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How to Create a Strategic Plan

Looking for a way to take your company in a new and profitable direction? It starts with strategic planning. Keep reading to learn what a strategic plan is, why you need it and how you can strategically create one.

What Is a Strategic Plan?

When it comes to business and finance, strategic planning will help you allocate your resources, energy and assets. When implemented, a strategic plan will begin to move your operations in a more profitable direction. The primary goal of the plan is to ensure you and any other stakeholders are on the same page and striving to reach the same goal.

Creating a strategic plan requires a disciplined effort. Once you put the plan into action, it will influence the segment of customers that you target, how you serve those customers and the experience those customers have.

Assess the Current Infrastructure and Operations

The first step in creating a strategic plan is to carefully assess your existing infrastructure and operations. You can do this through a SWOT analysis, which is an analysis of the company’s strengths, weaknesses, opportunities and threats. The goal here is to pinpoint the resources that you use to carry out your day-to-day operations, to look at your monthly revenue patterns, to list any company challenges related to the customer experience and, most importantly, to look at your marketing methods and ways to improve the overall customer experience.

Creation of Mission Statement and Objectives

The next step is to create a mission statement. You may already have one, but it’s important to note your mission at the top of the strategic plan document you create. This ensures everyone is focused on the same goal. Your mission statement should cover why you started the company and what you intend to accomplish through the products and services that you offer.

In addition to the mission statement, make sure to outline both short- and long-term objectives. List the objectives according to their priority and designate certain managers or employees to be responsible for each one. Also, jot down the resources that will be used to achieve each objective.

Measure Performance

Now that you know what you’re trying to achieve and who is responsible for each goal, it’s time to deploy the plan and measure its progress. A weekly meeting is extremely important for all managers and stakeholders provide feedback. Your goal is to determine if the company is headed in the right direction. If not, you’ll need to revise the strategic plan accordingly.

Strategic Plans Are Ongoing

Once your strategic plan helps you achieve several objectives, it’s smart to regroup and set new objectives. As your company grows, you can set new goals to ensure the company keeps moving forward. You can share the success of your strategic plan with potential investors as a way to tap into new capital funding.

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U.S. Department of the Interior

Portfolio Management

DOI’s portfolio management program is designed to consolidate and eliminate duplicative spending on Commodity IT, identify opportunities for modernization and shared services, and drive mission and customer-focused IT solutions. The supporting processes ensure that the Department can continuously select a balanced portfolio of IT investments, control the performance of development/modernization activities, and then regularly evaluate whether outcomes are realized.

DOI’s  2020-2025 Information Resource Management (IRM) Strategic Plan

This plan articulates strategic priorities and expected outcomes to deliver technology and information resources to mission programs and the public over the next five years.  By 2025, DOI will be a data-driven, customer-centric organization with an optimal IT landscape that invests in innovative technologies and a highly skilled workforce.

IT Governance and FITARA Support

The portfolio management program supports an integrated governance process that enables annual IT budget development and submission to OMB, strengthens the role of the CIO in decision making, and provides alignment between strategic planning, capital planning, budgeting, and acquisition. The Federal IT Acquisition Reform Act (FITARA) requires agencies to establish management practices that align IT resources with missions and provide the CIO with appropriate visibility into the management of IT resources across the agency. To support this requirement, the portfolio management program develops annual IT strategic priority guidance, supports the budget formulation process to jointly certify IT resources between the IT and budget functions, and monitors IT acquisitions for conformance to strategic policies.

Capital Planning and Investment Control (CPIC)

CPIC is a core function of the portfolio management program. CPIC is a structured, integrated approach to managing information technology (IT) investments. It is the primary process for making investment decisions, assessing investment process effectiveness, and refining investment related policies and procedures. It ensures that all IT investments align with the agency’s mission and support business needs while minimizing risks and maximizing returns through the investment’s lifecycle. CPIC is mandated by the Clinger-Cohen Act which requires government agencies to use a disciplined process to acquire, use, maintain and dispose of IT.

DOI’s IT Investment Portfolio is viewable on the federal IT Dashboard .

21 st Century Integrated Digital Experience Act

The H.R.5759 - 21st Century Integrated Digital Experience Act  (IDEA) requires an executive agency that creates or redesigns public websites or digital services to, among other things, ensure that the websites or services are user-friendly, accessible to individuals with disabilities, and is provided through an industry standard secure connection.

2020 Report to OMB on IDEA, Section 3

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Strategic Planning For Asset Management – An Overview

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In the last few years many companies have begun to realize the importance of Strategic Asset Management (SAM) as an enterprise strategy that, properly implemented, will improve financial performance. Typical results of an effective Strategic Plan for Asset Management include a 20% - 50% reduction in maintenance cost accompanied by a 15% - 20% increase in real capacity, with no capital investment in production equipment. The tangible results include a significant increase in profitability accompanied by a dramatic reduction in unit cost.

INTRODUCTION

In her paper "Improving Profitability Through Reliability" Dr. Carol Vesier states, " The goal of all public companies is to enrich their investors. A requirement to increasing shareholder wealth is profitability. Profitability is the return on an investment. Measurements of return include cash flow and net income while measurements of investment include operating assets, total assets and equity. All strategies to improve profitability can be classified as employing one or more of three fundamental mechanisms of which improving reliability is one. As discussed below, each of these mechanisms has a different risk-reward relationship.

Research has shown that increasing asset productivity and reducing costs are powerful contributors to improving profitability. Successful strategies that allow harnessing two of the most powerful contributors to profitability will have more impact than those based on weaker contributors to profitability. Manufacturing reliability improvements offer a unique opportunity to simultaneously increase asset productivity and reduce costs. Because of this ability, reliability strategies offer an excellent opportunity to increase profitability. Most companies should include a global reliability strategy amongst their profitability strategies . "

During the days of the Dotcom Craze, Boston Consulting Group conducted a study titled " Asset Productivity: The Next Wave ". In the study Nichol and Amouyal stated, " In order to compete for funds, companies must offer investor returns that are competitive with other opportunities. Alternative investments such as dot-com and others with non-traditional business models have raised the bar ." While being a Dotcom no longer guarantees a wild ride in the stock market, the basic statement remains true today - in order to compete, your company must offer investor returns that exceed averages for your industry.

The researchers believed that shareholder return is a result of three factors:

The study results identify asset productivity as the most powerful mechanism for increasing Shareholder return. It states the following, "Companies have exhausted methods of traditional cost cutting. They have experienced the downside of rapid growth and have neglected the balance sheet. Fundamental changes in industry structure such as deregulation, outsourcing, and IT innovations have taken their toll. The only remaining opportunity is to increase Asset Productivity. "

Fixed Asset Productivity = Sales Volume x Selling Price Net Fixed Assets

Sales Volume= Max Daily Rate x Utilization x 365 days

The author believes that the most effective way to increase Fixed Asset Productivity is to maximize asset utilization by increasing the Reliability of the Assets and associated Business Processes. In a rather heated debate my former boss (then President and COO of HSB Reliability Technologies) angrily said to me, "The problem with you engineers is that you think everything is about process!" Everything is about processes and the people that implement them and the culture in which they work .

Developing and implementing a Strategic Plan for Asset Management requires significant effort and knowledge. Most companies have difficulty finding a sufficient supply of these valuable commodities to implement SAM internally. Many companies also struggle with figuring out how to get started and what direction to proceed. A Roadmap is nee ded !

WHY CONSIDER SAM?

