Even in a world that has grown increasingly digital, a new report finds that technology strategy and experience are lacking in the boardroom. The report from Deloitte Global revealed that “board members are uncomfortable assessing their organizations’ digital transformation progress and need more technology experience.”
This gap between the level of technology engagement that organizations need and what often exists in the boardroom may ultimately jeopardize digital transformation and value creation strategies altogether, according to Deloitte.
The report was prompted by the fact that worldwide IT spending is projected to reach $4.4 trillion in 2022, according to Gartner. At the same time, cyberattacks have proliferated globally in the past two years. Deloitte wondered whether boards have stepped up their engagement on tech concerns including cyber and investments, and also whether they are being effective stewards and helping to ensure that technology is supporting strategy — and not the other way around.
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“The research revealed that surveyed boards are engaging in technology matters much as they did for many years; many board members lack the knowledge they need to ask informed questions and ensure technology is being driven by strategy, not the other way around,’’ the report stated. “More broadly, this is creating a gap between the level of engagement organizations need and what’s commonly taking place in the boardroom.”
Boards lacking technology leadership and experience
Organizations are looking for stronger board engagement in their technology strategy. However, fewer than half of executives and board members surveyed believe their board is providing enough oversight of technology matters. A similar number of executives (44%) said that their board directors lack the knowledge they need to provide effective stewardship in this crucial area.
The research found a number of challenges to board oversight of digital, cyber and new technologies including an overreliance on management, deficits in tech fluency, vague tech governance structures, poorly defined management information and unclear links between technology and strategy.
“Organizations require greater leadership and collaboration to successfully embark upon digital transformation,” said Mark Lillie, leader of Deloitte Global’s CIO Program, in a statement. “From a board perspective, directors need to be fluent with technology not only to support but to challenge conventional thinking and spark new innovative strategies.”
A sound understanding of technology and its benefits may help speed up digital transformation. Deloitte Global’s survey highlighted considerable difficulties in measuring the success of tech investments. In fact, four in 10 respondents said their biggest challenge is demonstrating cause and effect between technology investments and growth.
One in three said that focusing too much on ROI and short-term gains dominates thinking, instead of focusing on long-term value measures. Additionally, one in four said the biggest barrier to identifying investment ROI is their organization’s fragmented reporting and use of separate KPIs, and metrics to assess outcomes.
Opportunities to increase technology engagement
Deloitte Global’s survey paints a portrait of a boardroom that’s not as connected as it wants to be with technology — however, respondents offered productive next steps to become more effective stewards of digital, cyber and new technologies.
Sixty-six percent of directors, along with 61% of executives, recommended educating board members on the latest technology trends. A similar subset of respondents recommended developing a more holistic plan to address technology and its link to strategy at the board table.
Other recommendations are to recruit one or more tech-fluent board members to gain more experience on the board and to make technology a standing agenda item at meetings.
“Directors should be assessing whether, and to what extent, proficiency and stewardship gaps may exist on their boards,” said Dan Konigsburg, leader of Deloitte’s Global Boardroom Program, in a statement.
The C-suite and boardroom executives can complement one another to drive a technology strategy, said Rich Nanda, principal at Deloitte Consulting.
Deloitte said the report polled more than 500 directors and C-suite executives to explore boardroom perceptions on technology and investment.