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The elephant in the boardroom

Deloitte report_Board Tech knowledgeIT governance is way more than a cybersecurity check list…

In business, technology offers both risks and rewards. So what happens when your board sees only the risks?

It creates a significant missed opportunity, says Deloitte in its new research article, The tech-savvy board: Engaging with CIOs and management on strategy, risk, and performance, and it’s one that’s creating big new challenges for governance.

When it comes to the threat landscape, boards aren’t lagging behind. They’re well aware of the existence of cyber threats and are actively working to ensure they are managed. Put simply, boards are striving – diligently and consistently – to increase, improve and develop their digital chops.

That’s a good start, but it is coming from a defensive position, says Deloitte. What many organisations need, especially when it comes to technology, is top-down support to go on the offensive.

“Because boards also have an obligation to guide the company toward growth and innovation, offensive conversations need to be part of the board agenda, too,” says Deloitte. “Particularly with today’s exponential pace of change, technology is an enabler of strategy, new business models, innovation, disruption, and more efficient and effective execution.”

Everyone has been forewarned on what’s coming, says Deloitte, but actual plans to deal with the risks and rewards of emerging tech are less common.

“Offensive conversations need to be part of the board agenda, too.”

“Sixty-four percent of survey respondents in the 2019 Deloitte Global Human Capital Trends report see growth ahead in robotics, 81 percent say the same about artificial intelligence, and 80 percent foresee growth in cognitive technologies.”

“Yet despite the predicted growth in adoption, only 26 percent say their companies are ‘ready’ or ‘very ready’ to address the impact of these technologies, which are expected to include job design, reskilling and work reinvention as people and machines are more extensively integrated across the workforce.”

This seeming contradiction – that boards understand that there are challenges before them, but do not understand the challenges themselves – is reflected in the way boards oversee technology planning and budget allotment says Deloitte.

“Overall, companies spend 3.5 percent of their revenue on technology and for some sectors, such as banking, this number can be as high as 7.5 percent. These are significant investments, so it’s important for boards to understand whether and how investments in technology will generate greater returns than alternative uses of the funds.

“Yet only 36 percent of participants in Deloitte’s 2018 global CIO survey say that their organisations have a well-defined IT investment process, and only 35 percent say that there is a clear process for prioritising IT investments. Less than a third (30 percent) report there is a structured process for measuring the value of IT investments.”

What’s needed in the boardroom is an actual depth of knowledge that traverses technology performance, strategy and risk management.

That’s clearly a big ask, but one that Deloitte says is surmountable – if you don’t mind learning a new trick or two.

Step one, says the professional services multinational: Commit to identifying and addressing your tech knowledge gaps – and getting less tech-savvy board members up to speed (or replacing them).

You don’t have to be a tech expert says Deloitte, but you do need to have enough context to question and “steer management in the right direction.”

Next, technology poses both opportunity and threat: Recognise this ambivalence and prosper.

“Organisations whose boards are actively engaged on technology issues typically perform better financially,” says Deloitte. “By helping management leverage the use of technology, boards can help catapult businesses to a different level.”

Finally, says Deloitte, adopt a holistic approach to all things tech: “Boards often consider IT to be a stand-alone function. Instead, they can view it as an integrated part of business operations and strategy, and recognise the organisation’s dependence on technology in achieving its business goals.”

Once attitudes have been sufficiently adjusted, the steps to improving the technology-chops at the boardroom table are relatively simple: Start by building intellectual agility, says Deloitte, and that can be as simple as inviting a tech-native to the table.

“One quick fix could be to add a tech-savvy board member who can bring knowledge and expertise to board conversations around technology topics. However, this may not always be possible to do quickly.”

“There are many ways for directors to develop greater technology knowledge, including reading in areas relevant to the company and industry as well as attending training and development programs and technology conferences or trade shows.”

Next up, leverage committees to do the hard yards on technology – but don’t forget where the buck stops.

“No matter where the committee-level conversation about technology takes place, it’s important to remember that the overall responsibility – particularly for opportunity- and growth-related technology discussions – remains with the full board.”

Once the board has its bearings, break down the walls between board and management to keep the conversation going.

“Boards and management usually have the same goals, but can sometimes appear to be two separate teams,” says Deloitte.

“Ongoing technology conversations with management, particularly when tied to business strategy and outcomes, can help bring down walls between the two and help raise the awareness and knowledge of board members.”

Finally, help develop tech talent and skills in the C-suite and beyond.

“Technology skill sets are changing rapidly; not having talent with needed skill sets could mean falling behind the competition or not leveraging technology effectively,” says Deloitte.

“Boards can be actively involved in understanding the current talent pool for technology and helping CIOs recruit talent to support current and future business mandates for innovation, growth and transformation.”

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