Technology and company boards rarely mix well and having an IT director on the board is not always the best solution.
Who would want to be an IT director? There's the worry about whether your computers will work in the year 2000, and the need to convert all your financial systems to recognise the euro, not to mention exploiting electronic commerce and the Internet. Then there is the art of communicating your strategy to the technophobes in the organisation. You need to understand business and speak in a language intelligible to the top management team because the perfect IT director should be as comfortable with software developers in the basement as with the chief executive in the boardroom.
Such people are hard to find. 'IT bosses need to be charismatic people good at presenting to the board,' says Stephanie Twigg, who specialises in IT appointments for headhunter Odgers. 'They also need to be technical visionaries.' The idea of the 'hybrid' manager who can bridge the technology-business divide is not a new one, but few individuals are fulfilling it.
Because of this, communication between the IT expert and the generalists in a company is at best sporadic, says Twigg. 'Most board members avoid their IT managers ... for fear of getting caught up in conversations about the latest gizmos.'
The number of IT directors is increasing - Executive Grapevine, which publishes an annual index, says the total has soared from 1,000 to 1,800 during the past year - but the relationship between the directors and rest of the board is not improving. The situation is highlighted in a recent survey which found that four out of five IT directors regard the relationship between their department and the board as one of their worst headaches. Helen Mumford, marketing director of Wentworth Research, which conducted the survey, believes that boards are still heavily influenced by their memories of bad experiences with techno-freaks and failed projects.
'Boards and IT directors are planets apart,' she says. 'Boards are from Mars and IT directors are from Venus.'
Many companies conclude that they can manage IT more effectively through another function. This view is especially common in sectors where IT is less crucial, such as manufacturing, transport, engineering or construction.
At Go-Ahead London, which runs the London General and London Central bus companies, the IT budget is less than 1% of the company's £105 million turnover. IT isn't strategically important enough to warrant a board-level position, says managing director Keith Ludeman. His view is typical: 'Clearly we don't think IT is that important or we'd have an IT director.' Instead, Ludeman assigns the role to his finance director.
Another finance director who carries responsibility for IT is John Acornley of the Baxi Group. Acornley is open to the idea of an IT director, but reiterates the fact that such people are difficult to find. 'There might be a need for an IT expert on the board, but you have to get the right person,' he says. 'People who are purely focused on technology are often unable to grasp the business issues.'
However, finance directors may be the wrong people to have overall responsibility for IT because they tend to be less focused on the commercial aspects of the business, Acornley says. 'At present, IT is falling down in areas such as manufacturing and resource planning. The solution may be to encourage operational directors to take charge of IT at board level.'
At Kvaerner Construction, board-level responsibility for IT falls to business development director Derek Ashburner. He is the first to admit his lack of technical expertise, but this hasn't prevented his presiding over a massive shake-up in the company's computer systems during the past four years. Ashburner sees his skills as complementary to those of the company's IT manager who reports to him and provides the technical skills.
'One of my roles is to change our business thinking and alter the way people look at business processes,' Ashburner says. 'I can then identify the sort of IT applications that would help us change way we do things.'
Not surprisingly, the IT managers with the highest status tend to be in the financial and information-services sectors, where computer and communications technologies are crucial to marketing and operations. Bill Brant, who became business systems director of Commercial Union a year ago, says he wouldn't have taken the position without a place on the board.
However, Brant, who controls an annual budget of around £80 million, has since revised his views. 'I now believe that what matters is having a seat at the top table,' he says. This could be the main board, the executive board or even a committee. 'IT needs to be represented at the meeting which runs the company on a day-to-day basis,' he says. For small companies, another person on the board may simply be too expensive, while the main board in large multinationals often comprises divisional heads. Some companies give their IT managers the title 'director' even though they don't have a seat on the board.
Just as true directorships for IT heads are most common in information and financial services, so salaries in those sectors are highest - anything from £150,000 to £200,000. This compares with an average of around £130,000 in business generally, although the figure is less in the public sector.
The salary discrepancy is a concern for Claire Dimitros, head of IT at Kent County Council. Dimitros is responsible for a £16 million annual budget, strategic planning for IT and 300 staff. Her salary is less than half she could expect to earn in business. But there are compensations.
