Annual Planning for Information Technology


For CIOs, and other information technology executives the annual plan is a practical, calendar year representation of the IT strategic plan. The process requires executives to prioritize efforts and effectively allocate financial and human resources in line with your organization’s IT objectives for the incoming year.

The recent pandemic has magnified the difficulty in accurately forecasting the next fiscal year. The COVID-19 crisis has amplified that bureaucratic and rigid planning methods have now become obsolete. To be successful, organizations need to be reactive to the current unpredictable economic conditions.

This dramatic change requires new approaches and frameworks to enable agile processes. It is critical for IT leadership to be embedded within the executive team. As organizations encounter unanticipated threats and opportunities, IT must be flexible and expedient to support the business.

According to Corporate Executive Board, 93% percent of IT’s business partners agree that IT strategic planning is important in achieving their business objectives. However, less than 25% rate IT’s strategy and planning efforts as effective. Worse, only 29% of CIOs reported themselves as effective at implementing IT strategy and planning.

Annual Planning

Given this dismal appraisal of the value delivered by strategic planning, is annual planning a wasted endeavor? Is annual planning doomed to drain precious organizational capacity and deliver limited to no value in return? No, but it must be done effectively.

At Liberty, we believe that annual planning has a value-driven purpose within IT organizations:However, value must be unlocked:Value is delivered through the tried-and-true process of the Annual Planning

Annual Planning Maturity Model:

Annual Planning Maturity Model

Stage 1: Define a forward-focused vision for IT

A clearly defined vision creates the foundation and focuses on your effective annual planning. There is certainly not a one-size-fits-all approach. It must fit your own organization’s culture and individual set of values. Before defining the vision of the plan, leaders must identify both the short-term and long-term goals to create ambitious objectives for the plan.

Many organizations find value in segmenting work to run the business from work to grow and transform the business:This allows initial planning efforts to avoid “boiling the ocean” and it enables focus and scope for the coming year:Gartner’s Run, Grow, and Transform Model is a strong asset to introduce the required language for planning and scope definition

Gartner's Run, Grow, and Transform Model

Once the vision is clearly defined, it must be part of your company’s culture. Often, key members of organizations view annual planning as unnecessary because it has failed in the past. Without strong organizational leadership in stage one, the annual plan will fail.

A strong executive champion for the planning process plays a key role in its cultural acceptance and compliance. They set the vision for the annual plan, define the need and business objective, articulate the value expected, and drive cultural alignment.

Stage 2: Determine how to maintain a competitive advantage

For many organizations, the journey toward harvesting value from annual planning begins by identifying what sets you apart from your competitors. This differentiation can assist in focusing on which projects will transform your business in a meaningful way, such as introducing a new product category or entering a new business through acquisition.

Planning for these large discretionary projects and their business expectations must start with engagement with the business. It is essential that the technology planning teams understand what the business wants to achieve. It is critical to understand the financial needs and impacts as well as the organizational resources needed.

Investment is best measured in the consumption of existing capital and resource capacity. Any new or incremental capacity funded by the business must also be considered. Once the demand from the business is understood, the technology planning team can allocate its available resources (capital and people) against the demand to assess potential capacity constraints.

Planning for large discretionary projects enables business expectations to be set. Furthermore, the financial needs and impacts must be prioritized, clearly understood, and communicated.

Prioritization requires business and technology leadership to agree upon the criteria to make trade-offs and prioritization decisions:Common criteria include alignment to business strategy, financial impact (such as Net Present Value or Payback Period), and risk:Risk involves the business risk associated with the investment assumptions and the technology risk of unsuccessful delivery.

Generally, there is not sufficient capacity to meet all the business demands for discretionary investment in the coming year. It is essential that organizational resources are allocated or onboarded to those projects worthy of execution in the coming year.

While planning for large discretionary projects provides some value, this level of annual planning maturity provides visibility into only a subset of IT resource consumption for the coming year: It also relies on high-level assumptions surrounding capacity for investment.

Finally, the annual planning document produced may quickly become stale as business conditions can readily change into the new year, emphasizing the requirement for re-evaluation.

Stage 3: Account for All Resources

The next stage of annual planning maturity provides for a holistic roadmap for the IT organization for the incoming year:The planning team is required to capture the demand for all IT resources, not just the demand for the potential discretionary projects from stage 2.