In the past, Reliability Improvement Initiatives have been restricted to site level programs that achieve impressive results at individual manufacturing sites. These benefits often are lost due to management changes, failure to establish a "Reliability Culture", and lack of Senior Management support. The ability to duplicate results across multiple sites is restricted due to cultural differences, lack of consistent business processes, and plain old territorial jealousies. Strategic Asset Management (SAM) programs are designed to overcome these deficiencies and achieve significant and sustainable improvement in corporate business processes and financial performance.

The benefits of a successful Asset Management Strategy include:

CASE STUDIES

The following companies have developed and implemented a Strategic Plan for Asset Management at the corporate or business unit level to improve their Asset Utilization and achieve impressive financial performance improvement. The names of the companies are removed to protect confidentiality, but more information and specific contacts in each company are available if you wish to contact the author.

Global Oil & Gas Producer

This company produces nearly 700,000 equivalent barrels per day of crude oil and associated gasses from its Gulf of Mexico base where it operates approximately a dozen offshore platforms as well as several onshore processing facilities. Working with our firm, they have established an objective of consistency & economy across these operations, which include deepwater platforms, shelf platforms, and onshore processing facilities.

Senior management realized that they needed to eliminate unnecessary equipment downtime in order to increase production volumes to an acceptable level. Health, Safety and Environmental (HSE) and Asset Integrity concerns are key issues for the management team, but they lacked alignment on the best way to address them.

The existing operations had no common processes for maintenance and reliability management being applied in their diverse and distributed asset base. The geography ranges from Colorado to Michigan and about 150 miles into the Gulf of Mexico. The dispersed sites have levels of staffing that vary from 3 to 250 persons. They had experienced numerous failed attempts at maintenance improvement and were experiencing assessment fatigue, having been "Maintenance Assessed" seven times in past five years.

Management decided to embark on a Strategic Plan that initially focused on Stage 1 of the SAMI Asset Healthcare Triangle. We collaborated in a multi-week Strategic Planning exercise to:

Strategic Initiatives for Maintenance and Reliability were defined and a clear value proposition supporting the investment was presented. The executive management team and the line leadership were aligned and focused on the required path forward. The key stakeholders had a keen sense of ownership for implementing the Strategic Plan. A governance structure was established to steer the implementation.

The Team engaged the operations management in owning their site implementations. (e.g., financial improvements and project progress owned by line organization, not the project team).

An "Owners Group" was developed to manage and review implementation activities and progress. They commenced with the training of resources and kick off of the implementation. Processes were put in place to implement results tracking and adjustment of resources and the project approach as necessary The results through the end of calendar 2003 are exceeding the projections and the potential upside forecasted in the business case.

Annualized operating expenses have been reduced by $21 M. The production capacity increases are even more outstanding. An additional production volume of 13.2 M equivalent barrels per year has been produced at no incremental costs.

This represents in excess of $300 M in additional revenue at current market prices. In addition to these results, the project is being achieved ahead of schedule representing a cost reduction to the client, as units test high for sustainability of the new processes earlier than originally forecasted.

Global Life Sciences Company

The author was the Project Executive on the Reliability 2000+ initiative between 1995 and 1999 for a Global Life Sciences Company. The initiative was focused on reducing maintenance costs and improving the reliability of manufacturing and packaging facilities in North America.

This Global Company is involved in Research, Manufacturing and Marketing of Life Sciences Products. Annual sales exceed $32 billion with approximately 60,000 employees globally. They produce a broad range (over 3000 products) of Prescription Drugs, Vaccines and Antibiotics.

Their Manufacturing Division has over 12,000 employees worldwide. Manufacturing technologies include: Bulk Chemical Manufacturing, Fermentation, Tablet Formulation and Packaging, and Sterile Operations.

Perhaps the greatest achievement of the initiative was the implementation of a new Reliability Design processes that enabled them to bring the first AIDS Bulk Pro-Tease Inhibitor to full production reliably and safely, faster than ever before. This produced millions of dollars in additional revenue and provided early treatment for thousands of critically ill people.

SAM CONCEPTS

The "Asset Management Business Process" cuts across all enterprise functions: operations, engineering, management, production, purchasing, and maintenance. This implies that each of these organizations has an opportunity to contribute to enhanced equipment reliability and to benefit from the results. The members of these organizations will have roles to play in the core business processes that are integrated into the Strategic Plan.

The Strategic Plan documents the current status, provides a future operations vision and identifies of a set of detailed strategies and projects for achieving the future vision.

It establishes effective leading and lagging performance indicators and goals that clearly reflect the adoption of new behaviors and trend the achievement of stated objectives that results from these changes. The Strategic Planning process aligns Senior Management as to strategy, objectives, performance indicators, and the means by which we will achieve success.

The SAM Model

In a recently published paper titled "The Future of Asset Management" Brad Peterson, Founder and President of SAMI, stated, " This article explores a broader vision for asset management than has been previously articulated and brands this vision Strategic Asset Management (SAM). Based on successful experience with our clients, SAM is an integrated set of processes that systematically derive the highest value from plant assets, through a consistent philosophy, plans and objectives, and cooperative involvement by everyone in the plant. SAM represents a higher level of performance than is currently practiced or even recognized by the manufacturing community today. "

"Any useful model to guide action will have several characteristics:

· Simplicity : All of the greatest ideas are simple in concept. If not kept simple, they are not fully understood or remembered, and fail as guiding principles.

· Intuitive : Readers should be able to understand the underlying principles without guidance.

· Utility : The model should work consistently in application.

· Completeness : All necessary elements of success should be contained.

Our experience with the SAM model indicates these criteria are met. However, you as the reader will need to make your own judgments."

We will explore the SAM Model and its applications in detail in a subsequent paper.

Business Processes of SAM

In order to have effective business processes, " The Six Sigma Way " by Peter Pande tells us that we need to understand the components or characteristics required for defining a business process.

· A work flow diagram that models the process and identifies roles for each step in the process, and identifies interfaces to other processes

· Definitions of the roles and terms used in the process model

· Measures or performance indicators to measure the process

· Definition of the inputs / suppliers and

· Clear specification of output and service requirements

There are nine "Core" or high level Business Processes that are addressed in SAM.

Strategic Management Strategic Management processes define the way in which we establish and communicate the future of the company involving stakeholders at all levels within the organization.

Information Management Information Management incorporates all of the processes and tools that are used to store and retrieve information that is used to support decision making based on hard data.

Organization Management Organization Management involves establishing the Asset Management process management organization and defining the roles of personnel involved in working with the reliability and maintenance business processes in all organizations. It defines our Managing System business processes.

Capacity Management Capacity Management processes address the methods by which we acquire or dispose capacity and manage capital investment. It includes all of the aspects of incorporating reliability, maintainability, and operability into the design and installation of new systems and equipment or modifications to existing.

Production Management Production Management includes all of the processes necessary for establishing and maintaining proper process controls as well as those required for day to day management of the production process. This process includes critical equipment operating procedures, quality management, environmental compliance, and more.

Resource Management Resource Management includes all of the planning and supervision activities that go in to allocating manpower, materials, tools and contractors to the accomplishment of the day to day function of the manufacturing site..

Logistics Management Logistics Management includes all of the planning and day to day management processes the manufacturing reliability mission and objectives. Storehouse management, procurement of supplies and parts, and vendor management are all elements of Logistics Management.

Reliability Management Reliability Management involves the work processes and activities that focus on ensuring and enhancing reliability of the plant's production assets, the manufacturing equipment. It includes proactive activities like preventive and predictive maintenance and analysis activities and record keeping.

Change Management Change Management includes all of the work processes and activities required for communicating the SAM objectives to the workforce, to motivate them to take ownership of the SAM, to achieve success, and to maintain state of the art work processes.

We will address these Business Processes and their relationship to the SAM Model in a subsequent paper.

