Technology Management is a Board Issue. Not Really.

Ade McCormack's column in the February 11, 2008 Financial Times is entitled "Technology Management is a Board Issue" and argues that "a lack of technology wherewithal at the board level is, today, an indicator of poor governance."

Overall, the article had some interesting points but was generally way off-the-mark and perpetuated the "IT as a victim" theme which seems very persistent today.  I'm perplexed by IT organizations and what seems like this pervasive Rodney Dangerfield-esque 'I get no respect' philosophy and attitude.  This inferiority complex manifests itself repeatedly with the constant "what is the business value of IT?" efforts that IT organizations seem to undertake.  These generally do little to prove the value and instead serve to make a host of consultants and software vendors who sell various elixirs a bit wealthier.

In the case of the Board, it is not their job to understand and realize the importance of IT, but in fact, it is the CIO's responsibility to create a compelling case that makes the Board prioritize and want to hear about IT.  This may mean the CIO collaborates and influences the CEO or his/her business partners to raise IT discussions.  Or perhaps they do it via some other means, but the main point is that it is the CIO's job to raise consciousness on this topic.

The Board should be focusing on strategic and financial considerations which means that the CEO, CFO and business/operations folks will dominate the agenda because they generally speak about these topics in the language of business, e.g., revenue, profit, cashflow, new customers, retained customers, etc.

It is not the job of the Board or the rest of the organization to understand IT, but the job of IT to talk, like other groups, in the language of business.  If they do this in a compelling manner, they'll earn the requisite spot(s) on the Board agenda.  Merely saying you deserve the time/attention is not enough.

I do agree that many business & Board members maybe ill-informed about technology and its implications, but again, the responsibility falls onto the CIO and his/her organization to provide appropriate education and context to get the Board interested & engaged.  This may mean convincing the CEO or other senior managers of this, but as a high-ranking member of the senior team, I'd presume the CIO would have the capability to "sell" these ideas.  If they cannot syndicate their ideas, the issue maybe with the CIO.

Your point about future board members being likely to have spent part of their career in the IT function maybe true because of the changing demographics within corporations, but again, this is not nor should it be requisite.  A board which is financially and strategically astute and which understands that IT maybe an enabler of certain organizational priorities should be enough.

Comments

[Paul Wallis]

Anand,

You may recall that I replied to one of your previous blogs about my view that IT exists for one reason: to manage the flow of data between business assets.

So I agree with what you are saying.

I hope you don’t mind the extended excerpt from one of my blogs on this subject:

"...So if we have all of this technology and it is so mission critical – life critical even - why does the business never seem to want to engage with IT and discuss its relative merits?

Let’s take a look at some analogies:

In the finance industry, the board aren’t interested in the Anticipatory dialling vs Predictive dialling characteristics of their sales agents’ call centre. But to the call centre Service Delivery Manager these characteristics have has a direct impact on the way (s)he performs daily tasks and plans for strategic goals.

In manufacturing, the Business Unit Manager doesn’t want to understand the virtues of moving from a Swagelok Metal Gasket Face Seal to a Rubber-Edged Composite Compression Seal. But to the plant engineer the choice has direct impact on the way (s)he performs daily tasks and achieves the levels of product required by the production planners.

In the Medical Industry, the Primary Care Executive Manager couldn’t care less about using the 2.5V Fibre Optic Halogen light sources in the Reister Ri-mini Otoscope. But to the paramedic, the ease with which he can change specula and obtain a clear view of the patient’s current state can save valuable time, and even lives – both of which are monitored as part of the Hospital’s performance indicators.

To the leaders and strategists of the respective industries these diallers, seals and scopes are seen as tools of their employees’ trade. They wouldn’t be expected to listen to presentations about their relative merits, and the department heads would never dream of inviting them to do so.

So why does it happen with IT?

