As technology becomes ever more the vital linchpin of business strategy and operations, many boards still do not have the knowhow to oversee critical technology-driven initiatives, opportunities, and threats.
A case in point is TSB, which has faced a very public series of tech meltdowns in the past year, culminating in a £176m bill for customer redress, fixing operating defects and lost income after it waived fees and charges to customers. Perhaps unsurprisingly, CEO Paul Pester was forced to step down last week in its wake.
While TSB has a Chief Information Officer sitting on its leadership team, technology is an absent title among its board, which is responsible for directing the company’s affairs. It is a rather huge oversight, given that the bank was undertaking a migration from Lloyds’ Bank platform to a new one, but something it is not alone in.
Tech can rapidly make businesses — or entire industries — obsolete even as it creates opportunities. Without a digital leader, it is unlikely that a business can truly understand the potential that technology can offer, and the ways in which technology makes new value propositions possible. Tech leaders are also often uniquely placed to cut across all areas of the business without bringing bias to the table.
Boards set the tone for the organisation’s digital future and culture: it’s vital that someone has an oversight on the big picture and pushing forward-looking conversations about how technology affects the industry and what the implications are.
It’s also extremely important that the business goes into any digital transformation with eyes wide open, to risks as well as opportunities. In the case of TSB, the CEO’s head ended up on the chopping block when things went wrong. But would that be the case if potential pitfalls were pre-empted at that senior level?
TSB’s IT migration set the business back over £300m. When you’re playing with that much money, it makes sense to give technology a seat at the boardroom. Without it, issues will arise around investment — either with investments happening in the wrong places, or at insufficient scale. Tata Consulting recently recognised this when it gave its CTO oversight of its R&D spend earlier this year, to boost its innovation agenda. It makes a huge impact on success — research by MIT has shown that companies that are more digitally mature are as much as 26% more profitable on average than companies that aren’t.
This investment will make absolutely no difference if it isn’t adopted by employees. Getting employees from top to bottom to adopt a digital transformation is easily the most difficult part. And if it is not shepherded through an organisation by a strong leader, you’re setting yourself up for failure.
For too long, technology has been sidelined to the back office. According to Deloitte, the percentage of public companies that have appointed technology-focused board members has grown over the last six years from 10% to 17%. However, this figure almost doubles (32%) for high performers — companies that outperformed the Standard & Poor’s 500 Index by 10% or more for the past three years. The board must have the right expertise around the table, or it will risk falling behind, just as TSB has.
Ketan Patel is CIO at tcc global
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