Due to the distribution of ITIL, Demand Management is a common business practice. Requirements from different departments are received, analyzed and prioritized. The IT department then decides how to realize them and finally implements them. The experience over the last years helped to improve the processes. Nevertheless, in some organizations uncertainty still exists. Despite of a professional Demand Management there are (huge) gaps in the IT support. The IT department is still left out during the implementation of Shadow IT and is involved very late during the defintion of system requirements of enterprise systems. Therefore, the question arises: What are the causes of this situation? I will answer this question in today's article “Strategic Demand Management”.

The answer is, in a way, aready hidden in the headline. The situation described above about Demand Management is mainly caused by a short-term and operative thinking. Usually the Demand Management incorporates the concrete requests of business departments. However, this process is limited to tangible requirements. The long-term perspective suffers from the necessary operationalization and the link to budget and strategy processes. In practice, this often leads to organizations not talking about the long-term IT support. This gap can be easily closed with “Strategic Demand Management”.

What is "Strategic Demand Management"?

Strategic Demand Management aims at the long-term control of IT support in the business departments. It is based on two essential components: the strategic development plan and the strategic application portfolio. These two components are presented below:

The strategic development plan establishes the relationship between enterprise architecture management and demand management. Based on the main processes and functions of the organization in the business view, the used applications are assigned in the application view. The applications can be managed by the IT department as well as by the business department itself (outlined in green). The infrastructure view maps the technical IT infrastructure to the other layers.

The strategic application portfolio is based on the McFarlan model. Here, the applications described in the strategic development plan are assessed by their influence on the company's competitive position. This influence may already be present (business dependence) or lie in the future (competitive potential); the present influence shapes the risks or rather dependencies on the IT. This influence can be classified as high or low. The same classification serves to classify the differentiation in the competition and therefore, the future influence. The results are four possible modes: Support Mode, Turaround Mode, Strategic Mode and Factory Mode. These modes reflect both the potential competitive potential of an application as well as the needs for strategic control.

Together, these two perspectives provide a strategic view of existing or planned applications. Thereby, they enable an integrated and long-term control of the demand of a business department.

What do I need?

The implementation of a strategic demand management does not require a big project. However, there are four key components that are essential for the success of the approach:

1. Adaptation of the Management System of IT

A prerequisite for the success of strategic demand management is the development of a common understanding of the role of IT between the business departments and the IT department. There must be a common value system for the use of technology. In addition, the organization must accept and apply universally accepted boundaries in IT design and use. Ideally, as part of an adaptive IT governance, it is also clear which tasks the business departments can conduct.

2. Transparency across all Applications

Another condition is the creation of transparency about the AS-IS situation. Shadow IT must be identified to illustrate the actual IT demand. As shown above, the applications created in the business department as well as the formal systems of the IT department are part of the strategic development plan and the application portfolio.

3. Definition of Important Roles

The long-term planning of the IT demand requires appropriate actors in the organization. Therefore, two important roles must be established in the organization. The domain architect and the process owner. Domains differ from company to company. Examples include "Finance" or "Sales". Both roles do not necessarily have to be full-time, but there must be enough resources left to make room for these important tasks.

The domain architect is part of the IT department and overviews the architecture of the business domain. He is able to plan it in the long term by coming to an arrangement with with the process owner from the business department. Hereby, she identifies strategic action areas for the development of the IT support. In turn, the process owner discusses the IT vision with the business department and is able to convey it to the architect. Together, they evaluate the strategic portfolio. They also discuss which business applications can be run by the IT department and which applications might be candidates for consolidation. After all, together with the enterprise architect, they plan the integration and standardization of the applications.

4. Connection to Operational Demand Process and Project Portfolio Management

Strategic demand management must be integrated with the remaining IT management processes. Naturally, this includes the coordination with the operational demand management. Two questions arise: When does a strategic demand become a real task? How can organizations identify operational demands with a strategic influence? At the same time, the strategic development of a domain must be aligned with the company's project portfolio for prioritization.

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We have already discussed the adaptation of the management system via adaptive IT governance and the management of shadow IT in various other articles. Next time we will deepen the last two areas.

Do you see any other tasks of a strategic demand management? Have you had similar experiences? I am looking forward to your reply.

Author: Prof. Dr. Christopher Rentrop