2008 International Conference on Computer Science and Software Engineering
The Importance of IT Strategic Demand Management
in Achieving the Objectives of the Strategic Business
Planning
Igor Aguilar Alonso
Faculty of Computer Science
Technical University of Madrid
Madrid, Spain
iaguilar@zipi.fi.upm.es
Edmundo Tovar Caro
Faculty of Computer Science
Technical University of Madrid
Madrid, Spain
etovar@fi.upm.es
Abstract—This paper describes demand management and its
strategic planning life cycle as related to a company’s businesses.
A key to good demand management is to know the demand
management process life cycle, starting with strategic planning.
Strategic planning is important for aligning an enterprise’s IT
and business goals in order to successfully complete projects on
schedule and on budget. This way effective strategic demand
management will be feasible. To achieve these goals, senior
business executives must liaise well with the CIO responsible for
managing IT.
CIOs are currently playing a very important role in decision-
making of the company's business and are responsible for
strategic initiatives to help with strategic planning and
identifying opportunities for automation to improve business
processes and reduce costs of investment in IT.
Keywords-component; Demand Process Life Cycle, Strategic
Demand, Strategic Planning, Strategic Alignment, IT – Business
Objectives Alignme.
I. INTRODUCTION
Information technology (IT) strategy varies from one
organization to another, and it must apply to all IT
departments. The IT departments are managed by the chief
information officer (CIO).
The best CIOs use a set of sophisticated techniques to
develop strategies and ensure that the routine IT operations
work properly at the least possible cost, giving added value to
the enterprise. Released from routine operating problems, they
are free to focus on maintaining effective working relationships
to create thorough business knowledge, recruiting the best
talent for their team, and maintaining a clear vision of industry
and the evolution of technology that could add value for the
978-0-7695-3336-0/08 $25.00 © 2008 IEEE 235
DOI 10.1109/CSSE.2008.1307
José Carrillo Verdún
Faculty of Computer Science
Technical University of Madrid
Madrid, Spain
jcarrillo@fi.upm.es
enterprise. This way, the CIO is able to identify, promote and
implement significant business change initiatives.
CIOs, along with the chief executive officer (CEO) and the
board of directors, are responsible for enterprise strategic
planning.
Strategic planning is one of the key business process stages
and is directly related to the demand process life cycle stages.
The CIO will participate very actively with other senior
executive members to develop business planning, thus ensuring
that demand management is efficient.
Section 1 is an introduction setting out the importance of IT
strategic demand management for achieving the business
strategic planning objectives.
According to the classification of demand [1], (1) strategic
demand, (2) tactical demand and (3) operational demand,
strategic demand is the hardest to manage. This is why the CIO
and the board of directors require thorough business knowledge
to implement and carry out a very detailed planning. This
article presents the importance of strategic planning in the
organization by aligning the IT goals with business objectives,
as well as a model for establishing priorities for projects and IT
resources.
Section 2 defines strategic demand and the demand process
life cycle. Section 3 presents strategic planning, CIO skills and
strategic planning activities. Section 4 discusses strategic
alignment. The last section lists the conclusions.
II. ESTRATEGIC DEMAND
Strategic demand is managed through the project portfolio.
Ideas are managed within this portfolio that spawning new
businesses or project innovation Strategic demand "represents
the most significant opportunity to increase business value”.
[2].
Project portfolio management (PPM) offers an event-based
process that can evaluate, prioritize and monitor projects.
Pressure to maximize profit can come from internal factors,
i.e. business partners, board of directors or other business units,
or from external factors, such as regulatory frameworks,
market competition, etc. For this reason, there needs to be a
very close link between strategic planning and project
processes from the very start.
Strategic demand management depends on (1) strategic
planning units, (2) strategic process planning, (3) resource
location, (4) budget location, (5) project selection and
implementation and (6) project "post-mortem" metrics to
improve good practice in the organization. By implementing
these best practices, we can manage demand at a management
process level, such as:
• Clearly identify strategic objectives [3]
• Use an event-based decision-making process [4]
• Take a life cycle approach to investment and profit
realization. [5].
A. Demand Process Life Cycle
The demand management life cycle [6], shown in Figure 1,
has the following states:
• Strategic planning
• Portfolio management
• Delegation of authority
• Financial planning
• Prioritization and funding, and
• Value management.
Figure 1. Demand process life cycle
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Now that we know what the demand process life cycle is,
we need to find out how mature the enterprise is with a view to
carrying out these projects.
A mature enterprise manages demand efficiently by
delivering quality products on schedule and within budget,
using the planned financial resources. One of the most
important and seldom used stages is strategic planning.
III. STRATEGIC PLANNING
Strategic planning is the first stage in the demand process
life cycle. It, is the process on which much of a business’
success will depend. It is this process that sets the priority for
all investments (including establishing strategies, values, risks,
and architecture).
At this stage the chief executive officer (CEO), the CIO, the
chief financial officer (CFO) and senior executives of the
enterprise must work very carefully to make the right decisions
for the business to succeed.
Strategic IT management should take into account the
following factors: the external and political economic
environment, competitor knowledge and competency
strategies, regulatory frameworks, skills and availability of
human resources and other additional factors. Thanks to the
knowledge of these factors, it will be possible to assess the
company and determine its growth, decide on its target
markets, whether to pursue a cost reduction strategy, whether
to go for a wide product diversification or focus on a single
market and find out what the expectations of external
stakeholders are.
From all this information, which must be confined to the
realm of the CEO, board of directors and the most senior
business executives, it will be possible to put together a
strategic planning to achieve business success.
A. Strategic Skills for CIOs
Generally, enterprises that have a "strategic CIO" are
companies using IT for product and service innovation [7],
where technology can be used more effectively throughout the
enterprise.
A Center for CIO Leadership study [8] reveals that CIOs
benefit significantly from developing the following skills:
• Promote collaboration between IT and lines of business
• Persuade senior management about the importance of IT
• Contribute to strategic planning and growth initiatives
• Identify business process automation and improvement
opportunities
• Improve internal and external users’ experience and
satisfaction
CIO abilities to interact and collaborate are related to the
following activities leading to strategic and innovative success:
• Political skill
• Influence, leadership, power
• Relationship management
• Inventiveness
• Strategic planning
• Determination
• Employee management
B. IT Strategic Planning and Priorities Model
Strategic planning aligns IT goals with the enterprise’s
business objectives. This alignment is a phase of strategic
planning and is positioned at IT priority level IV, as shown in
Figure 2. [9]. Figure 2 shows the IT use priority levels for an
organization, according to a hierarchy similar to Maslow’s
basic human needs ladder.
Figure 2. IT priority levels
Levels I, II and III, based on operations, infrastructure and
applications have an internal target. Levels IV and V are geared
to IT governance and have an external target. It is at level IV
where IT has to align with business
IV. STRATEGIC ALIGNMENT
The strategic alignment is one of the five domains within IT
governance [10]. For good governance to achieve IT
alignment, leaders and senior members of the company’s board
should be committed to and assume responsibilities for:
• Ensuring that the IT strategy aligns with the business
strategy
• Ensuring IT deliveries go according to plan
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• Directing the IT strategy to achieve a good balance of
investments across business support systems like business
change or business growth
• Making informed decisions concerning IT resource
targeting and prioritizing.
• Ensuring adequate IT and business-related resources are
available to deliver IT that meets expectations.
A. IT - Business Objectives Alignment
The alignment of corporate strategic plans with business
unit strategic plans is a key requirement for business
executives.
At this level, all decisions are made in keeping with the
business priorities. This is reflected at all levels through
staffing, budget, projects and applications architecture.
The business priorities should provide a perspective for
answering the following questions:
• What hardware should be purchased?
• What staff should be hired?
• What are the staffing levels for different tasks and
activities?
• What vendors are our partners?
• How is capital allocated and how are budgets drafted?
• What projects are going to be run?
• What projects can be carried out simultaneously?
The IT department should also exhibit the following
additional features:
• The IT department has developed the skills needed to
manage and develop projects. Demand management is
done methodically and focuses IT efforts on high
performance initiatives. The number of competing projects
under way is appropriate to the organization's capacity.
The rate of completion of projects must be reasonable and
long-term projects must not be lagging behind
unnecessarily. Demand management processes are used
and the projects are completed to the business’ satisfaction
and with high return on investment (ROI).
• The IT department should have implemented a steering
committee for governance and should meet frequently
with its members.
• The IT department should have implemented all major
policies required, should also be aware of the need for
compliance with any industry regulation or internal
company requirements.
• The CIO must have an effective relationship with senior
management and vice versa.
• IT budgets must be in keeping with industry averages and [9] John, B., Jon P., Nicholas G. C., The Executive's Guide to Information
Technology, Second Edition, Publisher: John Wiley & Sons Pub, March
should target the costs of appropriate activities. 23, 2007.
[10] A. W. Paul; IT Alignment: Who is in Charge?, IT Governance Institute,
Roling Meadows USA, 2005.

