Definition:

The Strategic Grid for IT from McFarlan, McKenney & Pyburn ('83) is a tool that can be used to assess the current operational dependence on information systems (low, high) versus the future potential strategic impact of information systems (low, high). Combining the 2 views in a matrix results in 4 possible combinations:
1. Support (currently low, low in the future too). IT has little relevance and simply supports some processes. Firms or systems in this quadrant will place the least amount of emphasis on IT (planning) in terms of senior management concern and involvement.
2. Turnaround (currently low, high in the future). IT will be a key feature of future strategic planning. Significant top management involvement in IT (planning) must be established.
3. Factory (currently high, low in the future). It is important in terms of day-to-day operations but it is not felt that there are any major IT developments on the horizon that will fundamentally alter the nature of the business. The level of senior management involvement is decreasing.
4. Strategic (high, high). IT Strategy is very important ands plays a critical role in the formulation of the overall business strategy. High level of involvement of top management in IT strategy.

Purpose:

One can use the McFarlan Grid to analyze the impact of information systems as a whole for an organization or for a division or department of an organization. But the strategic grid can also be used to analyze the dependence and impact of individual IT applications or systems.
Any organization would be wise to have an IT Strategy, even if it is in the support quadrant.According to Professor Earl, there are nine reasons as to why any organization should have an IT strategy:
1. IT involves high costs.
2. IT is critical to the success of many organizations.
3. IT is now used as part of the commercial strategy in the battle for competitive advantage.
4. IT is required by the economic context (from a macro-economic point of view).
5. IT affects all levels of management.
6. IT has meant a revolution in the way information is created and presented to management.
7. IT involves many stakeholders, not just management, and not just within the organization.
8. The detailed technical issues in IT are important.
9. IT requires effective management, as this can make a real difference to successful IT use.

Source

http://www.12manage.com/description_strategic_grid_it.html