Boardrooms fail to harness IT advances

Mar 16 2007 by Nic Paton Print This Article

American boardrooms are worryingly detached when it comes to making decisions about the best use of new information technologies, despite recognising such decisions may be critical to the future success and direction of their organisation.

Research by Deloitte Consulting, a subsidiary of professional services firm Deloitte & Touche and the publication Corporate Board Member, has found that fewer boards take the trouble to make sure their IT strategy is aligned with their overall corporate strategy.

Its poll of more than 450 directors of publicly traded companies found a tenth of boardrooms relegated IT matters to a board committee and only slightly more, 11 per cent, discussed IT at every meeting.

Just 14 per cent of boards believed themselves to be "completely and actively involved" in IT strategy, found Deloitte.

Yet, directors who reported a higher level of involvement in IT matters also tended to have a better understanding of IT's importance to their business and their performance.

Crucially, when chief executives led the discussion, boards were more completely and actively involved in IT.

Directors also reported that effectiveness in executing their IT strategy directly correlated to better financial performance.

And more than a fifth blamed various aspects of IT strategy for their companies' inability to achieve its goals.

Just as worryingly, more than half said their board would be spending no more time on IT over the next three years than it does now.

"Directors are aware of the importance of information technology to their companies' results, but a significant gap exists between the emphasis the board appears to place on IT and the steps they are taking to address it," said Kenneth Porrello, a principal with Deloitte Consulting.

"Many directors and senior executives blame this gap on the number of other things that have been hitting the board's agenda and a resulting lack of time to properly address IT.

"However, this excuse is becoming less credible given the growing importance of IT," he added.

Directors could no longer get away with just thinking of technology as something that supported the actual business strategy.

"Today technology and IT are key business strategies and typically are accompanied by capital budgets reaching as high as a billion dollars in larger companies," said TK Kerstetter, president and CEO of Corporate Board Member.

"The days of not understanding IT in the boardroom are gone, and I expect we will see more CIOs and CTOs invited to serve as board members in the years ahead."