Boards need to get up to speed with digital

blue_at_signBusinesses are operating in a digital age. Technology is playing an increasingly important role in every aspect of the organisation and, in particular, the customer experience. As a result it has never been more important for boards to take an active role in guiding and overseeing their company’s IT investments, strategy and opportunities.

And, based on the recently published PricewaterhouseCoopers Annual Corporate Directors Survey for 2013, it would seem that board directors are very much aware that IT can play a big role in their business. The IT Oversight section of the report, which is based on a survey of 934 public company directors of which 70% serve on boards of companies with more than $1 billion in annual revenue, reveals that 88% of respondents said that IT was important to creating shareholder value in their company.

It is perhaps not surprising then that the survey found that boards are spending more time on IT matters and are planning to further increase the amount of time spent overseeing IT. When asked about the amount of time their boards spent on IT risks, 40% of directors reported that this had increased over the last year while 32% said the amount of time spent on IT strategy had also increased. And when asked about the next 12 months 61% said they wanted to spend more time on risks and 55% said the same about strategy. So the level of oversight by boards is increasing, which is encouraging given the growing importance of IT to their businesses.

However, oversight alone is not enough. Boards need to have a good level of understanding of digital business models and how these can be enabled through technology. This is not to say they need to understand the technology itself – that’s the CIO’s job – but they do need to understand what IT can do, what customers want and expect from their digital interactions with organisations, how employees and customers are using technology, and how IT is being used by their competitors and by companies in other industries.

It is perhaps worrying then to read the responses to the question “How engaged is your board or its committees with overseeing/understanding new business models that are enabled by IT” as only 12% replied that they were very engaged and a further 33% said they were moderately engaged. This just doesn’t seem high enough given the potential for technology to transform business models and disrupt industries. When asked the same question about their employees’ use of mobile technologies only 6% said they were very engaged while 35% said they were moderately engaged. And in relation to their competitors’ use of emerging technologies their responses fell to 3% and 23%, respectively. And yet 88% of the same group believe that IT was important to creating shareholder value in their company.

No wonder then that 75% of the survey respondents said that it is important to add directors with technology or digital media experience to the board compared to 68% a year ago. The survey also shows an increase in the number of boards seeking help from external consultants on IT matters with 35% saying they had engaged a consultant on either a project-specific or continuous basis compared to 27% in 2012.

So whilst their current levels of engagement and understanding in technology and digital business may be low, the good news is that many boards recognise the gap and are either seeking to address this when appointing new directors or through the use of external consultants. However, whilst this may fill the immediate gaps in their knowledge, it is not addressing the long-term issue: digital spans the entire organisation and beyond. It is about the devices, applications, tools, communication channels, and data being used by their business and employees and also that of their customers, suppliers and partners. To succeed in this new model, all members of the organisation’s leadership team have to understand what it means to be a digital business and how technology can enable this. Consultants and individual directors can certainly help but to avoid getting left behind the whole board need to get up to speed with digital.

Trackbacks

  1. […] writing my last article, Boards need to get up to speed with digital, in which I highlighted the need for boards to gain a better understanding of what it means to be a […]

  2. […] of the discussion about being a digital business centres on technology. In Boards need to get up to speed with digital I talked about the need for executives to understand what technology can do; what customers want […]

  3. […] is a subject I have written about before. In Boards need to get up to speed with digital I talked about the need for boards to gain a better understanding of what it means to be a digital […]

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