The SAM Organization The SAM Organization is a multi-functional team of individuals responsible for creating, implementing and maintaining the Strategic Plan for Asset Management. We call it a "SAM Organization" because it exists in parallel with the normal company hierarchical organization. It is designed to support rapid development, implementation and maintenance of critical business processes in order to achieve performance improvement and financial benefits as quickly as possible.

The SAM Organization is process-oriented rather than function-oriented. Members will have roles to play in support of the core business processes and the detailed business processes that are integrated into the SAM. Key roles include:

· The SAM Executive Champion and Steering Team, who provide overall guidance and support to the initiative supported by a team of Senior Management individuals that sets the vision and objectives for the SAM Program and provides guidance to the Strategic Planning (SP) Team.

· The SAM Program Director, who has management responsibility for the design, planning, and implementation of the SAM. He is the only "full-time employee" in the SAM Organization.

· The SP Team, a work group responsible for developing the Strategic Plan and participatging in the redesign of existing processes and the development of new processes.

· The SAM Site Champions, volunteers who are involved with the site and committed to implementation of the Strategic Plan for Asset Management.

Members of each organization must discard their traditional thinking about individual departmental goals in favor of the overall plant performance and higher-level strategic objectives.

Key Performance Indicators (KPI"s) Effective measurement of the results is a critical success factor for SAM. Performance indicators will be identified at each phase of the implementation

Sample Leading Indicators:

Sample Lagging Indicators:

Key Performance Indicators (KPI's) are established to track or trend all critical aspects of an organization's business processes. Accurate KPI's provide a firm base for making decisions that will increase the organization's efficiency, effectiveness, and success. Two integrated levels of KPI's are used in implementing SAM:

The KPI's are a key element in the Change Management Process, and are the primary method for tracking progress in the implementation of the new business processes. The value of KPI's can be enhanced through benchmarking internally, among your sites, as well as externally within and outside your industry, and using the comparisons to establish stretch goals.

IMPLEMENTING SAM

The author recommends a two-step approach to a Strategic Plan for Asset Management; Strategic Planning and Implementation.

Developing and implementing SAM requires significant effort and knowledge. Most companies have difficulty finding a sufficient supply of these valuable commodities to implement a SAM Program internally while continuing to perform their rather demanding daily functions. Many companies also struggle with figuring out how to get started and in what direction to proceed. The ability to create and implement SAM and realize the associated benefits is dependent on success in three areas:

1. Development of three to five year operational strategy that clearly identifies the current status, future vision, gaps and strategies for closing the gaps, project plans to execute the strategies, and a compelling business case.

2. Design of the business processes, management systems, and performance indicators that, when implemented, will accomplish the business case.

3. Integration of the Asset Management Strategy with existing business processes and systems and establishing a new culture that will sustain the changes into the future.

The Strategic Planning (SP) Phase In the SP Phase, you should assess your corporate reliability performance and identify opportunities for improvement. The results of the assessment are used to establish the roles and responsibilities of personnel and the key performance indicators that will drive the reliability improvement initiatives. Your reliability processes are documented and perfected using models that can be implemented and enhanced with effective software tools. Information about your existing software solutions is incorporated into the overall strategy.

Gaps and Strategies to Close the Gaps The difference between the current and future state is defined as the "Gap". The SP Team begins to develop strategies designed to close the gaps.

Projects to Implement the Strategies Once all of the Strategies have been defined, the Team begins to develop Projects that will execute the Strategies.

Challenge Sessions Challenge sessions are conducted between the SP Team and the Executive Steering Team. These Change Management Tools serve to create ownership of the Strategy among the SP Team members and assure alignment of the Senior Management.

The Business Case A key activity completed during the SP Phase is determination of potential financial benefits resulting from SAM implementation. Primary benefits come from improved efficiencies and increased capacity utilization.

The Business Case shows how the financial benefits will be realized over time, assuming the SAM implementation follows the methodology outlined in the Strategy Document and the established targets are achieved. It demonstrates the yearly impact as well as the cumulative effect of Maintenance Cost Reductions and Productivity Improvements. It also provides a means for comparing the cost of the implementation to the benefits derived, thus determining the return on the SAM investment.

Implementation should begin with a Design Workshop of several weeks' duration designed to get the SAM Design Team onboard and up to date. It focuses on defining the detailed project plan and establishing the SAM Organization. Activities conducted during this workshop include:

· Completion and documentation of an integrated Project Plan with resources, cost estimates, milestones, etc.

· Confirmation of the Business Case and creation of a SAM Scorecard.

· Creation of detailed business process models and KPI's for Phase 1 Implementation.

· Identification of the reliability management information requirements for each reliability role.

· Change management and training plans to support implementation.

Implementation is best achieved using an Iterative Implementation Methodology designed to mitigate project risk and deliver results every six months to one year. During each of these implementation phases, the SAM Team will define, pilot, and roll-out new business processes including performance indicators, definitions of terms, and identifications of roles required for each.

This Iterative Implementation ensures quick and productive development of a comprehensive, working Strategic Plan for Asset Management, and mitigates the risk that is often associated with "flash-cut" implementations. These distinct phases allow us to focus on the vital processes at each stage, keeping the project streamlined while presenting specific milestones. Formal Monthly Scorecards provide concrete progress reports, allowing you the benefits of ownership early on. The achievement of measurable results with each iteration reinforces the cultural change and supports buy-in at all levels in the organization. Leading Indicators are implemented with each of the business processes to trend the implementation and measure progress. Your Strategic Plan for Asset Management is developed, tested, and implemented on-site in an iterative approach that achieves real, practical results. The key to a successful SAM implementation is the creation of a detailed Asset Management Implementation Plan combined with an effective change management plan that supports that strategy. Experience has taught us that a proven step-by-step technique starts with the company's strategy and objectives, uses comprehensive tools such as business process models and key performance indicators, and follows an iterative development and implementation methodology to ensure maximum return on investment.

IN CLOSING Executive management in pace setter companies has begun to realize the benefits of implementing SAM across the full spectrum of their enterprise. Millions of dollars in savings combined with increased profitability are available to pacesetter companies who are capable of designing and implementing an effective SAM strategy.

It is not enough to define the functions that need change. A useful SAM initiative must also define the roles and responsibilities of those who are to implement it. It must be designed to change the organizational culture to a "Reliability Culture" where everyone involved assumes ownership of the assets and focuses on improving financial performance by making reliable production a primary target.

The critical success factors for such an effort include:

· Highly visible top-down management commitment to the initiatives. People must perceive active leadership versus authoritative management during the course of implementation and in the future culture.

· The "Right People" on the bus to develop the Strategy and implement sustainable change to a new culture.

· A measurement system (KPI's) and committed goals to track the progress. This weaves accountability into the initiatives and provides a tangible picture of the organization's efforts.

· Internal and external benchmarking of the organization's products, services, and processes. This information inevitably leads to a "significant emotional event" as the organization can truly understand its relative position.

· Stretch goal setting (10x, 100x, etc.). Such goals focus people on changing the process by which the work gets done rather than "tweaking" the existing process. This leads to "leap-frog" rates of improvement.

· Provision of education and development plans to all levels of the organization. Without the necessary mind-tools, people cannot make breakthrough improvement happen.

· Communicating success stories that demonstrate how the tools of improvement can be applied and the results that can be achieved.

Beginning without full commitment to these principles will rarely achieve success. This is not a journey to be undertaken by the faint of heart..........commitment to change and strong leadership are required. Engagement of a qualified outside agency as a catalyst and facilitator for sustainable change is most often needed.

