A new report from Deloitte Global reveals a lack of investment in technology gaps in boardroom involvement in digital transformation.
Even in an increasingly digital world, a new report finds that there is a lack of technology strategy and expertise on boards. The Deloitte Global report revealed that “board members are uncomfortable with evaluating the progress of their organizations’ digital transformation and need more technical expertise.”
According to Deloitte, this gap between the level of technology engagement that organizations need and what is often found in the boardroom may ultimately jeopardize their digital transformation and value creation strategies altogether.
The report was driven by the fact that worldwide IT spending is expected to reach $4.4 trillion in 2022, according to Gartner. At the same time, cyber attacks have spread globally in the past two years. Deloitte questioned whether boards of directors have stepped up their involvement in tech concerns including the Internet and investments, and also whether they are effective stewards and help ensure technology supports strategy — not the other way around.
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“The research revealed that the boards surveyed are involved in technology matters as much as they have for many years; many board members lack the knowledge they need to ask informed questions and ensure technology is driven by strategy, not the other way around.” On a larger scale, this leads to Creating a gap between the level of participation organizations need and what is commonly happening on the board.”
Councils lacking leadership and technical expertise
Organizations are looking for stronger board participation in their technology strategy. However, less than half of the executives and board members surveyed believe that their board provides adequate oversight over technical matters. A similar number of executives (44%) said that board members lack the knowledge they need to provide effective oversight in this vital area.
The research found a number of challenges to board oversight of digital, cyber, and new technologies, including over-reliance on management, deficits in technology fluency, opaque technology governance structures, poorly defined management information, and unclear linkages between technology and strategy.
“Organizations require greater leadership and collaboration to successfully embark on digital transformation,” Mark Lilly, Program Leader for CIOs at Deloitte Global, said in a statement. “From the board’s point of view, managers need to master technology not only to support conventional thinking but also to challenge conventional thinking and launch new innovative strategies.”
A sound understanding of technology and its benefits may help accelerate digital transformation. The Deloitte Global survey highlighted the significant difficulties in measuring the success of technology investments. In fact, four out of 10 respondents said their biggest challenge is demonstrating cause and effect between technology investments and growth.
One in three said an overemphasis on ROI and short-term gains dominates thinking, rather than on measures of long-term value. Additionally, one in four said that the biggest barrier to determining ROI is their organization’s segmented reporting and the use of separate KPIs and metrics to evaluate results.
Opportunities to increase participation in technology
Deloitte Global’s survey paints a picture of a boardroom that isn’t as connected as it would like to technology – however, respondents provided fruitful next steps to becoming more effective stewards of digital, electronic and new technologies.
Sixty-six percent of directors, along with 61 percent of executives, recommended educating board members on the latest technology trends. A similar subset of respondents recommended that a more comprehensive plan for dealing with technology and its relevance to strategy be put on the board table.
Other recommendations are to appoint one or more tech-savvy board members to gain more experience on the board and to make technology a permanent item on the agenda at meetings.
“Managers need to assess whether and to what extent there are competency and oversight gaps in their boards,” Dan Koenigsberg, Head of Global Boardroom Program at Deloitte, said in a statement.
Rich Nanda, director of Deloitte Consulting, said executives in the executive suite and board of directors can complement each other to lead a technology strategy.
Deloitte said the report polled more than 500 key directors and CEOs to explore boards’ perceptions of technology and investment.