Although many corporate board members believe IT strategy is important, most directors admit they don’t pay adequate attention to information technology issues, according to a study by Deloitte Consulting.
Just 10.5% of 455 directors of big companies surveyed said their boards discuss IT at every meeting, while 48.7% said their boards talk about IT issues only as the need arises.
Dennis L’Heureux, CIO and senior vice president for planning at Rockford Health System, says he isn’t surprised by the results of the study.
L’Heureux says he has worked for three different CEOs during his 12-year tenure at the healthcare firm.
When he first started as Rockford’s CIO, he provided the organisation’s board of directors with an IT strategy update every quarter.
Now, in addition to the quarterly updates, he meets the board every time the company is about to embark on a big project, such as the implementation of medication safety technology or an electronic medical records system, he says.
L’Heureux also spends time with the board either at the CEO’s request or to inform it about a new technology or a related IT topic.
“In either case, the board is very familiar with me,” says L’Heureux. “I sit [in] as an invited guest to all board meetings and also participate in the annual board retreat. Some of the board members are more comfortable discussing technology than others. However, all of [the board members] are very interested in how IT is to be used and how it will bring value.”
Kenneth Porrello, a principal at Deloitte Consulting, says the results found a “strong correlation” between corporate boards that are diligent in overseeing IT issues and companies that consistently perform better financially than their competitors.
That correlation “doesn’t establish causality”, he says, but with a base of more than 450 respondents, “it raises questions as to why that is there. It could be that good organisations are just simply good at everything,” he says.
Not surprisingly, the study also revealed that CEOs are often very influential in driving boardroom discussions about IT matters, Porrello says. “A CEO’s outlook tends to set a tone and to get IT on the board’s agenda more frequently,” he says. “I think it really starts with the relationship between the CIO and the CEO.”
Joe Trentacosta, CIO of Southern Maryland Electric Cooperative, says advocacy of IT issues at board meetings by the utility’s CEO, A Joseph Slater, has been “a critical success factor” for it.
Slater champions IT projects by initiating informal discussions with directors prior to board meetings and then actively supports Trentacosta’s strategies or decisions during the CIO’s presentations to the board.
“It begins with ensuring we have an adequate [IT] budget to implement new systems and technologies and goes full cycle through active executive sponsorship” of major IT initiatives, such as a customer information system that the utility finished rolling out a few weeks ago following an 18-month development effort, Trentacosta says.
He also points to Slater’s recent support of the IT organisation’s decision to in-source support of its IT infrastructure and operations as it was nearing the end of a 10-year outsourcing contract with a vendor he did not want identified.
Although there isn’t a one-size-fits-all IT strategy for corporate boards, Porrello suggests that companies using best practices are more likely to discuss IT issues at regular intervals.
“Sometimes it’s a very short agenda item. Sometimes it can be a much deeper dive, like an annual one-hour review of IT investment strategies,” he says.
The survey of directors at companies with more than US$1 billion (NZ$1.4 billion) in annual revenues was conducted in July and August 2006 by Deloitte and Corporate Board Member magazine.