Please visit SAMI online for more information here: www.samicorp.com

Upcoming Events

International maintenance conference (imc) 2023, maximoworld 2023, focal points.

Table of Contents | Chapter 1 | Chapter 3

CHAPTER 2 STRATEGIC PLANNING FOR INFORMATION SYSTEMS

2.0         STRATEGIC PLANNING 2.1         INFORMATION TECHNOLOGY INVESTMENT MANAGEMENT (ITIM) 2.2         ENTERPRISE ARCHITECTURE 2.3         PERFORMANCE MEASUREMENT 2.4         BUSINESS PROCESS REENGINEERING 2.5         SYSTEMS SECURITY

2.0      STRATEGIC PLANNING

Strategic planning provides a framework for analyzing where the Department is and where the Department should be in the future. The agency strategic plans required by the Government Performance and Results Act (GPRA) provide the framework for implementing all other parts of this Act, and are the key part of the effort to improve performance of government programs and operations. The U.S. Department of Justice Strategic Plan guides the annual budget and performance planning. It sets the framework for measuring progress and ensuring accountability to the public. Each Bureau’s Strategic Plan is mission driven and should include a vision statement which describes the work environment to accomplish the mission. The strategic plan identifies goals, objectives and strategies in support of the bureau’s mission and vision. Bureau strategic plans are linked to the overall goals and direction the Attorney General has set for the Department. Strategic planning is not part of the SDLC, but determines what information systems projects get started and/or continue to receive funding.

2.1      INFORMATION TECHNOLOGY INVESTMENT MANAGEMENT (ITIM)

The ITIM process implements the Department’s information technology capital planning and investment control process. The ITIM process uses the “Select-Control-Evaluate” methodology recommended by OMB and GAO guidance to implement the strategic and performance directives of the Clinger-Cohen Act and other statutory provisions affecting information technology investments. The process complements the SDLC process by providing fiscal oversight of system development projects and linking IT investment decisions to Strategic goals and objectives. The DOJ ITIM Guide is available on the DOJ Intranet at: http://dojnet.doj.gov/jmd/irm/whatsnewpage.htm, then click on ITIM Guide.

2.2      ENTERPRISE ARCHITECTURE

The development of information technology architectures is a requirement of the Clinger-Cohen Act. The Department is building an enterprise IT architecture which promotes the effective management and operation of IT investments and services. This enterprise architecture (EA) provides a comprehensive, integrated picture of current capabilities and relationships (i.e., the current architecture), an agreed upon blueprint for the future (i.e., the target architecture), and a strategy for transitioning from the current to the target environment. The EA describes the information needed to carry out these business functions and processes; identifies the system applications that create or manipulate data to meet business information needs; and documents the underlying technologies (i.e., hardware, software, communications networks, and devices) that enable the generation and flow of information.

The EA is an essential tool for taking a strategic approach to planning and managing IT resources and making maximum use of limited IT dollars. It ensures the alignment of IT with the Department’s strategic goals so that business needs drive technology rather than the reverse; identifies redundancies, and thus potential cost savings; highlights opportunities for streamlining business processes and information flows; assists in optimizing the interdependencies and interrelationships among the programs and services of the Department’s various component organizations as well as with external agencies; ensures a logical and integrated approach to adopting new technologies; promotes adherence to department-wide standards including those for systems security; and pinpoints and resolve issues of data availability, utility, quality and access.

The ITIM policy and guidance uses this architecture as a key criterion for selecting a proposed investment and managing it through the life cycle. The EA processes are specifically aligned with the Select, Control and Evaluate phases of the ITIM and considered throughout the SDLC. Information on the DOJ EA can be found at http://dojnet.doj.gov/jmd/irm/imss/enterprisearchitecture/enterarchhome.html (available to DOJ Employees only).

2.3      PERFORMANCE MEASUREMENT

Performance measurement is an essential element in developing effective systems through a strategic management process. The mission, goals, and objectives of the Department are identified in its strategic plan. Strategies are developed to identify how the Department can achieve the goals. For each goal, the Department establishes a set of performance measures. These measures enable the Department to assess how effective each of its projects are in improving Departmental operations.

For the Department to make this assessment, the current performance level for each measure (performance level baseline) for the existing systems must be determined. For each project plan, as part of the cost benefit analysis, estimate the performance levels expected to be attained as a result of the planned improvements. As the project’s improvements are implemented, actual results are compared with the estimated gains to determine the success of the effort. Further analysis of the results may suggest additional improvement opportunities.

Performance Measurement, along with evaluation are the principle methods for determining if identified benefits are realized in the expected time frame.

2.4      BUSINESS PROCESS REENGINEERING

The primary underpinning of any new system development or initiative should be business process reengineering. Business process reengineering (BPR) involves a change in the way an organization conducts its business. BPR is the redesign of the organization, culture, and business processes using technology as an enabler to achieve quantum improvements in cost, time, service, and quality. Information technology is not the driver of BPR. Rather, it is the organization’s desire to improve its processes and how the use of technology can enable some of the improvements. BPR may not necessarily involve the use of technology. There are circumstances when all BPR will entail is an elimination of steps or the process. For BPR to attain large benefits, the use of information technology can be justified. Bureaus or agencies should consider BPR before requesting funding for a new project or system development effort. When BPR is applied to one or more related business processes, an organization can improve its products and services and reduce resource requirements. The results of a successful BPR program are increased productivity and quality improvements. BPR is not just about continuous, incremental and evolutionary productivity-enhancements. It also utilizes an approach which suggests scraping a dysfunctional process and starting from scratch to obtain larger benefits.

2.5      SYSTEMS SECURITY

The Federal Government has become increasingly reliant on IT systems to support day-to-day and critical operations/business transactions. Risks to system and data confidentiality, integrity, and availability can impact an organization’s ability to execute its mission or its business strategy. To minimize the impact associated with these risks, federal IT security policy requires all IT systems to be accredited prior to being placed into operation and at least every three years thereafter, or prior to implementation of a significant change. The Department goal is to define a process which ensures that Department systems are conceived, designed, developed, acquired, implemented, and maintained according to all appropriate federal guidance and are in compliance with the appropriate laws, regulations, OMB circulars, and Department orders. The DOJ IT Systems Certification and Accreditation Standard and Implementation Guidelines provides IRM managers with a single source of information for conducting certification and accreditation and provides templates for the Systems Security Plan, Security Risk Assessment, Contingency Plan, and Certification and Accreditation memorandums. The C&A process is compliant with the SDLC and the ITIM process. These guidelines can be found at http://dojnet.doj.gov/jmd/irm/imss/itsecurity/seclifecycle.html (available to DOJ Employees only).

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Emotional vs. Strategic Decisions

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Information Technology Management: Governmentwide Strategic Planning, Performance Measurement, and Investment Management Can Be Further Improved

Over the years, the Congress has promulgated laws and the Office of Management and Budget and GAO have issued policies and guidance, respectively, on (1) information technology (IT) strategic planning/performance measurement (which defines what an organization seeks to accomplish, identifies the strategies it will use to achieve desired results, and then determines how well it is succeeding in reaching resultsoriented goals and achieving objectives) and (2) investment management (which involves selecting, controlling, and evaluating investments). To obtain an understanding of the government's implementation of these key IT management policies, congressional requesters asked GAO to determine the extent to which 26 major agencies have in place practices associated with key legislative and other requirements for (1) IT strategic planning/ performance measurement and (2) IT investment management.

Recommendations

Recommendations for executive action, full report.

Chuck Young Managing Director [email protected] (202) 512-4800

strategic planning and investment management department

At Evercore Wealth Management and Evercore Trust Company, strategic planning is core to our approach to wealth management. We believe that clients need to know what to expect – after the real impact of taxes, fees and inflation – and to plan accordingly.

