Boardroom IT
Few (non-tech) companies have even one director with a strong understanding of technology; in terms of executive directors, while the CEO and CFO are almost always represented, the board level CIO is a rare bird indeed. In this week’s Digital Business supplement, Ade McCormack asserts – correctly imo – that “Technology management is a board issue”:
There are many reasons why IT management fails to stem from the boardroom. These include: *Many business leaders have had a largely tech-free career. Their lack of experience in using technology as a tool beyond word processing makes them feel vulnerable. Making technology management non-strategic helps to keep their weakness off the agenda. * Many technologists do not want “users” interfering in technology decisions, often because their ill-informed input would be detrimental to value maximisation. Keeping users at arm’s length was standard practice because clunky technology tools and approaches did not lend themselves to mid-project change requests. Despite big improvements in the tools, user-inclusiveness is still some way off. *Some technology vendors have too much influence at board level. Their account director has more clout in technology decision-making than the CIO. This is a parlous state of affairs. Under these conditions technology management will be driven by the cash flow requirements of the vendor rather than the imperatives of the business.
Good governance, cost management, innovation management and ultimately shareholder value all require strong board level technology management.
Good IT management does not mean becoming a technologist, although future board members are likely to have spent part of their career in the IT function. It does mean ensuring there is a management process to reduce technology risks – many of which stem from abdicating decision-making to the IT function.
It also requires good technology leadership to ensure that creators and supporters of new technology feel sufficiently valued to stick around.
I first wrote about this (again spurred on by one of Mr. McCormack’s articles) almost two years ago. Unfortunately some of my optimism then was probably misplaced (or at least mis-timed) – I’m not sure we’ve made much progress on this front since then; David Yu’s rise to become the CEO of Betfair (in January 2006) still seems sadly to be very much the exception…
When I am investing, this is one of the first things I look for – does the management understand the strategic importance of technology to their business and if so how does this translate into how they run the business. Not surprisingly, my personal portfolio has a strong bias towards private companies who in my experience are often much further along in terms of embracing technology as a core pillar of their strategic discussion. All to often, many executive and non-executive directors of large public companies see technology as the bit that makes sure their Blackberry is working (or for the true traditionalist – that makes sure their secretary’s computer and printer works so that important emails get printed in a timely manner…)
I hope there are more signs of progress on this front over the next two years. Ultimately, I think it is inevitable but it might well take a generational switch in the boardroom before we see significant changes in approach or attitude. In the mean time, this offers a great window of opportunity for companies and leaders who are willing to embrace this line of thinking now.
