McFarlan’s Strategic Grid

Overview

The strategic grid was introduced in 1983 by McFarlan, McKenney and Pyburn in Harvard Business Review's "The Information Archipelago -- Plotting a Course."  

The strategic grid model is an it specific model will be that might be designed to assess the nature of one's comes that the it organization has in its portfolio along with the aim of seeing how well that portfolio supports the operational and strategic interests of one's firm.


The CIO plots comes and systems direct from it organization’s portfolio connected to 2 dimensional graph. the x axis represents impact of one's project on it strategy. One way for you to expressing almost everything that mean by this is often : What choices does that project provide the firm by way for you to affecting one in every of porter’s 5 forces in our own favor ? Does it replace the nature of competition in our own market, affect the bargaining power of buyers or suppliers, raise or lower the barriers to firmly entry into our market, or modification switching prices for our particular merchandise and services ? Does it enable us to firmly provide fully new merchandise and services, or enable us to firmly substitute one in every of ours for one in every of somebody else’s within the eyes with the customers ?

The y axis represents the impact of one's project on it operations. One way for you to expressing this is often to speak about that comes who might be high for this axis improve the efficiency or quality in our existing systems and business processes, or lower their prices.

The graph is usually drawn like so:

Another method to believe the 2 axes is in relation out to argyris’ organizational learning designs : one loop and double loop learning. Influence on operational ability is like one loop learning : Incremental method improvements on what it is that we already do. Influence on strategy is like double loop learning : look and get a utterly new method.

The Quadrants

• Support : low operational impact, low strategic impact. this quadrant is about native method improvements for individual users. 
• Factory : high operational impact, low strategic impact. this quadrant is about operational improvements that affect massive portions as to the firm, and are aimed at improving performance or decreasing cost. 
• Turnaround : low operational impact, high strategic impact. this quadrant is about exploiting new technologies to actually give strategic opportunities. 
• Strategic : high operational impact, high strategic impact. it organizations which have most comes during this quadrant recognize that it may each improve core operations as to the firm whereas simultaneously generating strategic choices.

CIO’s consideration

The CIO can employ the strategic grid to firmly assess business/it alignment, to firmly assign appropriate governance and oversight to firmly individual comes, and to firmly choose comes and systems for outsourcing.

After plotting all comes within the portfolio by the grid, the CIO assesses in which the bulk out of them lay : that would be how it's being utilized in the organization. This may indicate how well aligned it strategy is to firmly business strategy, and could be taken as either a confirmation that the IT org is practicing what is predicted of them from the business organization, or being a wake up decision. When the comes that the it organization is engaged on aren't in which the CIO expects the them as being, then they will see what a sort of changes want as being made.

Secondly, completely different quadrants demand completely different varieties of project governance : support quadrant comes often is handled because of it specialists and individual finish users ; factory quadrant comes really ought to be handled by a business executives and this executives operating along ; turnaround quadrant comes really ought to be handled by business executives, IT executives and emerging technologies development teams ; and strategic quadrant comes really ought to be initiated, defined and managed at the highest levels of one's firm. The failure of several comes may return about as a result of the quadrant these lay in was misidentified and inappropriate governance was applied to the people.

Thirdly, the CIO can employ the order of the project within the grid to firmly assess how sensible a candidate it's for outsourcing. support and factory comes are sensible candidates for outsourcing largely as a result of economies of scale that outsourcing vendors could be ready to provide, access to firmly skills and best practices that the it org may not possess, and increased time for them to market/implementation. Turnaround and strategic quadrant comes really ought to be outsourced with caution ; the firm may elect to outsource such project to firmly access rare skills, resources or applications or to firmly work around an out-of-control it organization.