CIOs say corporate directors are clueless about IT

By Kim S. Nash , CIO |  IT Management, IT management

But Noble experienced the opposite when he was CIO of what was then AOL Time Warner. The co-CEOs at the time, Steve Case and Gerald Levin, encouraged senior leaders to interact with the board--and then some. Netscape's founder, wunderkind Marc Andreessen, was brought in as CTO and the company created a technology advisory group that included media and IT vendor hotshots. "The board and executives knew that old business models weren't sustainable and were open to a lot of ideas," he says. "That's the best board atmosphere I've seen."

What You'll Face

Some boards want to hear more about technology, but some don't. Fourteen percent of directors in PricewaterhouseCoopers' study never meet formally with the CIO. What a board wants from a CIO depends on what's going on at the company. Patti Reilly-White, CIO of Darden Restaurants, usually presents to her board about once a year and attends dinners and retreats. But she anticipates seeing the board more often for the next couple of years as Darden invests $200 million to build and implement a new technology platform. The $8 billion company, which owns Olive Garden, Red Lobster and six other chains, plans to unify IT across its brands and install mobile ordering and other services at its restaurants.

Given the size of the investment, Darden's chairman and CEO, Clarence Otis, "provides input and guidance" about this critical project, which is intended to leapfrog competitors, Reilly-White says. Otis, who sits on Verizon's board, "has the vision and is driving what we should be going after," she says.

Expect to meet with the board more often when there's a crisis or corporate transformation going on. American Airlines is trying to right itself after filing for Chapter 11 bankruptcy protection last year. Maya Leibman has attended the board's monthly meetings since being appointed CIO of the $24 billion airline in January. Leibman has presented to the directors three times, twice on information security and once on the replacement of a key system.

American Airlines director Stephen Bennett, former CEO of Intuit, asks salient questions, she says, such as about the kind of testing her IT group conducted on the new software. "Many on the board are tech-savvy," she says, "but he has insights that others don't."

Having a technology expert on the board sharpens a CIO's business wits and usually makes for an intellectually strenuous meeting, says Hauck, formerly at Dun and Bradstreet. The $1.8 billion company's board includes Austin Adams, former CIO of JPMorgan Chase, Bank One and First Union, plus a former Hewlett-Packard executive. Naomi Seligman, founder of The Research Board, an influential CIO think tank, retired from the board last year.

Dun and Bradstreet is one of relatively few companies with a board-level technology committee. There are only 12 in the Fortune 100. Establishing a technology committee signals that the board is ambitious about IT, says Estelle Metayer, founder and president of Competia, a competitive intelligence consultancy.

Financial services firms, where IT and business are nearly indistinguishable, are more likely to have such committees than companies in other industries. Other forward-thinkers with board-level tech committees include FedEx, Pfizer, Procter & Gamble and Wal-Mart. Metayer predicts that more companies will join in because IT is pervasive but also because directors are taking a larger role in assessing corporate health as well as in shaping strategy. These duties require directors to be conversant in IT issues, she says. "If your board is stacked with retired CEOs, lawyers and auditors, they're probably not questioning technology strategy well," she says. "When technology is [covered by] the audit committee, it's being overseen, but no one's gaining foresight."

Among other tasks that Dun and Bradstreet's technology committee performs is keeping tabs on MaxCV, a $160 million transformation project started in 2010 to create a real-time "data supply chain" with Web applications and interfaces.

But the committee and the full board wanted to know much more about Hauck's work than project-management reports can reveal. They delved into his approach to staffing and his views on business. Directors also looked for evidence that he collaborated well with peers, especially the heads of sales and of product development. Hauck says that when he attributed some of his own success to those colleagues, for example, and when employees of one group take jobs in either of the two others, he was able to show the board that he could cultivate healthy relationships.

Adams, in particular, drilled Hauck on talent, not wanting IT to be caught short of staff during a future merger, for example. "He says, 'I need you to have five guys as good as you. If you don't, then you're not doing your job as a leader for this company.'"

A board firing on all cylinders will challenge you--not necessarily because directors doubt your knowledge (though they may), but because they want to test your thinking, Noble says. But a CIO shouldn't feel threatened by a grilling from directors, he says. "They keep you real. They keep you connected with the marketplace."

Besides, a CIO should be used to that dynamic by now. The position reports to a CEO, COO or CFO and usually has various steering committees guiding decisions and plans, he says. "The IT function isn't autonomous by any means."

The Internal Consultant

To be in its best fighting form, a corporate board may well need a technology committee and deep engagement with the CIO, says Metayer, the competitive intelligence consultant. Some companies, such as Dun and Bradstreet, are already there. Others remain calcified in old ways. Most are somewhere in the middle.

One $5.5 billion healthcare company has no technology committee on its board, but the board calls on the CIO often to make presentations or answer ad hoc requests, says the CIO, who asked not to be quoted. The board has asked for her views on topics such as new industry partnerships and startups, the company's competition and what it needs to stay strong into the future.

That the board consults the CIO about such core issues shows that both it and the IT leader are enlightened, Metayer says. "I don't know any company not struggling with some technology issue. Diversity of thought at the board level is an important way to approach those struggles."

Read more about cio role in CIO's CIO Role Drilldown.

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