This remaining demand can best be considered the Run and Grow portions of Gartner’s Run, Grow, and Transform Model (Figure 3). Capital investments are also considered here. This refers to the planned rejuvenation of infrastructure as well as the acquisition of new technology assets.

Your organization can capture Run and Grow demand by leveraging time tracking data or benchmarks to allocate a percentage of capacity. The percentage allocated varies by team. Distilling time tracking data from prior years, or industry benchmarks by team, enables a systematic capacity projection available for discretionary investment.

The team concept must be clear in order to allocate teams effectively to Run and Grow demand. Organizations often have a human resources team view and a financial team view. The optimal view selected should group resources having similar skills, supporting a more granular allocation of resources: This exercise creates confidence in the plan and the ability to identify resource surplus and deficiency grows tremendously.

At this stage, the plan will be effective at forecasting demand for the coming year:Supply constraints are identified, and a strategic asset has been created:However, unless the plan is correctly implemented, this usefulness fades very quickly.

Stage 4: Implementation & Re-evaluation

Now that the annual planning process produces an asset that delivers value, it is imperative that it is put into action. Specifically, the plan must evolve into a living, flexible document.

Traditionally, most organizations believed that a quarterly cadence was sufficient for keeping the plan relevant: As our world is so uncertain and volatile, monthly updates are necessary. It must be revisited regularly so as not to become outdated throughout the year.

It is key that the update process be viewed as standard operating procedure and not as a burden, especially in its early years:A leading practice is to focus only on capturing changes from the prior plan of record. The technology planning team then integrates those changes to create a new master plan.

The planning team further assesses variances and drives requested changes down to their underlying business catalyst. This process can lead to deep insight:For example, have business conditions changed?Were estimates of pace and progress for initiatives systemically inaccurate?Can other risks to the plan now be detected that were previously undetectable?

While operationalizing the plan maintains the value achieved in stage 3 and reveals new insights, this phase of planning still leaves value on the table.

Stage 5: Harvest Value – Using the Plan to Make Decisions

With the plan asset representing all of IT spending, and kept current through operationalization, we are ready to arrive at the pinnacle of the Annual Planning Maturity Model.

In this stage, the plan asset is leveraged to make strategic decisions in the enterprise portfolio management function to yield immediate value.

Enterprise Portfolio Management is responsible for the ongoing demand management process. The presence of a current plan representing the utilization of IT resources provides decision-makers with critical visibility and impact analysis when business conditions change, or opportunities arise that result in the need for quick and responsive IT initiatives.

For example, if your business wishes to enter a new market, the plan can indicate the resource availability for, and prioritization implications of doing so.

The annual plan also can serve as a valuable risk management tool for the Program Management Office:Since the annual plan shows the expected consumption of resources by project by month (or week), the Program Management Office can track actuals against these projections.

Excess consumption of resources could signal delivery challenges:Underconsumption of resources could trigger the risk of missing delivery dates and/or disappointing business stakeholders.

The annual plan can also provide early warnings and increased visibility for Finance. For example, projects consuming materially more or fewer resources than planned can signal impacts on software capitalization projections and quarterly financials.

At this point in the annual planning maturity model, the plan is used to make forward-looking decisions and provide critical, advanced visibility into areas of risk:Beyond the common uses presented here, your organization may uncover additional opportunities to harvest value from the annual plan.

Harvest Value from Your Investment in Planning

As you enter your annual planning process, is your organization looking to harvest more value from your investment in planning? Whether you’re just beginning to define a language and culture for planning or seeking to maximize the value in your existing planning process and assets, Liberty Advisor Group can help accelerate your path. We offer objective strategic planning guidance, supported by battle-tested experience.

Please reach out to us at We’d be happy to work with you to accelerate your progression and enable you to achieve more from your annual planning endeavors.

About Liberty Advisor Group

Liberty Advisor Group is a goal-oriented, client-focused, and results-driven consulting firm. We are a lean, handpicked team of strategists, technologists, and entrepreneurs – battle-tested experts with a steadfast, start-up attitude. We collaborate, integrate, and ideate in real-time with our clients to deliver situation-specific solutions that work. Liberty Advisor Group has the experience to realize our clients’ highest ambitions. Learn more at and on LinkedIn and Twitter.


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