  Our understanding of each client’s lifestyle, family, business, and philanthropic goals drives our wealth planning and asset allocation. Integrated and long-term planning is key; each of these elements must work together to achieve the best results.   Our multidisciplinary teams – which include experts in investment management, tax, financial and estate planning, and in philanthropic strategy – work closely with our clients, their families, and their other trusted advisors to develop, implement and monitor customized wealth plans and investment portfolios.   Our strategic wealth planning capabilities include:  

Copyright © 2023 Investment and Wealth Management services are provided by Evercore Wealth Management, LLC an investment advisor registered with the U.S. Securities and Exchange Commission (the "SEC") under the Investment Advisors Act of 1940. Registration with the SEC does not imply a certain level of skill or training. Trust and custody services are provided by Evercore Trust Company, N.A. a national trust bank regulated by the Office of the Comptroller of the Currency. All rights reserved

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You can download our brochure from the link - Brochure 2013.

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190 South Main Street Bountiful, UT 84010

(801) 627-2200 [email protected]

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(801) 627-2200 [email protected]

SECOND OPINION SERVICE (SOS®)

Second opinion service (sos).

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STRATEGIC RETIREMENT SCORE (SRS®)

Strategic retirement score.

The creation of your own written Perfect Calendar is a very important lifestyle consideration for retirement. Pre-retirement doubts and fears typically stem from the fact that many people don't have a carefully crafted and regularly updated written plan in place.

401(K) and IRA Analysis

Verifying your 401k and IRA meet your retirement objectives is crucial. We will help you decide if you need to roll over a 401k, recommend a personalized 401k allocation, or make other changes to help you better achieve your retirement goals.

Retirement Planning

We help you develop a blue print for your retirement plan. We will analyze all sources of income such as, social security filing strategies, pension analysis, investment asset allocation, and more. Resource coordination is vital to retire successfully.

Wealth and Investment Management

Clients engage us for our experience in investment portfolio management. We will customize a strategy that fits your personal needs. Your investments are a crucial part of your overall retirement strategy.

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The right moves could make all of the difference. We are here to help lead the way.

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Why strategic planning group.

With over 30 years of industry knowledge, we are equipped to answer your financial questions at any stage of life.

We are helping clients plan their retirement up and down the Wasatch Front.

We are engaged in the consistent competent monitoring of your Strategic Plan.

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Thought Leadership

What Is Strategic Portfolio Management?

Strategic portfolio management (SPM) garners insights that make difficult decisions easier to oversee and employ. Those with macro views of organizations know that balancing differing needs, keeping larger goals in mind, and effectively implementing through operations is not a simple balance; it’s more of a highwire act. This is where strategic portfolio management steps in. What is strategic portfolio management? It is the future of business.

Adaptive Portfolio Planning: 5 Steps to Achieve Greater Agility for Your Transformation Journey

Become a strategic execution leader that drives value while adapting to disruption

Solution Demonstration: Strategic Portfolio Management: Drive strategy and transformation enterprise-wide

Learn how you can get a clear view into strategic initiatives and empower your organization to deliver outcomes faster with strategic portfolio management.

Software designed for strategic portfolio management enables you to gain insights into delivery, no matter how your teams execute.

Gartner provides evidence that:

Understanding the Strategic Portfolio Management Definition

Strategic portfolio management is the process an organization uses to select, prioritize, and control resources within its portfolio of programs, projects, and initiatives used to meet strategic goals and objectives. While each company has its own customized objectives, ultimately any organization’s goal is to balance implementing change, maintain current initiatives, and optimize return on investment. Strategic portfolio management helps companies successfully oversee and implement all of those tasks from strategy to execution.

Strategic portfolio management is useful because it:

If the question, “what is strategic portfolio management?” still remains, here are the top ways companies see the benefits.

What Are the Benefits of Strategic Portfolio Management?

Strategic portfolio management reprioritizes tasks and continuously adapts and optimizes the values of projects, programs, assets, and/or product investments to align with strategic objectives. By employing Agile, intelligent systems that adapt to changing data, companies can tap into powerful strategic insights to guide programs and initiatives.

There are some major benefits to strategic portfolio management if used effectively. Here is a more comprehensive view of some of the benefits. They include:

Responding to disruptions quickly and effectively.

The last few years have been an intensive bootcamp for businesses on the art of disruption. What we’ve learned along the way is that disruptions are not only inevitable and always lurking around the corner. So how do companies prepare for these disruptions? “Companies that adopt bold offensive strategies in the face of industry disruption will come out the winners,” write Jacques Bughin and Nicolas van Zeebroeck in MIT Sloan Management Review .

Strategic portfolio management creates an offensive strategy with technology that continuously garners insights and adapts to changes to mitigate risks. That way, when disruptions do occur, organizations’ management systems can adapt quickly to reprioritize tasks in alignment with real-time data.

Faster time to market

Strategic portfolio management delivers deeper, quicker insights than analog processes by transforming single analysis tracks to tackle many at once. By analyzing all data in parallel, SPM delivers insights to a single, unified platform. This allows stakeholders to focus on analyzing progress and identifying trends quickly.

The speed and ease enable quicker strategy delivery and faster initiative completion. The quicker the decision-making process, the faster the idea will move through the innovation funnel and the quicker it will reach the market. Gaining this speed of delivery places companies at a competitive advantage and drastically minimizes expense.

Better strategy-execution alignment

McKinsey global research shows that successful strategy execution is more of an exception than a rule. In a longitudinal study of companies that underwent an organizational change, less than one-third of respondents said that their companies had executed transformation successfully. While these numbers are alarming, they aren’t uncommon.

Strategic portfolio management includes enterprise roadmaps that connect strategy with investments, products, and applications.

McKinsey found that companies that do succeed do so by undergoing comprehensive, fact-based assessments to identify opportunities and then adapt goals for employees at all levels. Strategic portfolio management enables companies to thoroughly evaluate and prioritize tasks so that limited resources are allocated consistently and objectively based on each proposed project. With visualized dependencies between business capabilities, applications, products, services, organizations connected to strategies, investments, and value metrics, everyone on your team can see what’s next and create custom plans to reach shared goals.

Maximize ROI

Speaking of resources – we know that they are limited. By having an objective, data-driven approach for your strategic portfolio, prioritized tasks change as the business environment evolves.

Strategic portfolio management can ensure benefits realization from products, services, and other outcomes.

As resources and funding change, reallocation of resources and funding is visualized, allowing executives to leverage flexible funding approaches to reflect changing circumstances. Attaching metrics and financials to all initiatives allows executives to control and reallocate resources based on data-driven models . Transparency and real-time metrics eliminate wasted time and ultimately create significant bottom-line savings.

Strategic Portfolio Management Use Cases

With a clear plan in place, executives can lead transformational change , monitor performance, and measure progress to accelerate strategy delivery. See how organizations use strategic portfolio management across the business.

Capital planning

Capital planning is about investing today to be ready for tomorrow’s business environment. Without a way to prioritize capital investment requests and gain visibility to drive informed strategic decisions, organizations can miss opportunities, fall behind their competitors, or worse, become irrelevant in their market.

Planview’s strategic portfolio management solution helps leaders, Finance, and capital planning teams to make better decisions for future business needs. A single source of truth across all capital portfolios, programs, projects, resources, and financials empowers organizations to quickly shift priorities, re-allocate capital, and monitor performance.

Real-time visibility into capital budgets and investments

On-demand reporting with dashboards equip executives with the data they need.

