A new report from Deloitte Global finds underinvestment in technology gaps in executive engagement in digital transformation.
Even in an increasingly digital world, a new report finds technology strategy and experience lacking in the boardroom. The report from Deloitte Global revealed that “board members are uncomfortable assessing the progress of their organization’s digital transformation and need more technology experience.”
This gap between the level of technology engagement organizations need and what is often in the boardroom, Deloitte says, could ultimately jeopardize strategies for digital transformation and value creation.
The report was prompted by the fact that global IT spending is expected to reach $4.4 trillion by 2022, according to Gartner. At the same time, cyber attacks have spread globally over the past two years. Deloitte questioned whether boards have stepped up their involvement in technology issues, including cyber and investment, as well as whether they are effective stewards and ensuring that technology supports strategy — not the other way around.
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“The survey showed that the boards surveyed are engaged in technology matters, as they have been for many years; many board members lack the knowledge they need to ask informed questions and ensure that technology is driven by strategy, not the other way around,” the report said. “More broadly, this creates a gap between the level of engagement organizations need and what happens in the boardroom.”
Boards without technology leadership and experience
Organizations are looking for stronger governance involvement in their technology strategy. However, less than half of executives and board members surveyed believe that their board oversees technology matters adequately. A similar number of executives (44%) said their board members lack the knowledge they need to provide effective stewardship in this critical area.
The research revealed a number of challenges to the oversight of digital, cyber and new technologies, including over-reliance on management, deficiencies in technical fluency, vague technical governance structures, ill-defined management information, and unclear connections between technology and strategy.
“Organizations need more leadership and collaboration to successfully navigate digital transformation,” Mark Lillie, leader of Deloitte Global’s CIO program, said in a statement. “From the board of directors perspective, executives need to be fluid with technology, not just to support conventional thinking, but to challenge them and fuel new innovative strategies.”
An understanding of technology and its benefits can help accelerate digital transformation. Deloitte Global’s research revealed significant difficulties in measuring the success of tech investments. In fact, four in ten respondents said their biggest challenge is demonstrating cause and effect between technology investment and growth.
One in three said focusing too much on ROI and short-term profit dominates thinking, rather than focusing on long-term measures of value. In addition, one in four said the biggest barrier to identifying investment ROI is fragmented reporting and using separate KPIs and metrics to assess their organization’s performance.
Opportunities to increase engagement with technology
Deloitte Global’s research paints a portrait of a boardroom that isn’t as connected to technology as it would like to be. However, respondents offered productive next steps to become more effective stewards of digital, cyber and new technologies.
Sixty-six percent of directors, along with 61% of executives, recommended educating board members about the latest technology trends. A similar subset of respondents recommended developing a more holistic plan to address technology and its link to strategy at the boardroom.
Other recommendations include recruiting one or more tech-savvy board members to gain more board experience and make technology a regular agenda item at meetings.
“Directors should assess whether, and to what extent, gaps in competence and stewardship may exist in their governance,” Dan Konigsburg, leader of Deloitte’s Global Boardroom Program, said in a statement.
The C-suite and boardroom executives can complement each other to drive a technology strategy, said Rich Nanda, principal at Deloitte Consulting.
Deloitte said the report surveyed more than 500 directors and C-suite executives to examine executives’ perceptions of technology and investment.