A new report from Deloitte Global reveals underinvestment in technology gaps in board engagement on digital transformation.
Even in a world that has become increasingly digital, a new report reveals that technology strategy and experience are lacking in boardrooms. Deloitte Global’s report found that “Board members are uncomfortable assessing their organization’s digital transformation progress and need more technology experience.”
According to Deloitte, this gap between the level of technology engagement that organizations need and what often exists on the boardroom can ultimately undermine digital transformation and value creation strategies.
The report was prompted by the fact that global IT spending is expected to reach $4.4 trillion in 2022, according to Gartner. At the same time, cyberattacks have increased globally over the past two years. Deloitte questioned whether boards have stepped up their engagement on technology concerns, including cybersecurity and investments, and also whether they are effective stewards and help ensure technology supports strategy — not the reverse.
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“The research found that the boards surveyed engage with technology issues as they have for many years; many board members lack the knowledge to ask informed questions and ensure technology is driven by strategy, not the other way around,” the report says. “More generally, it creates a gap between the level of engagement that organizations need and what is commonly happening in the boardroom.”
Boards lack technology leadership and experience
Organizations are looking for stronger board engagement in their technology strategy. However, less than half of executives and board members surveyed believe their board provides sufficient oversight of technology issues. A similar number of executives (44%) said their board directors lacked the knowledge necessary to provide effective stewardship in this critical area.
The research revealed a number of challenges to board oversight of digital, cyber and new technologies, including overreliance on management, technology literacy deficits, governance structures vague technology, ill-defined management information and unclear links between technology and strategy.
“Organizations need increased leadership and collaboration to achieve digital transformation success,” Mark Lillie, CIO program manager at Deloitte Global, said in a statement. “From a board perspective, directors must master technology not only to support but also to challenge conventional thinking and spark new, innovative strategies.”
A good understanding of technology and its benefits can help accelerate digital transformation. The Deloitte Global survey highlighted considerable difficulties in measuring the success of technology investments. In fact, four in 10 respondents said their biggest challenge was demonstrating the causal link between technology investments and growth.
One in three said focusing too much on ROI and short-term gains dominates thinking, rather than focusing on long-term value metrics. Additionally, one in four respondents said the biggest barrier to identifying ROI from investments is their organization’s fragmented reporting and use of separate KPIs and metrics to gauge results.
Opportunities to increase technology engagement
Deloitte Global’s survey paints a picture of a boardroom that isn’t as connected as it would like with technology. However, respondents offered productive steps to becoming more effective stewards of digital, cyber and new technologies.
Sixty-six percent of directors, along with 61% of executives, recommended training board members on the latest technology trends. A similar subset of respondents recommended developing a more holistic plan to address technology and how it relates to strategy at the board table.
Other recommendations are to recruit one or more tech-savvy board members to gain more experience on the board and to make technology a standing item on the meeting agenda.
“Directors should assess whether, and to what extent, skill and stewardship gaps may exist within their board,” Dan Konigsburg, head of Deloitte’s Global Boardroom Program, said in a statement.
C-suite and board leaders can complement each other to lead a technology strategy, said Rich Nanda, principal at Deloitte Consulting.
Deloitte said the report surveyed more than 500 directors and senior executives to explore boardroom perceptions of technology and investing.