One of the things inherent in the rise of the next-generation Enterprise (or Enterprise 2.0) is that its dependency upon adaptable, flexible and easy-to-deliver technology goes up.
So, too, does the use of technology to mediate interactions with suppliers, customers, the general market and potential employees.
Then there’s the shift from an operational focus to an information and analytics focus.
The integration of social environments into the company. The diversity of devices. Doing all this while staying within Bill 198, Sarbanes-Oxley, CLER9 … and keeping the organization out of the media except in ways it wants to be there.
In other words, developing a strategy for the firm will require technological expertise — and it will require it both on the Board of Directors and within the Executive Management Committee.
This need is not periodic. It is on-going.
Many firms believe they are getting what they need because the CIO is invited to address these bodies once per year.
In almost all cases this is proving to be woefully inadequate.
Other types of strategic decision require an on-going knowledge of what technology might demand and impose on the firm. It is all blended together.
We are also seeing a large number of firms that end up being driven by their key vendors, who look to move into the gap and direct the company’s technology decisions into routes that favour them.
Although this is often obvious with outsourcing, that is hardly the whole of the story: major decisions about platforms, longevity of technology, etc. are being driven in this way by consulting firms.
I do not recommend that the Board become self-sufficient in this matter, despite everything I’ve just said, although on a Board of nine or more directors we would expect two of them to have a technology background (and not currently be associated to a major supplier to the firm) they can put to work.
That, by the way, is a pattern you do see for other areas of concern.
The Board, in turn, can depend on the CIO presenting on issues as a regular agenda item, and on the input of the IT Governing Board, which should provide a strategic perspective annually.
You don’t have an IT Governing Board? It’s an approach that’s complementary to the Board of Directors and the Executive Management Committee. Keep the operational policy issues where they belong, while handling the 3-5 year horizon tactically, and getting the 5+ year strategic positioning properly decided where it belongs.
At the Executive Management team level, we would expect one or more Governing Board members to be a member of the EM group, including the CIO regardless of his or her current reporting structure.
A CIO, in turn, who makes this work, will probably end up reporting to the top, if she/he is not already doing so.
Issues that the EM team and the Board should expect to address regularly are:
- The state, longevity expectations and reinvestment priorities in the current IT portfolio, with a special attention to liabilities.
- A competitive analysis that looks at technology issues as being addressed by competitors, including those that have the potential to enter the company’s market space via technology.
- Business strategic imperatives and their technology implications, including investments to leverage them and demands these will place on the organization as a whole.
- The value of technology-related IP within the enterprise (knowledge bases, customer interactions and feedback, etc.), both potential and actual based on use.
- The fundamental direction of the firm — and what this implies for core decisions such as sourcing partners, IT organization and purposes, creation of corporate offices and autonomy of the divisions and regions in re technology investment.
There’s no question but that technology remains a subject most Boards and EM teams would prefer not to have to address.
This has little to do any longer with personal abilities to use technology and more a concern about the decisions being considered. The complexity involved is a matter of awareness, now.
Companies should therefore plan to augment their formal resources within the firm and at Board level with such advisors as may be required, at least during the first two years.
We recommend, again, that these be chosen with one eye toward who is already or likely to benefit as a major supplier. Be as independent of your suppliers as possible.
The corporate governance needs that surround technology go far beyond simple budgets and allocations of capital.
They are directional in nature.
Invest in them properly.