SWOT Analysis for an IT Company

by Annie Sisk - Updated October 18, 2018
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Perhaps more than most fields, the information technology industry faces a dizzying rate of change and innovation. IT firms that don’t regularly assess those changes, and the firm’s place in the evolving marketplace, risk losing clients and contracts to firms better equipped and prepared for new opportunities. One proven method for an IT firm – or indeed, a company of any kind – is to evaluate market position through a complete analysis of the firm’s strengths, weaknesses, opportunities and threats. More commonly known as a SWOT analysis, this process helps a business spot potential avenues for revenue, stave off declining revenue and build on its unique value for a healthier company.

What’s a SWOT Analysis?

SWOT is an acronym that stands for:

  • Strengths: The things your company does well or considers assets.
  • Weaknesses: Tasks and projects your business struggles with or assets it lacks.
  • Opportunities: Events and circumstances that your company could leverage. 
  • Threats: Situations that pose a risk to your company in some way.

One way to distinguish strengths/weaknesses from opportunities/threats in the SWOT analysis is to view them from the company’s perspective. Strengths and weaknesses are internal, while opportunities and threats are external to the company.

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For example, an IT firm may employ multiple coders with extensive experience in building native web apps. Thus, skill in native web app development would be a strength because it is based on an asset – employees – within the firm itself. If the popularity of native web apps drops dramatically in favor of some new, emerging technology, that would present a threat to the firm, as it is coming from outside the business.

The strengths and weaknesses analysis is focused on the present, examining what the company can do well today. On the other hand, opportunities and threats can be forward looking. There’s a bit of prediction at work, since you’re trying to anticipate future events and benefits, as well as risks.

Purpose of a SWOT Analysis

The process of a SWOT analysis is valuable to IT companies in a busy marketplace. It’s all too easy to become too wrapped up in urgent, daily crises to take a step back to get perspective on the business itself. At the same time, it’s also easy for a business owner to become convinced of a certain perspective – either that the business is great or that it’s hopeless and the company will have to close.

A SWOT analysis helps you take a deep look at your business from a more objective framework so you get a clearer idea of what the business does well and what it struggles with. The SWOT process also forces you to think about the future; not just tomorrow, but next year and the next five years. SWOT helps you craft a longer-term strategy that takes advantages of your company’s natural strengths and opportunities by working with the grain, not against it.

Conducting a SWOT Analysis

A SWOT analysis can be conducted at any time in a company’s existence. However, the best results generally flow from avoiding this process in times of high stress, overwhelming deadlines and financial pressure. Often managers use a piece of paper that’s been divided into four quadrants or a two-by-two table with four cells to track SWOT analysis work. In the left-hand column, jot down strengths and opportunities, such as the helpful categories, and in the column on the right, note weaknesses and threats.

An alternative is to create a team of workers at all levels in the firm to prepare the analysis jointly. The team should meet two or more times to share opinions and work to finalize the analysis. A whiteboard can be a more effective tool than individual pieces of paper in team meetings.

Analyzing Strengths and Weaknesses

Owners of IT firms may find the strengths and weaknesses part of the SWOT analysis challenging, since it requires objectivity about your own company, your employees and yourself. To be helpful to your business, however, it’s important to achieve some clarity in this perspective.

One way to approach this part of the analysis is to think about what your firm does well, as opposed to assets that it has or owns. Physical assets can be lost or sold, and employees can leave, but core competencies are more fundamental. Additionally, think specifically about skills and strengths that will help the firm achieve its goals. If one goal is to expand into the local business market, look at strengths such as relationships and connections with other local businesses.

Evaluating External Factors

Opportunities and threats analysis should focus on the world outside your firm; all sorts of external forces can impact an IT firm. What is changing in your business or your local market? Why are those changes taking place, or what is driving them? In evaluating external factors, it’s important to be upfront about your limitations. A certain amount of future-oriented thinking is required in a SWOT analysis. However, there’s too much uncertainty involved in IT to accurately predict the future in detail.

After the SWOT Analysis

To fully realize the benefits of a thorough SWOT analysis, an IT firm should disseminate the conclusions of the analysis to stakeholders, then schedule a follow-up meeting a week or so later. At the follow-up meeting, the goal should be to create a plan to leverage the firm’s strengths and take advantage of any identified opportunities, while simultaneously minimizing weaknesses and avoiding threats.

For each opportunity the firm can identify, set specific goals that are aligned with the company's core values and mission. For example, if the firm has the opportunity to sign a contract for services with a large new client, the goals could be centered around creating a value-driven proposal and connecting with that company’s decision-makers.

About the Author

Annie Sisk is a freelance writer who lives in upstate New York. She holds a B.A. in Speech from Catawba College and a J.D. from USC. She has written extensively for publications and websites in the business, management and legal fields.

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