Navigating the digital frontier – role of boards in technology transformations

Technology is an important topic for business leaders. According to a source, 85% of CEOs accelerated digital initiatives during the COVID-19 pandemic. Nevertheless, Deloitte Global’s 2022 report found that less than half of the board members surveyed thought that the board’s oversight of technology matters was sufficient and mentioned over-reliance on management, the deficit in technology fluency, and unclear technology governance as their main challenges. 

We asked Timo Perkola – partner, leading Technology and Transformations Consulting at Deloitte Finland – to share his view on the role of boards in technology transformations.

Why should boards engage with technology-related matters at all? Isn’t it mainly for management to deal with?

They need to because technology is materially important for companies. Every business or organization is keenly aware of the importance of digital today: Either their services and products are partly or fully technology driven and digital or, at the very least, the company’s operations are digitized. Especially when both aspects are present, technology’s impact on the board’s agenda is wide-reaching, ranging through strategy and its execution, risk management, and shareholder value. Additionally, technology-related investments are often significant in terms of impact as well as size, enabling operational excellence, opening new revenue opportunities, or creating risks.

How has board engagement with technology evolved in recent years?

Boards are becoming more familiar with technology-related issues through topics such as cyber security, privacy, and risks related to business continuity, reputation, and customer data. The intended benefits from technology investment, as well as its size, are often discussed in the boardroom. Having a person with technology experience can also bring boardroom discussions to life. However, new technological trends are constantly emerging, and staying informed about them all – not to mention adopting them – is an impossible task. So, it requires focus and ability to prioritize.

What are the areas where business leadership should invest their time and other resources in technology?

It starts with having a view of the big technology-related themes that are affecting, or will affect, the business – either risks or opportunities – and thinking about how these impact on the organization. Then you can better focus on two important questions: 

• Which of our offerings / parts of our organization are most affected by a new technology (e.g., customer service, manufacturing process, etc.)?
• What implications are there for the affected areas?

The CXO or business leader responsible for the affected areas should be in the position to answer the second question. Here, the board’s role is to encourage and challenge the management to produce answers.

Finally, do you have any advice for boards regarding technology?

In my view, it’s important for the organization to have an angle on technology at all levels: In addition to a tech-savvy board and strong technology experts on the ground or operational level, there should be people at the business or corporate-management levels who think about the impact of technology on business day and night.

The more technology becomes part of operations, the more there will be challenging matters to consider, for example, demanding clear business cases and assessing significant investments, time, and human resources in the light of both organizational and shareholder values. Following up on these, it is important to consider how technology transformation proceeds systematically and continues to contribute to anticipated value creation. So, boards need to think about technology in regard to bringing value on an ongoing basis, not just when making an investment decision.

Some companies may consider technology merely as a cost center. They might be managing adequately at present thanks to other factors contributing to their success. In my view, however, they are likely to face a significant need to catch up in the future given the scale of technology transformation that is happening now.