V. CONCLUSIONS
The conclusions can be drawn are as follows:
• The demand management strategy will succeed if
senior company managers liaise well and implement
sound strategic planning.
• As part of the demand management life cycle, strategic
planning is regarded as one of the keys to an
enterprise’s business success.
• At present there is no set model for maximizing IT -
business alignment in all situations, and a great deal
will depend on the nature of the business, the its
capacity, its markets, the IT unit, leadership style
deployed in the business and entrepreneurial culture
and on the maturity of IT governance in the
organization.
• Business managers want to have the technology and
return on investment but do not work properly with
CIOs to achieve this.
• It is very important for the strategic planning
committee to meet regularly to evaluate company
performance and be able to make the necessary
adjustments to strategies for ongoing projects.
• If IT projects have not been prioritized, aligning the
objectives of the project portfolio with corporate
objectives, it is very hard to tell whether they are
successes or failures. Unless this condition holds, an
organization is unlikely to be able to tell whether the
projects it develops maximize the profit expected by
the shareholders of investments in IT.
• At present, the challenge is to build a business model
for which the CIO, senior executives and business line
managers are responsible.

REFERENCES
[1] S. Cray, “How IT Must Shape And Manage Demand”, Forrester,
Cambridge, June 15, 2006.
[2] B. Andrew, “Defining The MOOSE In The IT Room”, Forrester,
Cambridge, October 18, 2005.
[3] S. Cray, “Relationship Managers: Focal Points For Innovation”,
Forrester, Cambridge, June 15, 2006.
[4] V. Margo, “What Successful Organizations Know About Project
Management”, Forrester, Cambridge, May 26, 2006.
[5] G. Chip, V. Margo, “Moving Up The Portfolio Management Ladder”,
Forrester, Cambridge, March 22, 2004.
[6] Susan, “Maturing Your Demand Management Practices”, Valuedance,
[7] Center for CIO leadership, “La Profesion del CIO”, IBM, New York,
October 2007.
[8] Center for CIO leadership, “La Profesion del CIO”, IBM, New York,
October 2007.

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