Boardroom discussions for winning IT strategies

by Sohini Bagchi    Jun 13, 2013

meeting

As technology becomes the heart of any organization, discussions around IT governance and digital strategies are essentially becoming part of the boardrooms. These discussions should have a specific objective that can help IT align with long term business success, something many boardroom meetings fail to discern. Experts often ponder what could be the starting point for shaping a fruitful conversation with management about what the company needs to do to become a technology winner.

Identifying competition: Board members should raise certain critical questions when discussing technology strategy with IT and business managers, notes Paul Willmott, director in McKinsey London Office in a recent article. For example, he mentions, in a board meeting C-suites should mention that how will IT change the basis of competition in the industry in which a company is operating. He writes, “For incumbents in many sectors, technology is becoming an arms race. Companies are harnessing technologies such as social media and location-based services to reinvent the customer experience and capture market share.” For this they have to identify their emerging competitors and understand how technologies such as social media, location based services and analytics can help the company win against traditional and new competitors.

Enhancing customer experience: There should be more discussions around enhancing customer experience. Customers’ expectations are fast increasing in the digital world and companies have to increasingly live up to this reality.  Willmott gives the example of retailers that may step up their development of digital channels. Similarly, banks, insurers, and telecommunications players may need to automate end-to-end sales and service processes so that customers can interact with the company in real time in an error-free digital environment. “Doing so often requires investment in sophisticated big-data capabilities that use social, location, and other data and information and in such as scenario, the discussion may be around customer experience compare with that of leaders in other sectors, their future expectations and a clear plan on for how to meet or exceed their expectations,” he says.

Deriving business value of IT: Often times C-suites ask, whether their organization has the capabilities required to deliver value from IT and this should also form the basis of boardroom discussions. “This requires a combination of strategies, including the right technology, high-quality data, appropriate skills, and lean processes that adds up to create value,” says Wilmott. For example, Training IT staff is a rigorous process in Globsyn Technologies. “We often evaluate the capabilities needed to drive full value from our existing IT systems and through rigorous training, create a pool of IT pros to build, monitor and upgrade these capabilities,” says Bikram Dasgupta, .

In most organizations, accountability is clear for functions such as finance and HR. But accountability for IT is not always so well-defined. Organizations should define a clear IT operating model, aligned with business priorities.
-Paul Willmott, Director, McKinsey

Accountability: Another area of boardroom discussion should include is who in the organization is accountable for delivering business value from IT.  Willmott opines in most organizations, accountability is clear for functions such as finance and HR. But accountability for IT is not always so well-defined. Emerging roles such as chief digital officer and chief data officer can also be confusing and moreover, measures of IT productivity is hard to measure, as in most cases, volumes of technical data are presented instead of business-relevant metrics. Therefore it is important to discuss the operating model for IT, and how it is aligned with the company’s business priorities. He believes leading organizations define a clear IT operating model, which determines exactly who is accountable for IT activities such as developing apps, managing data quality, or implementing IT solutions in business processes. The operating model must be aligned with business priorities.

Improving agility and performance: Boardroom discussions on IT should also involve how IT can improve the enterprises’ operational and strategic agility, for instance, the ability to extract synergies from an acquired business or the ability to connect systems to a distribution partner. Willmott writes leading businesses measure and manage both business and IT agility, with the help of say cloud architecture, so as to ensure that the business can respond competitively. Boardrooms discussions should therefore be revolved around how a company’s IT plans increase both business and IT agility, while keeping track of competitors and sourcing relationships.

Mitigating risks: Cybersecurity is becoming a growing IT concern, businesses often understand and discuss how comfortable or equipped they are with the level of IT risks. “Every large company’s security has been breached, and most executives have a poor understanding of the risks,” says Willmott. RK Chattani, DGM-IT at UCO Bank argues cyber threats are just one category of IT risk. A failure of a small software component can cost a company a great deal. Companies need a comprehensive system for managing IT risk that assesses the full range of risks including, hacking attacks, vendor failure, and technical failure and identify who would be responsible for overseeing the level of IT risk.  “The discussion should also involve how the IT investment portfolio is aligned with business value with regard to opportunities and threats,” mentions Chattani. He believes if his bank has to slash investment in Internet channel as customers are moving to mobile appa, the portfolio should also be monitored and managed to mitigate execution risk. Therefore, by seizing the opportunities and mitigating the threats, companies can dramatically improve their performance.

Taking IT discussions beyond the boardroom also helps organizations make the most of their technology story. As Willmott observes IT is already on the minds of analysts, customers, regulators, and shareholders, and interest will rise as enterprises become increasingly digital. In many industries, digital is likely to become the predominant sales channel. Companies should therefore identify the right sources and communicate their IT strategies externally to get greater business insights.