A SWOT analysis can help you assess how well your company is doing and identify potential areas of concern. It is useful not only for new businesses or those introducing a new concept, but for every company that would like to have insight into their strongest and weakest characteristics.
This article will provide you with important information on the subject as well as instructions on how to prepare an analysis for an IT company.
What exactly is a SWOT analysis?
SWOT stands for Strengths, Weaknesses, Opportunities and Threats – It is a name of a planning technique that combines various factors to develop a better awareness of what qualities a business or a person has. Also called the SWOT matrix, this method is especially popular in the corporate environment.
SWOT is presented as a four-square table, with individual sections for internal factors (strengths and weaknesses) and external factors (opportunities and threats). It is often used by companies to examine the characteristics of a project or idea, determine its advantages and disadvantages, and decide what could be a threat or an opportunity. SWOT analysis was developed at Stanford Research Institute in the 1970s and has been widely in use ever since.
Why is a SWOT analysis important for an IT company? What can you use it for?
An IT SWOT analysis does not differ much from those for other industries. Such a strategic plan is useful whether your organization is a technology company or not.
There are many different applications of the SWOT strategic planning for various desired outcomes. SWOT analysis can be used as an aid for internal appraisals within the company, establishing operational plans, analysis of set objectives, and many more. Companies operating in the IT industry can use this process to determine if a planned business decision is right – for example, if they should hire additional coders for a new project, or work on improving the skills of the already employed ones. Finding out the strengths and weaknesses, opportunities and threats of a company is always beneficial.
The business owner or the manager should be the one creating the SWOT analysis for the company or team, but asking other employees for their help and opinions is needed too. A brainstorming session is recommended to be held, to discuss the SWOT factors. Input from others can be extremely useful when developing a business strategy analysis for your IT company – others may see things differently and thus have different ideas about what the potential opportunities and threats are.
What are the positive outcomes of using the SWOT methodology?
A better understanding of your business situation
Knowing what risk your company may face in future might help you take appropriate action to minimise or mitigate the damage they may have on your business. Discovering a threat earlier means the company will have more time to prepare for it. The earlier a threat is identified, the more time the organisation has to prepare for it. Being aware of potential problems is critical in the IT sector, especially when it comes to security issues.
The weaknesses that a SWOT analysis might uncover may feel demotivating but also prove beneficial. Remember, these factors slow down your company's development. When they are identified, you can find out, what to do to change the course of action.
Understanding your strengths is just as vital as knowing your weaknesses, so find out what your organisation excels at. Does your company's internal strength lie in its resources, superior hardware, or a strong team? What sets you apart from the competitors? Answers to such questions can help you understand, what you can do to make those advantages even bigger and stronger - in the case of IT organisations, it is critical to evaluate the technical possibilities. This will aid in determining what strategic steps the organisation should take next.
Context for future planning
The SWOT analysis technique is excellent for identifying strengths and weaknesses and tracking growth – when a business is regularly assessed, its development can be tracked more easily. After a few evaluations, it is evident which aspects of the company require immediate attention. It also encourages strategic thinking in those who work on it. It is very useful to analyze the current state of the company, and may also be used to present the resolutions to the management board or the employees.
Overall, even a simple SWOT analysis can provide you insight into what to do to avoid failure and ensure success – giving you an idea of what the next steps in your business strategy should be.
How to write a SWOT analysis for your business – internal and external factors
Creating a SWOT analysis takes some time, but is worth it. First, you need to decide on what exactly you want to be the main focus of it. Gather all information needed and prepare the base matrix and the space for the four aspects – you can find many templates on the internet, but you can also make your own. Use any resources that you have access to, and start working!
Of course, the first thing you need to do is to create the four quadrants. The first row of your SWOT analysis should be your internal factors – strengths and weaknesses, and the second row – external factors, meaning opportunities and threats.
Think about what your goal is, and what you want to achieve by conducting the analysis. Remember to consider everything and to try to look at it from another perspective. Take into consideration both current and future business strategies. Consider the team and even outsider feedback – what do they think? Write down everything - you never know what will prove useful.
Always start with this part of the SWOT analysis first. Here you write about all the advantages you have that are not coming from outside of your company. Ask yourself, what are the things that are in your control ? What does your business do best? These could include your staff's qualities (such as their readiness to work, calmness in stressful conditions, etc), your marketing ideas, great process development techniques, and so on. Essentially, in this part you answer, what the top qualities of your IT business are.
Examples of strengths that could be used:
- Highly experienced and successful employees
- Strong relationships with suppliers
- Great attention to detail
- Brand recognition on the market
- Strong planning skills
- High-quality technology used
What is holding your IT company from growing? What may require improvement, in what areas does your strategy need work? Every problem is worth noting in your SWOT for future analysis. This is a space for any internal weaknesses that come from within the organization.
Some examples of weaknesses that can affect your business include:
- Employee absenteeism
- Low quality of technology used
- Lack of focus on important operations
- Wrong management methods
- Poor services quality
- External factors
What events or situations will be beneficial to you in the future? What are your fortunate chances? This section is all about expanding your business, but keep in mind that it only applies to external conditions. Opportunities can also become threats, as a failed opportunity can be detrimental to a firm, but do not include them in both areas of your SWOT analysis at the same time. A threat in an IT organisation might be both digital and regular business concerns. If you have the opportunity to hire some new, talented programmers or acquire funding for more coding classes for your employees, that could be written in as an opportunity.
Some examples of opportunities are:
- A chance to cut costs
- New marketing trends you can profit from
- A season of increased sales
- The possibility to access a new market
- Availability of new technology
- Competition going out of business
You must consider different areas here – not only the market, but also things like the current situation in the country of operations, changing laws, and reputational risks. Look around, consult your peers, and identify the unfavourable conditions over which you have no control.
Examples of threats for your SWOT analysis:
- Competitors growing fast
- Political or social changes
- The supplier not being able to provide the product needed for your work
- Business trends changing not in the desired way
- Possible security breaches
Once you have completed your SWOT analysis, you have a clear list of everything you can use to build a better strategy. For instance, if you know that your weakness lies in the poor equipment your programmers use – you know that you should soon get better hardware for them. In general, the SWOT analysis will help you draw logical conclusions and find out how can you use your strengths to even out, or even get rid of, the weaknesses.
SWOT Analysis for an IT company
An IT company can utilise a SWOT analysis in the same way that any other organisation does. The only difference will be which features are included in the matrix. Problems reduced to their most basic form will appear easier to address. An IT SWOT analysis can also be used as a conversation point in a business meeting, such as for brainstorming sessions with management or discussing prospects with a client. If you apply what you learned from your SWOT matrix, you are on your way to advancement.
This simple, yet effective tool can help you assess a new initiative, improve your strategy, and even understand your competitors better. Definitely make use of your strengths, weaknesses, opportunities and threats. Drawing a growth plan for the business will be easier if you can adapt and utilise what you learned from the SWOT analysis, and being able to plan actions accordingly for the future is a great thing.