an interesting model that can be aptly used in decisions like managed outsourcing or moving to the cloud:
- Applications which are in the support and factory quadrant are the ideal ca...

Insufficient IT Knowledge at C Level

Lack of knowledge of the CEO (and the rest of the board) about the role of IT for their business is a big issue (not easy). Mis-plotting the situation in the McFarlan Grid will lead to severe problems in the future....

IT is a Value Enhancer for Any Organization

Clear business objectives should drive the IT solutions necessary for the organization. Often companies get the latest technology solution without assessing the organization policy. In todays knowledge economy definitely IT adds value to any type of ...

Where is the Value for the Customer in the Strategic Grid for IT?

This model seems a very internal (within the company) discussion. Should value for the customer not be more pronounced?
At one side you have the needs/values/expectations of the customer. At the other side you have the dream, vision, miss...

Usage of the McFarlan Grid

The McFarlan Grid is a useful tool for IT planning. IT executives have failed to provide a solid "risk analysis" to the business model, which is why B & IT relationships fail. The 2007 Standish Group survey proves this point with over 39% of I...

IT in Support Quadrant of McFarlan's Strategic Grid

Over four decades ago the IT/computing/data processing drive was to develop an IT hierarchy and knowledge/experience base whereby the top IT level were fully conversant with business issues, impact etc - were business men with extensive wide ranging ...

Assessing the Relationship Between Business and IT

Key factors to assess the relation of IT with the Business should also include:
* Relevance - does IT want to be a key business partner, and a strategic part of the plan? Or are they simply a support model, that reacts and usually ...
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Compare with: Strategic Alignment  |  Impact/Value Framework  |  Strategic Thrusts  |  TDC Matrix  |  Chief Information Officer

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