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Boards and IT: The Necessary New Role for Directors in the Digital Economy

Boards and IT

The Board of Directors of a company holds final responsibility on matters of strategic management and organizational control, and in this context, much attention is put on legal and financial issues.

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Beyond Finance and Legal Matters: Bringing IT to the Board of Directors 

The Board of Directors of a company holds final responsibility on matters of strategic management and organizational control, and in this context, much attention is put on legal and financial issues. However, recent research emphasizes that Boards of Directors should also be putting the guidance and control of Information Technology (IT) on their agendas as well, due to both the potential innovation advantages as well as inherent business risks.

However, even though Boards dealing proactively with IT are often found to achieve significantly better business results, recent research shows that in 80% of the cases, IT remains “the elephant in the Boardroom” that doesn’t receive enough attention.  

Research project on the IT Governance Board 

To address this problem, the organizations CEGEKA, KPMG Belgium, Samsung Business, University of Antwerp and Antwerp Management School co-created an innovative research project titled "Board Level IT Governance". Among other issues, researchers investigate why IT receives insufficient attention at the Board level, while seeking resources and tools to increase awareness.

Eventually, this project group will be creating instruments to assist Boards of Directors in their IT governance efforts, such as specific management controls that are critical to posing questions, providing sufficient guidance, etc.  

How can Boards of Directors take on their role on "IT"?

 In the second research briefing, the research group studied state-of-the-art research in this area, including critical questions to ask a Director regarding IT (e.g. "How do we know if/how new technologies affect our business? "), competencies that must be present in a Board (e.g. The competence to articulate the role of IT innovation and business continuity), management structures that can be set up (e.g. Putting an IT Strategy Committee at the same level as the Audit or Compensation Committees), and so forth. 

There also appear to be other factors which can positively or negatively affect the involvement of the Board in IT matters, such as the number of "insiders" on the Board, the age of the organization and the size of the Board. Based on research insights, three recommendations are given to Directors concerning the tasks of providing direction and implementing controls in IT: 

1.Give direction in articulating the role of IT in the reliability and innovation factors of the business. 

2.Install the appropriate management structures in relation to the role of IT, such as an IT Oversight Committee operating under the auspices of the Board of Directors 

3.Ask the right questions about IT in the context of innovation, value and risks.  

Would you like to know more about this research? 

The digitization of our businesses requires Boards of Directors to expand their scope of work from a strong focus on finance and legal to the area of “digital leadership”. CEGEKA, KPMG Belgium, Samsung Business, University of Antwerp and Antwerp Management School have committed themselves to implementing rigorous and relevant research around this theme over the next three years. Furth details on the findings of this second research briefing, and other reports, can be found at: http://www.antwerpmanagementschool.be/boarditgovernance   

 

April 25th 2016

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