The Netflix Story And The Role Of IT Strategy
Most of us, if not all, already know the now legendary story of how a DVD rental-by-mail service founded in 1997 pivoted into an online streaming service that redefined how audiences consumed movies, TV shows, and documentaries. But this digital transformation of Netflix is only half the story.
When it first started its streaming service in 2007, the service was only available on computers to subscribers in the United States and it offered only a small selection of movies and TV shows. By 2017, i.e. within 10 years, it expanded to over 190 countries and had close to 130 subscribers, who could stream a wide variety of high-quality video content over the internet on a wide range of devices, including smartphones, tablets, smart TVs, and gaming consoles.
What made this transformation and growth of Netflix possible? In the mid-2000s, video streaming was still in its infancy and no one had the bandwidth required to stream high-quality video content over the Internet. So, what drove Netflix and made its success possible?
IT Strategy For The Win
In the mid-2000s, although video streaming was still new and the bandwidth required for streaming high-quality video was out of reach of most people, Netflix saw the potential value in developing the capabilities of delivering high-quality video content to customers. With this in mind, they invested heavily in their IT infrastructure to develop a streaming platform.
Their IT strategy was honed in on the following three elements:
1. High-Quality Video Streaming
Netflix needed to build a video streaming technology that could deliver high-quality videos over low-bandwidth connections on different devices such as computers, tablets, smartphones, and smart TVs.
2. Cloud-Based Infrastructure
Netflix needed infrastructure that could scale quickly so that it could efficiently handle surges in demand and traffic. So, a cloud-based infrastructure was the obvious solution that could seamlessly support rapid growth and global expansion.
3. Personalized Recommendations
To keep users engaged, Netflix focused on developing algorithms that could analyze viewing habits to come up with personalized recommendations.
Netflix’s success demonstrates how a well-executed IT strategy can not only transform an organization but also has the potential to revolutionize an entire industry. Investing in the right technology and infrastructure can put an organization in an opportune position to capitalize on changing market and technological trends.
So what is an IT strategy and how can you create one for your organization? In this blog post, I answer these and other related questions. Let’s get started…
What Does IT Strategy Mean?
IT Strategy is defined as the use of information technology (IT) to facilitate the achievement of business goals and objectives. It is used to ensure that the organization’s objectives are supported by the right technology capabilities, which create a competitive advantage and increase operational efficiency.
Its primary purpose is to identify and implement technology solutions that will enable the organization to achieve its business goals. But at the same time, IT strategy should be flexible enough to take into consideration the dynamic technology landscape and adapt to changes in the business environment.
In many instances, such as in the Netflix example we saw earlier, IT doesn’t just support business goals but also creates and drives business value. In other words, IT can not only help create capabilities that drive business value but also directly create sustainable value for the organization.
The Role Of IT In The Overall Business Strategy
The role of IT strategy is to align technology initiatives with the organization’s business goals and needs. In other words, it outlines how technology will be used to achieve strategic business objectives. It involves identifying and prioritizing technology investments, optimizing the use of technology resources, and ensuring that IT projects are aligned with the organization's overall strategy.
An effective IT strategy ensures that the organization is agile and competitive in the ever-changing technology landscape. It can also help drive innovation, improve operational efficiency, enhance customer experience, and reduce costs. In addition, an IT strategy also plays a critical role in cybersecurity and risk management.
Overall, an IT strategy is a critical component of an organization’s overall business strategy and plays a vital role in ensuring that the organization is in an opportune position to leverage technology for sustained growth and success.
Components Of An IT Strategy?
An IT strategy consists of a variety of components that depend on the organization’s goals and needs. The most common components include:
1. Business Alignment
IT strategy must align with the overall business strategy so that IT initiatives deliver the functionalities necessary to achieve business goals.
2. IT Vision And Mission
The IT vision and mission of an organization outline what it wants to achieve with technology and how it plans to do so.
3. IT Governance
IT governance defines the roles, responsibilities, and decision-making processes, thus providing a framework for monitoring and controlling key information technology decisions. This ensures that key information technology decisions deliver value to the overall organization.
