It’s hardly surprising that the call for technology-savvy directors is getting louder. Emerging research points to serious consequences for boards that continue to ignore or delegate enterprise-level technology governance (Van Grembergen & De Haes, 2012). This is because boards are operating against a technology saturated backdrop characterised by speed, complexity and ever changing risk. They are expected to govern in an environment where the cloud, big data, mobile and social media are changing the way businesses operate and how modern societies work. Is enterprise business technology governance the business of boards? Up until very recently the focus of technology governance has largely been within the IT department. There are still plenty of boards that rely almost entirely on management or external advisors to guide their technology-related decision making (1). Yet technology is now integral to most commercial and government transactions. Some form of technology or technology-enabled system underpins business and government products, services, practices and processes, data monitoring and reporting and almost all aspects of stakeholder engagement. The necessity for boards to govern technology investment and risk at the enterprise level has become a part of their fiduciary duty of care whether they realize it or not. What is enterprise business technology governance? Enterprise technology governance (ETG) focuses the board on governing technology and information as assets, on value creation and competitive performance oversight against a technology backdrop. ETG includes the leadership, oversight and board mechanisms for governing information and technology at an enterprise level. At the strategic level of the enterprise, ETG differs significantly from operational IT governance in the same way that strategic and operational management differ. At this level, the board focuses on making sure that the business is enabled by technology. These boards understand how to best derive enterprise value and manage risk from the use of data and information via integrated business technologies, and govern accordingly. They promote a governance view where customers, stakeholders, people in IT and from across the business are expected to engage to better focus investment decisions and priorities. (Valentine & Stewart, 2013). The rapid rise of ‘questions your board should be asking’ publications In 2012 Canadian Institute of Chartered Accountants (CICA) published the second edition of ‘20 questions directors should ask about IT’ (Baker, 2012). They propose that boards needed to ask the right questions in relation to technology and information assets, to better leverage emerging technologies, manage technology-related risk, including security and business continuity, make wise investment as well as cost containment, and meet legal, regulatory and compliance requirements. McKinsey and Co’s Paul Willmott, recently released ‘The do-or-die questions boards should ask about technology’ (Willmott, 2013). This pragmatic article challenges boards to ask questions relating to how technology is changing the basis of competition in their industry. Importantly it also hones in on whether technology is changing customer product or service expectations; whether strategies and business plans reflect the full potential that technology represents. It asks about the extent to which technology investments will deliver the agility to maximise opportunities and minimise threats. It also asks whether the board has a clear IT operating model, and the enterprise technology governance structures and capabilities in place. Capability and competence within the board is the key The types of questions in these articles represent excellent areas for board reflection. But do boards have the maturity and capability to not only ask the questions but make a judgement or challenge the answer. This is critical because a board’s combined knowledge, skills and experience drives decision quality (Martyn, 2006), their actions and their priorities. Their capability and orientation has a profound impact on whether the organisation not only has a culture that uses data and information for decision making and competitive advantage, but also whether the organisation realizes the value of technology investments (Marchand & Peppard, 2013). However, without a good percentage of digitally-savvy directors within a board capable of asking the right questions, boards risk ‘flying blind’ (Carter & Lorsch, 2004) and there are potentially serious consequences for having a hands-off approach to ETG. Conversely with a strategy-matching and balanced set of competencies, boards are better equipped to meet their governance responsibilities (Leblanc & Gillies, 2005). ETG boards can ask the right questions, challenge responses in relation to the business they govern and are much more likely to ensure that the right information makes it onto the board agenda (Andriole, 2009). Don’t fall into the lone digital director trap. One is not enough. I'm currently researching technology competencies for boards, inspired in some ways from my own experience as a lone director raising IT questions on a board some years ago. I have to state up front that I'm a business person first but with a long and ever deepening interest in the role of ICTs in performance and learning. It always amazed me back then that my fellow board members, almost without exception, would dismiss any comment or suggestion of ICT considerations as the domain of management; as operational, not governance and therefore not the domain of the board. In the end I stopped asking. So, two points. First, a lone ICT/IT savvy director is not enough - their value can easily be diminished by 'the club' who are not yet in this space and who hide their lack of competence in this space behind a shield of operational vs governance. Second: ICTs are so pervasive throughout all aspects of business, that a level of awareness and knowledge (basic and high level) of the strategic use of business technology in compliance, financial, competitive and risk governance should be a part of the professional development of all directors. Technology governance thinking must become as integral as finance and legal I’d take it even further. In today’s technology saturated competitive environment EBTG should be as integral to a board’s strategic orientation, thinking and priority skills set, as finance and legal already are. This is necessary because failure to govern technology with a similar level of competence and priority, courts technology-related competitive, financial, compliance and reputational risk. The well publicised, often government, multi-million dollar projects that have failed are testimony to this. As an ongoing process the board must have the technology literacy to govern the balancing act of overseeing the strategic, technology enabled map of the future envisaged by the strategists whilst avoiding excessive risks or operational pitfalls along the way. They have to be able to ask the right questions (2). See blog post ‘Signs that all is not well in the boardroom.’ http://www.enterprisegovernance.com.au/blog/signs-all-not-well-boardroom\ Further work is required to identify and validate a flexible range of board-level digital director ETG competencies. This is the basis of our current and future research.
ABOUT THE AUTHOR Elizabeth Valentine is a doctoral candidate at Queensland University of Technology. Her research and thesis focuses on, ‘Enterprise Technology Governance: a core competency for boards of directors in a digital world’. To receive occasional newsletters click 'Sign Up'. Your details are safe with me. Publications: http://eprints.qut.edu.au/view/person/Valentine_Elizabeth.html#group_art... Email: firstname.lastname@example.org Mobile: +61 468 392302. LinkedIn: au.linkedin.com/pub/elizabeth-valentine/0/10/4b5/