Taking It To 'The Board'

How involved is your board of directors in technology planning or oversight? And how involved should you want it to be?
Posted September 27, 2006
By

Steve Andriole

Steve Andriole


(Page 1 of 2)

I recently completed some research on the role that Boards of Directors play in technology governance. I posted an online survey to determine what the state of the practice actually was.

The results were pretty amazing -– to say the least. More than 50 senior technology executives responded to the survey. The findings benchmark the state of the practice -– and suggest how companies can improve business technology governance.

Boards of Directors are typically organized around committees with specific responsibilities, but Technology Committees are relatively rare.

Nearly all of the companies that do have Technology Committees on their Boards of Directors are technology companies. For example, HP, Cisco, Sun and Microsoft have Technology Committees just like they have Audit, Compensation and M&A Committees.

The difference is that technology company Technology Committees focus on corporate technology strategy -– which new products to develop and market -– and not on the internal use of computing and communications technology.

Put another way, these committees would not look at the desirability or risk of installing and enterprise resource planning application -– but they would look at investing in a new search engine to compete with Google.

The analysis of the survey data revealed all sorts of patterns and insights:

  • Responses to the question -- "What governance structures does your firm utilize for technology?" -– indicated that the vast majority of respondents use Executive Review Boards (72%) or Project Management Offices (62%) to govern technology. A very small percentage use outside advisory boards (6%).

  • The next question –- "How would you characterize technology governance at your firm?" -– revealed an amazing response: More than 70% of respondents believe their technology governance is “tight” (27% think their governance is “loose”).

  • The next question –- "What role does your firm’s Board of Directors play in the governance of technology?" -– yielded some responses that in many respects define the state of the practice of board governance. Only 19% of the respondents stated that their Boards of Directors were routinely informed about the state of technology at their companies. 37% of their companies boards are informed about major projects and 29% are only informed about “special” projects.

  • The next question –- "Has recruitment of directors for your firm’s Board been influenced in any way by a desire for technology experience?" -– suggested that the overwhelming number of companies (63%) in our survey do not regard technology experience as a prerequisite in any way to board membership. Only 8% of the respondents indicated that their companies prefer board members with technology experience.

  • The next question –- "Is there a Technology Committee or Subcommittee of the Board?" -– says it all: Seventy-five percent of the respondents answered “no.” Twenty percent of the respondents answered “yes.”

    But the correlation of the 20% with the vertical industries represented in the survey indicated that companies that create, sell and support technology are the ones that have technology subcommittees of their boards.

  • The next question –- "How often does the CIO, or another technology executive, present to the Board of Directors?" -– suggests that 20% of the companies invite their CIOs into the board room routinely, but that 26% rarely do. Twenty-six percent sometimes do and 17% do so often.

    These results dovetail with the findings regarding the board’s oversight of major and special technology projects, but suggest that nearly 80% of board meetings are not interrupted by technology discussions.


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