3. IT Architecture
IT architecture defines the overall structure of the organization’s IT systems, including hardware, software, and applications.
4. IT Portfolio Management
IT portfolio management involves a system for managing the organization’s IT projects and initiatives.
5. IT Risk Management
IT risk management is the process of managing the risks associated with the operation, ownership, or involvement of IT within the organization. It involves identifying, assessing, and managing IT-related risks.
6. IT Performance Management
IT performance management involves measuring and monitoring the performance of the organization's IT systems and applications to ensure they are meeting business requirements.
7. IT Budget And Resource Management
IT budget and resource management involves ensuring that the organization's IT initiatives are properly funded and resourced.
8. IT Talent Management
IT talent management involves ensuring that the organization’s IT workforce has the right skills and capabilities to support its IT strategy.
9. IT Innovation Management
IT innovation and emerging technologies involves identifying opportunities for innovation that can help the organization achieve its goals.
What Is An IT Strategy Framework?
An IT strategy framework is a formal document that provides the structure and guidance for developing an IT strategy that aligns technology initiatives with the overall business goals. It defines which components are essential and how those components are interrelated.
In other words, the framework provides the logical foundation on which the IT strategy is built. It defines key IT components and their relation with IT strategy as well as the overall business strategy.
An IT strategy framework is necessitated because IT is a very complex topic that pervades all aspects of modern business. This ubiquity often relegates IT to merely a support function with little to no way of understanding how it moves the needle with respect to business goals and objectives. An IT strategy framework provides a way to visualize IT’s effectiveness in supporting organizational goals and objectives.
How Do You Create An IT Strategy?
Creating an IT strategy is not a one-time project but a process in which the document starts taking its final shape after multiple iterations. The key to starting off well lies in the alignment of business objectives and IT capabilities.
Here are the steps for creating an IT strategy:
1. Define the Business Needs
The first step in creating an IT strategy is to identify the organization's needs and priorities as well as gaps or deficiencies. This enables you to align IT goals with the larger business goals.
2. Assess the Current IT Environment
The next step is to assess the current state of the IT systems and environment. This involves analyzing the IT infrastructure, applications, processes, and governance to identify strengths as well as gaps and opportunities.
3. Define the Future IT Vision
Based on the assessment of the current state of IT, you define the future IT vision, which should be clear and concise and must align with the business objective. To facilitate monitoring and iterations, the vision must be specific, measurable, and achievable.
4. Develop an IT Roadmap
Once you know both the current state and future vision of IT, you can plan how to achieve that vision. This involves building a detailed roadmap with plans for specific initiatives, timelines, milestones, and resource requirements.
5. Build the Business Case
The technology landscape is constantly changing but organizations have only a limited budget. So any investment in IT needs to be justified by demonstrating how it will create value for the organization and support its business objectives.
Additionally, in many instances, the impact of IT on business objectives is not apparent. So you need to build a compelling business case that not only demonstrates the value of IT but also communicates it in a language that the stakeholders can understand.
6. Define IT Governance
The next step is to define IT governance, which involves defining decision-making processes, roles and responsibilities, and performance metrics. This helps ensure that the IT strategy is implemented effectively and efficiently.
7. Monitor and Adjust
As mentioned earlier, IT strategy is a process. It needs to be monitored continuously and adjusted to ensure that it continues to align with business goals and is effective in delivering value to the organization.
Conclusion
An effective IT strategy is imperative for organizations if they want to leverage technology to drive business results. Aligning IT initiatives with the overall business goals and objectives ensures that technology is working for your organization rather than against it.
A robust IT strategy helps reduce cost, improve productivity, enhance customer experience, improve security, and facilitate innovation, all the while adding business value and giving a competitive edge to your organization.
Does your organization have an IT strategy? Click the button below to reach out to us and learn how we can work together to develop an IT strategy so that your organization can achieve more with your investments in IT.
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About The Author
Hari SubediMarketing Manager at Jones IT
Hari is an online marketing professional with a focus on content marketing. He writes on topics related to IT, Security, Small Business, and Mindfulness. He is also the founder and managing director of Girivar Kft., a business services company located in Budapest, Hungary.