NEW YORK, NY, USA, 13 June 2022 — Organizations today are operating in an increasingly competitive, digital world—and yet, technology strategy and experience are lacking in the boardroom. A new Deloitte Global report released today, as part of the Deloitte Global Boardroom Frontier Series, polled more than 500 directors and C-suite executives to explore boardroom perceptions on technology and investment.
The report “Digital frontier: a technology deficit in the boardroom” reveals that board members are uncomfortable assessing their organizations’ digital transformation progress and need more technology experience. This gap between the level of technology engagement that organizations need and what is often found in the boardroom may ultimately jeopardize digital transformation, and value creation strategies altogether.
Boards lacking technology leadership and experience
Organizations are looking for stronger board engagement in their technology strategy. However, fewer than half of executives and board members surveyed believe their board is providing enough oversight of technology matters. A similar number of executives (44%) say that their board directors lack the knowledge they need to provide effective stewardship in this crucial area.
Deloitte Global’s survey reveals a number of challenges to board oversight of digital, cyber, and new technologies including: an overreliance on management, deficits in tech fluency, vague tech governance structures, poorly defined management information, and unclear links between technology and strategy.
“The COVID-19 pandemic significantly accelerated how technology shapes our society, ultimately creating an urgency to ensure that business can meet the technological demands of a hybrid workforce. The obstacles identified in the Deloitte Global survey demonstrate that organizations require greater leadership and collaboration to successfully embark upon digital transformation,” says Mark Lillie, leader of Deloitte Global's CIO Program. “From a board perspective, directors need to be fluent with technology not only to support, but to challenge conventional thinking and spark new innovative strategies.”
A sound understanding of technology and its benefits may help speed up digital transformation. Deloitte Global’s survey highlighted considerable difficulties in measuring success of tech investments, in fact, four in 10 respondents say their biggest challenge is demonstrating cause and effect between technology investments and growth. One in three say that focusing too much on ROI and short-term gains dominates thinking, instead of focusing on long-term value measures. Additionally, one in four say the biggest barrier to identifying investment ROI is their organization’s fragmented reporting and use of separate KPIs, and metrics to assess outcomes.
A competitive disadvantage
This lack of experience could put investment at risk, and ultimately lead to a competitive disadvantage. Nearly half of respondents (49%) say their organization isn’t investing enough in technology to meet the key strategic objectives of outpacing the competition and addressing opportunities and risks. In fact, C-suite respondents were seven percentage points more likely than directors to say their organization needs to step up investment.
“Framing tech investments as business investments is vital to securing a competitive advantage and capturing more market share,” adds Lillie. “However, demonstrating a causal relationship between these investments and growth requires boards to first establish good measurement criteria and be able to clearly articulate the value that technological advancements can bring—for the entire organization.”
Opportunities to increase technology engagement
Deloitte Global’s survey paints a portrait of a boardroom that’s not as connected as it wants to be with technology—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 on 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 board table—prioritizing technology as an ongoing topic of conversation.
“Directors should be assessing whether, and to what extent, proficiency and stewardship gaps may exist on their boards,” says Dan Konigsburg, leader of Deloitte’s Global Boardroom Program. “From asking if tech investments are driven by longer-term strategic priorities to how they can collaborate better with the organization’s business and tech leaders, the report provides a list of questions and recommendations directors can use to guide their organizations’ technology strategy.”
“While management should be thinking proactively about the relevance of adopting new technologies, board members can play an important role in the decision-making by exploring the ‘what-ifs,’ and envisioning future possibilities,” says Rich Nanda, Principal at Deloitte Consulting LLP. “Together, C-Suite and boardroom executives can complement one another to drive a technology-driven strategy that is both effective in the short-term and delivers outperformance in the long-term.”
As part of Deloitte Global’s Boardroom Frontier Series, in early 2022 the Deloitte Global Boardroom Program surveyed more than 500 directors and C-suite executives, and spoke to leaders, directors, and subject matter specialists to find out what’s being done in boardrooms around the world when it comes to technology.