Build capital plans that maximize ROI

With investment and capacity planning, ensure capital is best allocated considering financial metrics such as NPV, IRR, and payback period.

Optimize the capital portfolio

Manage capital forecasts with actuals, model various prioritization scenarios, and depreciate capital into future periods, enabling trade-off decisions for reallocation of funds to drive outcomes.

Strategic portfolio management from Planview helps capital planning teams make capital decisions faster, with more data and insights, to adapt plans, reallocate funding and resources faster, and quickly shift priorities to optimize costs and maximize outcomes.

Dynamic planning

Priorities can change overnight. Many companies already struggle with strategic planning, failing to translate strategic objectives into measurable goals, operational roadmaps, and coordinated delivery across the organization. When strategies change, it becomes even harder to reallocate funding, rapidly reprioritize, and realign teams.

Conventional strategic planning tools (usually spreadsheets) provide executives and managers with limited visibility into understanding how plans are progressing.

When disruption strikes, lack of actionable information can hinder effective decision making. Planview’s dynamic planning offering enables executives, finance, and EPMOs to work together to quickly shift strategies, priorities, funding, and resources.

Revisit strategic direction

Reassess strategic initiatives and their relative levels of priority and associated funding. Rapidly model the impact of changes and balance tradeoffs.

Reallocate funding

Visualize the reallocation of resources and funding over different timeline. Leverage flexible funding approaches to easily reallocate as circumstances change.

Reprioritize investments

Set new portfolio priorities. Balance work that needs to be done immediately, and over the next month, quarter, and year.

Realign teams and work

Quickly redeploy resources. Maintain alignment with strategic goals, financial constraints, and resource capacity.

Review performance

Engage stakeholders. Measure results and adapt dynamically as required.

Enterprise program and portfolio management

Enterprise portfolio management offices focus primarily on ensuring strategy execution alignment, portfolio governance, change management, and visibility for strategic decision making. Strategic portfolio management technology lets you plan and manage cross-departmental programs and products essential to achieving strategic objectives.

With Planview strategic portfolio management solutions, you gain access to comprehensive portfolio analysis and reporting, dashboards, and “what-if” scenario planning to ensure you both fund the best investments for delivering business outcomes and measure progress so you can adjust along the way.

Take a continuous planning approach so you can reprioritize and realign resources when business priorities and strategies shift or change.

Bring strategic programs to life

Define top-down timeframes, financials, and roadmaps; adjust based on progress and forecasts.

Create capacity for innovation and transformation

Balance capacity against demand; compare scenarios to evaluate alternative staffing and funding approaches for achieving outcomes, and effectively focus resources for on-strategy delivery.

Automate phase-gated processes

Gain visibility into gate deliverables and status; visualize trends with configurable gate status fields and dashboards.

Mitigate risk with improved visibility

Analyze impacts and manage dependencies while building technology plans and roadmaps to achieve strategic objectives.

Share progress through executive dashboards

Provide leaders clear visibility into strategic progress across the organization.

IT strategic planning

For today’s digital business, technology investments underpin the company’s strategic objectives. The IT strategic plan must span current and future business objectives while remaining adaptable when priorities change.

Planview’s strategic portfolio management software offers CIOs, enterprise architects, portfolio managers, and Finance an integrated portfolio that connects strategy to delivery, enabling the organization to realize strategic objectives for growth, innovation, and operational efficiency.

Accelerate innovation and transformation

Prioritize investments within initiatives that will best deliver strategic objectives, while understanding the impact of trade-offs and decisions.

Manage an integrated IT portfolio

Map outcomes to strategic objectives, spanning investment, project, program, product, service, application, and technology portfolios.

Mitigate risk

Create multiple investment and change scenarios; compare impact to costs, capacity, interdependencies to identify the least disruptive options.

Visualize the relationships between strategy, technology, and outcomes

Break down organizational silos with visibility, showing interdependencies among strategies, portfolios, and programs to drive strategic initiatives.

Address dependencies

Use visualizations to understand and explore the connections between strategies, objectives, business capabilities, products, applications, technology, and work. Understand how relationships can help or hinder progress so you can build the right plan for transformation.

Modernize your application portfolio

Reveal actions to reduce risk and technical debt by consolidating legacy software and infrastructure. Expedite deployment of new enabling technology for strategic outcomes.

Connectivity to your ecosystem

Integrate a variety of affiliated data sources to bring information into a single system of record to visualize interrelationships and monitor performance. Sources include work management, agile development tools, CMDB, and financial systems.

Strategy execution management

An organization’s inability to bridge strategy execution gaps is the primary reason for the failure of new growth initiatives. Translating strategy to delivery is derailed by conflicting priorities, overloaded resources, and confusion about direction.

Strategic portfolio management enables organizations to drive innovation and transformational change.

Planview strategic portfolio management offers a system where executives, strategists, EPMOs, and Finance can work together to achieve objectives by managing strategy execution and adapting for uncertainty.

Gain executive line of sight

Visibility milestones, financials, and KPIs of strategic programs.

Mitigate delivery risk

Manage performance with a KPI dashboard highlighting issues to address.

Map strategy to outcomes

Visualize dependencies between business capabilities, applications, products, services, and organizations connected to strategies, investments, and value metrics.

Define desired outcomes

Set objectives and the target results, focus portfolio funding decisions on objectives and business value.

Collaborate on portfolio decisions

Engage leaders and stakeholders with workflows, dashboards, Kanban visualization.

Access real-time, accurate data

Roll-up progress status and financial data from teams throughout the organization.

Streamline gated processes

Fail fast, deliver faster with improved efficiency and consistent, informed go/no-go decisions.

Comprehensive Data that Drives Successful Solutions

If your company has a large portfolio and is trying to keep up with your strategy execution process on spreadsheets and static program tracking tools, there’s a better way. The right strategic portfolio management solution will enable you to continuously monitor the risks and rewards of opportunities and decisions so that all projects in your portfolio are prioritized, contributing to your goals, and positively impacting your bottom line.

Planview’s strategic portfolio management enables organizations to drive strategy enterprise-wide.

Planview’s Strategic Portfolio Management solution enables executives to garner immediate insights and enact informed solutions including:

We hope that you’ve received answers to your question, “what is strategic portfolio management?” But if you’re craving more, Planview’s solution provides an on-demand demo experience of how strategic portfolio management capabilities can transform your business portfolio.

strategic planning and investment management department

Product Marketing Manager

Heather Westmoreland is a graduate of the University of North Carolina at Charlotte and has led application design and development throughout her career. As a Product Marketing Manager, Heather uses her creativity with a focus on user experience to expand the usability and understanding of Planview’s Enterprise One strategic capabilities. Before spending six years with Planview in consulting and product management, she was an active customer for 10 years. Heather applies her customer-first mindset to uncover product opportunities and drive innovation within the solutions-marketing side of Planview Portfolios.

U.S. Department of the Treasury

Management is responsible for the internal management and policy of the Department in the areas of budget, planning, human resources, information and technology management, financial management and accounting, procurement, privacy, records, and administrative services to Departmental (Headquarters) Offices

Assistant Secretary for Management, Chief Financial Officer, and Chief Performance Officer

The Assistant Secretary for Management, Chief Financial Officer, and Chief Performance Officer (ASM/CFO/CPO) is the principal policy advisor to the Secretary and Deputy Secretary on the development and execution of the budget for the Department of the Treasury and the internal management of the Department and its bureaus. The ASM/CFO/CPO also oversees Department-wide management programs including human resources, information and technology management, financial management and accounting, strategic planning, performance budgeting/metrics, acquisition/procurement, training, human capital and workforce management, equal employment opportunity, environmental health and safety, emergency preparedness, small business programs, and administrative services for the Departmental Offices.