Dimitros has the advantage of reporting to a board which is heavily committed to IT - the Council's deputy chief executive is an ex-IT director. There is plenty of enthusiasm for technology, but ironically this can create problems of its own. 'I don't feel I'm knocking on closed doors, but I sometimes find it difficult to match the level of expectation.'
So who would want to be an IT director? Aside from the question of internal status, there's the problem of keeping your best staff. Dimitros has had to cope with several re-organisations and constant pressure on funding makes it particularly difficult to attract and retain staff. 'Recruitment is much harder than it used to be,' she says. 'Our freedom to be innovative and responsive in pay scales is very limited compared to the private sector.' The problem of attracting and retaining staff is not restricted to IT directors in the public sector. A survey of 500 UK IT directors commissioned by Sequent, the US-based computer manufacturer, found it was one of the most common complaints across all areas of business. This comes as no surprise to Baxi's Acornley. 'Issues such as the Millennium time bomb and EMU are forcing salary levels up and encouraging people to leave for pastures new.'
Other sources of stress the Sequent survey identified for IT directors include risks associated with technology and the need to keep pace with technological innovation. Respondents also said they worried about projects running over time, over budget and failing to meet the expectations of the business. Two-thirds said that increasing stress levels of work had begun to have an impact on their private lives - 60-hour weeks are standard.
Ron Smith, IT manager of a marketing agency in London, cites suppliers as one of the main causes of stress because they so often fail to deliver what they promised. This casts a disturbing light on the fact that some organisations are beginning to avoid the appointment of an IT chief altogether, by outsourcing responsibility to a third-party.
One participant in the Sequent survey found the pressures so great that he left his job as IT director on the European divisional board of a large insurance company to farm a smallholding in Kerry, Ireland. 'I'd be up at 5am for flights from Heathrow two or three days a week, not getting back until 10pm, only to find a case of briefing papers waiting for me to read for meetings the next day,' he says. 'I'd spend a couple of hours reading them in bed, and catch up with extra work-related reading and writing on Sundays.' Not surprisingly, when he did get spare time he felt more like grabbing some extra sleep than going out and enjoying himself.
Of those who remain, it seems that few are motivated by the money. They could get richer by writing software or starting their own company. IT directors are more often driven by the intellectual challenges of the job. 'It's the battlefield mentality,' says one. 'It's the thrill of working out how you can wield a particular technological weapon to destroy the opposition and boost profitability.'
Changing boardroom attitudes are a vital part of this process. And although the IT people and the technophobes on the board often seem to come from different planets, there are encouraging signs. When Graham Otter joined British Steel, the chairman was not interested in technology and didn't want it discussed at board meetings (see box). Now it is on the agenda all the time. CU's Brant cites similar sources of satisfaction. 'Year 2000 and EMU are giving the job a special lift at the moment,' Brant says.
'But the real excitement is in being able to make a tremendous impact on the business once you get whole board behind you.' What UK plc needs is more IT bosses who think like that.
HAVING A SEAT ON THE BOARD MAKES LITTLE DIFFERENCE
Graham Otter has just begun a new job as head of information services and technology at Rio Tinto, the minerals and mining group.
Otter's brief is to carry out a complete overhaul of the group's IT structure and management while at the same time maintaining a consistent, reliable service.
It's a tough challenge.
In a similar role at British Steel, he slashed the 1,000-strong IT workforce to 50 in the three years to last December, outsourcing virtually all the work to IBM.
Yet Otter is expected to accomplish his new assignment without a seat on the board. Instead, he reports to a senior executive on the operating board who also deals with environmental matters and manufacturing processes.
The lack of a board-level position does not deter Otter - its importance is overrated, he says. 'In theory, if the head of IT has a board position, it should be plain sailing,' he says. 'But I can't really say that I would have acted differently at British Steel if I'd had a seat on the board.
You could argue I would have been more distracted.' More important is that the board has a positive, proactive attitude to IT, he believes.
Otter, who looked at several similar jobs before opting for Rio Tinto, believes that the status of IT directors is rising. 'Many more organisations have begun to recognise the crucial importance of IT,' he says. 'There have been enough bad experiences to show chief executives that putting the burden of responsibility for IT on senior general managers is probably a mistake.'.