Corporate directors: we're in the dark about IT

A majority of corporate board members recently surveyed say they don't have enough information about what their companies' IT departments can do for their organizations. Yet, IT is the foundation for future corporate growth and performance.
Written by Joe McKendrick, Contributing Writer

The talk about lack of "business-IT alignment" is incessant, and anyone on the IT or business side understands how frustrating the lack of communication can be. It appears that frustration reaches all the way up to the board of directors level.

Now a new survey of 204 corporate board members finds that almost half (47%) of corporate directors surveyed are dissatisfied with their boards' ability to provide information technology (IT) risk oversight. A recent survey from Oliver Wyman and the National Association of Corporate Directors (NACD) finds that, while virtually all board members acknowledge that IT will have a significant business impact on the companies they govern over the next five years, more than half, 51%, say they are not given enough information to perform their oversight duties effectively.

Not knowing enough about IT is a huge knowledge gap for the directors responsible for steering companies through today's hyper-competitive global economy. Companies rely on information technology to squeeze costs, streamline processes, leapfrog competitors, and even transform the business.

Surprisingly, the survey shows, only 19% think IT will transform their companies within the next five years. This suggests a lack of awareness of emerging strategies ranging from business analytics to cloud to enterprise and service-oriented architecture. A few more, 36%, do understand that IT can boost operational efficiencies.

Interestingly, the study also confirms that only 16% report having been a CIO or senior IT executive earlier in their career -- so they are newbies when it comes to business technology.

With the world's largest 500 companies losing more than $14 billion every year from failed IT projects, there is plenty of room for improvement and opportunity in helping corporate directors understand their companies' IT strategies. As Jonathan Cohn, Oliver Wyman Partner and co-author of the report put it: “Companies that receive focused board direction on IT-related risk will have a competitive advantage over those that don’t,” he adds.

Having a more informed and engaged corporate board can go a long way to better aligining business and IT. The report spells out the challenge involving the all-too-common problem of IT projects getting rolled out much later than expected:

"It’s not that IT is lackadaisical about deadlines, or the project manager is subpar. It happens because companies shift plans for their product, market, and trading strategies at lightning speed as the environment alters. And every time a company changes direction, the gap between what it needs as an IT solution and what IT has been working to deliver grows disproportionately larger.... some IT endeavors may never get under way, potentially forcing businesses to miss critical opportunities. ...bowing to the pressure to deliver, IT groups will stop adhering to standard solutions and/or architectures, increasing the risk and support costs of a project. ...business managers become so frustrated that they bring in 'shadow IT' solutions that then must be integrated into and supported by the larger corporate IT environment."

A full summary of the NACD report is posted at the Oliver Wyman Website.

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