Senior Procurement Executive

The Senior Procurement Executive (SPE) manages two offices. The Office of the Procurement Executive (OPE) is responsible for Department-wide acquisition management; provides policy, process, career management and continuous improvement guidance for procurement programs and systems; evaluates bureau procurement operations using balanced scorecard performance measures; directs and expands the use of streamlined, cost effective best value procurement strategies while optimizing small and disadvantaged business participation. This office also administers a Department-wide career management program for acquisition professionals. The SPE also oversees the Procurement Services Division, the operational procurement organization that serves the Departmental Offices.

Strategic Planning and Performance Improvement

​Treasury’s Office of Strategic Planning and Performance Improvement (OSPPI) sets departmental organizational performance policy and provides agency-wide internal management consulting services in operations strategy, implementation, and continuous process improvement. OSPPI’s Continuous Process Improvement (CPI) program directs business process redesign/improvement projects to cultivate a process improvement culture across the Department. OSPPI leads Lean Six Sigma training courses to expand Treasury’s cadre of process improvement professionals and foster a Department-wide network of CPI practitioners.

Deputy Chief Risk Officer

The Office of the Deputy Chief Risk Officer advises Treasury leaders and their teams on policies and programs relating to the management of credit, market, liquidity, operational, and reputational risks within Treasury and throughout the federal government where Treasury is involved.

Small and Disadvantaged Business Utilization

The Office of Small and Disadvantaged Business Utilization assists, counsels, and advises small businesses of all types on procedures for contracting with Treasury.

Chief Information Officer

The Office of the Chief Information Officer (OCIO) provides leadership to the Department and its Bureaus in all areas of information and technology management. OCIO supports Treasury's Mission by implementing strategies that improve the efficiency and performance of Treasury information technology (IT) systems and business processes. OCIO has Department-wide responsibility for the direction and development of Treasury’s IT strategy, management of IT investments, and leadership of key technology initiatives.

Management and Budget

The Office of the Deputy Assistant Secretary for Management and Budget (DASMB) oversees the strategic planning processes and the implementation of the Government Performance and Results Act, analyzes resource requests and allocations, as well as budget execution. This responsibility includes making recommendations to departmental offices and bureaus on budget priorities and strategies.  The DASMB prepares and coordinates the annual budget submission for the Department to OMB, and works with OMB on the Department’s portion of the President’s Budget. The office also formulates, manages, and directs the budget process for Departmental Offices.

Deputy Chief Financial Officer

The mission of the Office of the Deputy Chief Financial Officer (ODCFO) is to continuously improve and innovate Treasury’s comprehensive financial management and operational decision-making through competencies in governmental accounting, auditing, financial reporting, financial analysis, internal controls, financial systems, and governance and standard setting.

Privacy, Transparency, and Records

The Office of the Deputy Assistant Secretary for Privacy, Transparency, and Records oversees the protection, access, and disclosure of Treasury's information assets and the assurance that information the Department collects is being maintained within all legal requirements. 

treasury Operations

The Office of the Deputy Assistant Secretary for Departmental Offices Operations has responsibility for providing management and administrative support for the offices and employees in the Department’s headquarters offices (Departmental Offices).  The office oversees the Department’s headquarters facilities, as well as offices which provide various support functions in the areas of renovations, travel, historical preservation and curatorial services, telephone operator services, special events, food services, asset management, safety/health/environmental compliance, and printing and graphics.

Human Resources/Chief human capital Officer

The Office of the Deputy Assistant Secretary for Human Resources and Chief Human Capital Officer (DASHR/CHCO) is responsible for Department-wide policy and oversight in all areas of human capital management, including employment and staffing, compensation, benefits, executive resources, succession planning, labor and employee relations, workforce development, performance management, diversity management, equal employment opportunity and other human capital functions. The Office also provides for the full range of human resource services to support operations of Departmental Offices. The DASHR/CHCO represents the Treasury Department on several government-wide councils, including the OPM Chief Human Capital Officers’ (CHCO) Council and the Intelligence Community CHCO Council, chairs the Department’s Human Capital Advisory Council and is a member of the Treasury Human Capital Board. The Office is also the business owner of HR Connect, the Department’s automated human capital management system as well as an OMB approved HR Line of Business.

strategic planning and investment management department

The Role of Finance in the Strategic-Planning and Decision-Making Process

Financial goals and metrics help firms implement strategy and track success.

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The fundamental success of a strategy depends on three critical factors: a firm’s alignment with the external environment, a realistic internal view of its core competencies and sustainable competitive advantages, and careful implementation and monitoring. [1] This article discusses the role of finance in strategic planning, decision making, formulation, implementation, and monitoring.

[powerpress: http://gsbm-med.pepperdine.edu/gbr/audio/winter2010/PedroKono_article.mp3]

strategic planning and investment management department

A good strategic plan includes metrics that translate the vision and mission into specific end points. [5] This is critical because strategic planning is ultimately about resource allocation and would not be relevant if resources were unlimited. This article aims to explain how finance, financial goals, and financial performance can play a more integral role in the strategic planning and decision-making process, particularly in the implementation and monitoring stage.

The Strategic-Planning and Decision-Making Process

1. Vision Statement

The creation of a broad statement about the company’s values, purpose, and future direction is the first step in the strategic-planning process. [6] The vision statement must express the company’s core ideologies—what it stands for and why it exists—and its vision for the future, that is, what it aspires to be, achieve, or create. [7]

2. Mission Statement

An effective mission statement conveys eight key components about the firm: target customers and markets; main products and services; geographic domain; core technologies; commitment to survival, growth, and profitability; philosophy; self-concept; and desired public image. [8] The finance component is represented by the company’s commitment to survival, growth, and profitability. [9] The company’s long-term financial goals represent its commitment to a strategy that is innovative, updated, unique, value-driven, and superior to those of competitors. [10]

3. Analysis

This third step is an analysis of the firm’s business trends, external opportunities, internal resources, and core competencies. For external analysis, firms often utilize Porter’s five forces model of industry competition, [11] which identifies the company’s level of rivalry with existing competitors, the threat of substitute products, the potential for new entrants, the bargaining power of suppliers, and the bargaining power of customers. [12]

For internal analysis, companies can apply the industry evolution model, which identifies takeoff (technology, product quality, and product performance features), rapid growth (driving costs down and pursuing product innovation), early maturity and slowing growth (cost reduction, value services, and aggressive tactics to maintain or gain market share), market saturation (elimination of marginal products and continuous improvement of value-chain activities), and stagnation or decline (redirection to fastest-growing market segments and efforts to be a low-cost industry leader). [13]

Another method, value-chain analysis clarifies a firm’s value-creation process based on its primary and secondary activities. [14] This becomes a more insightful analytical tool when used in conjunction with activity-based costing and benchmarking tools that help the firm determine its major costs, resource strengths, and competencies, as well as identify areas where productivity can be improved and where re-engineering may produce a greater economic impact. [15]

SWOT (strengths, weaknesses, opportunities, and threats) is a classic model of internal and external analysis providing management information to set priorities and fully utilize the firm’s competencies and capabilities to exploit external opportunities, [16] determine the critical weaknesses that need to be corrected, and counter existing threats. [17]

4. Strategy Formulation

To formulate a long-term strategy, Porter’s generic strategies model [18] is useful as it helps the firm aim for one of the following competitive advantages: a) low-cost leadership (product is a commodity, buyers are price-sensitive, and there are few opportunities for differentiation); b) differentiation (buyers’ needs and preferences are diverse and there are opportunities for product differentiation); c) best-cost provider (buyers expect superior value at a lower price); d) focused low-cost (market niches with specific tastes and needs); or e) focused differentiation (market niches with unique preferences and needs). [19]