Why should the senior management be interested in the latest Cisco VSS 1440 with its 1.4Tbps bandwidth capabilities, or try to understand the intrinsic worth of the IBM BladeCenter HS21 with quad-Core Intel® Xeon® Processors?

The business, pure and simple, is not interested. These are just tools of the trade.

It is not the technology that is important to the business, and it is not always technology which leads to competitive business advantage – it is how that technology is utilised to perform the tasks needed to solve a business need..."

So, to me, technology is just the “nuts and bolts” that enables data to flow, providing the business with a service it needs.

Ultimately, it is the information that is being shared which provides business advancement and competitive advantage.

When IT knows how each data flow travels across and through the assets of the business, the responsibilities, roles, risks and costs of every IT resource (or group of IT resources) employed in support of each business activity (and/or set of business activities) can be clearly visualised and, thus, understood.

By attaching value meta data to data flows and cost information to IT assets, IT can start to assess the ratio between IT support costs and the value of the contribution of IT to the business.

Which means IT can speak to the board in the language it understands – that of money.

When IT uses cost/value as a basis of communication with the business it increases the likelihood of being accepted as a trusted part of the organisation.

[Sean]

Speaking from personal experience (both as an executive and a Board Director) - I have a slightly different take. On the one hand I generally agree with your assertions as to the responsibilities of the CIO wrt engaging and educating the Board, and I am sympathetic to your view that the 'IT as a victim' syndrome is all too often prevalent and is not helpful or relevant in considering the appropriate role of IT in a management context. Where I diverge is that the lack of baseline knowledge of IT on many Boards makes it nearly impossible for CIOs to fulfill their responsibilities as described above: most Directors (of large non-tech public companies) are unable to put strategic IT choices in any sort of robust context. To use an admittedly trite example as a metaphor, for example how can a Director hope to put the CIO's views on the strategic value of social networks into context if they have never used Facebook? I'm not saying that a Director needs to be an expert practitioner; take the example of a large Oil Company Board: the Directors are unlikely to be experts (and don't need to be) in the latest seismic and imaging technologies, but (at least some of them) will have an excellent understanding at a high level of the potential risks and rewards of these technologies. They will be able to digest - in context - any proposals or recommendations put to them as you describe above. They will be able to have an intelligent and relevant debate around these topics in the context of their impact on the business, its customers and its bottom line. When it comes to IT however, all too often this is not the case with the result that either poor decisions are made (often as a result of vendor lobbying) or I suspect more frequently completely ignored thus leaving the IT department to its own devices (for better or worse) and so almost necessarily divorced from the strategic decision making of the firm.

[Anand Sanwal]

Paul & Sean,

Thanks for your comments.

Paul - As you probably can imagine, I totally agree. Put the value of IT into the language of business, e.g., money, and stakeholders within the company and on The Board will take noice.

Sean - I agree with you to an extent. But I think what we're talking about is not having a Board that is clueless about certain large trends going on in the world. Take your Facebook example.

1. I don't think it's requisite that the Board have been on and used Facebook but they should be aware of this social networking/social web trend. The technology is an enabler of the trend. But again, I'd argue that someone articulating/arguing for a project that involves Facebook should be able to communicate the value of it in a way that resonates with the Board and management, e.g. in dollars of profit, revenue or market share, customers acquired, etc.

2. It's not really practical for the Board or management to be aware of the latest-greatest technologies. In fact, I think it would be dangerous for the Board or management to jump on and spend time becoming aware of all these IT developments as technology trends are fickle and subject to trends and fads which don't pan out, e.g. the dot com flameout. And in this case, Facebook, MySpace, etc are far from proven. While the media and Silicon Valley and a host of entrepreneurs may think of social networking as the next big thing, the same happened with B2C and then later B2B platforms back in the day.

3. At least with the very large companies I've observed through my work & research, the IT organization is not always leading the charge on new, innovative applications of technology. Things like software as a service and other innovative models of managing tech are not necessarily welcomed by IT because of the risks they pose to the way things have always been done.