5. Strategy Implementation and Management

In the last ten years, the balanced scorecard (BSC) [20] has become one of the most effective management instruments for implementing and monitoring strategy execution as it helps to align strategy with expected performance and it stresses the importance of establishing financial goals for employees, functional areas, and business units. The BSC ensures that the strategy is translated into objectives, operational actions, and financial goals and focuses on four key dimensions: financial factors, employee learning and growth, customer satisfaction, and internal business processes. [21]

The Role of Finance

Financial metrics have long been the standard for assessing a firm’s performance. The BSC supports the role of finance in establishing and monitoring specific and measurable financial strategic goals on a coordinated, integrated basis, thus enabling the firm to operate efficiently and effectively. Financial goals and metrics are established based on benchmarking the “best-in-industry” and include:

1. Free Cash Flow

This is a measure of the firm’s financial soundness and shows how efficiently its financial resources are being utilized to generate additional cash for future investments. [22] It represents the net cash available after deducting the investments and working capital increases from the firm’s operating cash flow. Companies should utilize this metric when they anticipate substantial capital expenditures in the near future or follow-through for implemented projects.

2. Economic Value-Added

This is the bottom-line contribution on a risk-adjusted basis and helps management to make effective, timely decisions to expand businesses that increase the firm’s economic value and to implement corrective actions in those that are destroying its value. [23] It is determined by deducting the operating capital cost from the net income. Companies set economic value-added goals to effectively assess their businesses’ value contributions and improve the resource allocation process.

3. Asset Management

This calls for the efficient management of current assets (cash, receivables, inventory) and current liabilities (payables, accruals) turnovers and the enhanced management of its working capital and cash conversion cycle. Companies must utilize this practice when their operating performance falls behind industry benchmarks or benchmarked companies.

4. Financing Decisions and Capital Structure

Here, financing is limited to the optimal capital structure (debt ratio or leverage), which is the level that minimizes the firm’s cost of capital. This optimal capital structure determines the firm’s reserve borrowing capacity (short- and long-term) and the risk of potential financial distress. [24] Companies establish this structure when their cost of capital rises above that of direct competitors and there is a lack of new investments.

5. Profitability Ratios

This is a measure of the operational efficiency of a firm. Profitability ratios also indicate inefficient areas that require corrective actions by management; they measure profit relationships with sales, total assets, and net worth. Companies must set profitability ratio goals when they need to operate more effectively and pursue improvements in their value-chain activities.

6. Growth Indices

Growth indices evaluate sales and market share growth and determine the acceptable trade-off of growth with respect to reductions in cash flows, profit margins, and returns on investment. Growth usually drains cash and reserve borrowing funds, and sometimes, aggressive asset management is required to ensure sufficient cash and limited borrowing. [25] Companies must set growth index goals when growth rates have lagged behind the industry norms or when they have high operating leverage.

7. Risk Assessment and Management

A firm must address its key uncertainties by identifying, measuring, and controlling its existing risks in corporate governance and regulatory compliance, the likelihood of their occurrence, and their economic impact. Then, a process must be implemented to mitigate the causes and effects of those risks. [26] Companies must make these assessments when they anticipate greater uncertainty in their business or when there is a need to enhance their risk culture.

8. Tax Optimization

Many functional areas and business units need to manage the level of tax liability undertaken in conducting business and to understand that mitigating risk also reduces expected taxes. [27] Moreover, new initiatives, acquisitions, and product development projects must be weighed against their tax implications and net after-tax contribution to the firm’s value. In general, performance must, whenever possible, be measured on an after-tax basis. Global companies must adopt this measure when operating in different tax environments, where they are able to take advantage of inconsistencies in tax regulations.

The introduction of the balanced scorecard emphasized financial performance as one of the key indicators of a firm’s success and helped to link strategic goals to performance and provide timely, useful information to facilitate strategic and operational control decisions. This has led to the role of finance in the strategic planning process becoming more relevant than ever.

Empirical studies have shown that a vast majority of corporate strategies fail during execution. The above financial metrics help firms implement and monitor their strategies with specific, industry-related, and measurable financial goals, strengthening the organization’s capabilities with hard-to-imitate and non-substitutable competencies. They create sustainable competitive advantages that maximize a firm’s value, the main objective of all stakeholders.

[1] M.E. Porter, “ What is Strategy ?” Harvard Business Review , 74, no. 6 (1996). [purchase required]

[2] D. Abell, Defining the Business: The Starting Point of Strategic Planning , (New Jersey: Prentice-Hall, 1980).

[3] J.S. Bruner, The Process of Education: A Landmark in Education Theory , (hyperlink no longer accessible). (Boston: Harvard University Press, 1977).

[4] J.A. Pearce and R.B. Robinson, Formulation, Implementation, and Control of Competitive Strategy , (New York: Irwin McGraw-Hill, 2000).

[5] C.S. Clark and S.E. Krentz, “Avoiding the Pitfalls of Strategic Planning,” Healthcare Financial Management , 60, no. 11 (2004): 63–68.

[6] T. Jick and M. Peiperl, Managing Change: Cases and Concepts , (New York: Irwin/McGraw-Hill, 2003).

[7] J.C. Collins and J.I. Porras, “ Building Your Company’s Vision ,” Harvard Business Review , 74, no. 5 (1996). [purchase required]

[8] Pearce and Robinson.

[9] J.A. Pearce and F. David, “ Corporate Mission Statement: The Bottom Line ,” The Academy of Management Executive , 1, no. 2 (1987): 109–116. [purchase required]

[10] R.K. Johnson, “Strategy, Success, a Dynamic Economy, and the 21st Century Manager,” The Business Review , 5, no. 2 (2006).

[11] M.E. Porter, “How Competitive Forces Shape Strategy,” Harvard Business Review , 57, no. 2 (1979).

[13] A.A. Thompson, A.J. Strickland, and J.E. Gamble, Crafting and Executing Strategy , (New York: McGraw-Hill/Irwin, 2009).

[14] Pearce and Robinson.

[15] Thompson, Strickland, and Gamble.

[16] B. Jovanovic and G.M. MacDonald, “ The Life Cycle of a Competitive Industry ,” The Journal of Political Economy , 102, no. 2 (1994: 322–347).

[17] C.A. Lai and J.C. Rivera, Jr., “Using a Strategic Planning Tool as a Framework for Case Analysis,” Journal of College Science Teaching , 36 , no. 2 (2006): 26–31.

[18] M.E. Porter, Competitive Advantage: Techniques for Analyzing Industries and Competitors , (New York: The Free Press, 1980).

[19] Thompson, Strickland, and Gamble.

[20] R.S. Kaplan and D.P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” (hyperlink no longer accessible).  Harvard Business Review , 74, no. 1 (1996).

[22] Peter Grant, “How Financial Targets Determine Your Strategy,” Global Finance , 11, no. 3 (1997): 30–34

[24] Sidney L. Barton and Paul J. Gordon, “Corporate Strategy: Useful Perspective for the Study of Capital Structure?” The Academy of Management Review , 12, no. 1 (1987): 67–75 .

[25] B.T. Gale and B. Branch, “Cash Flow Analysis: More Important Than Ever,” Harvard Business Review , July–August (1981).

[26] H.D. Pforsich, B.K.P. Kramer, and G.R. Just, “Establishing an Effective Internal Audit Department,” Strategic Finance , 87, no. 10 (2006): 22–29.

[27] Q. Lawrence, “Hedging in Perspective,” Corporate Finance , 115, no. 36 (1994).

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