DO BOARDS NEED A TECHNOLOGY COMMITTEE?
In 2017, research conducted by Deloitte Insights found that only a small percentage of companies had board-level Technology Committees. Specifically, only 10.2% of large-cap companies had such committees, while mid-cap and small-cap companies had even fewer at 5.4% and 4.7%, respectively. (Caroline Brown, Khalid Kark, Jason Lewris. “Bridging Boardrooms Technology Cap” Deloitte Insights, June 29, 2017)
Establishing a Technology Committee is a wise decision for any company. It ensures that the board places the appropriate focus on digital strategy and risk management. Moreover, it funnels technology issues to experts who can provide the right context and color, presenting their findings and recommendations to the full board so that all members are well-informed and productive.
By having a dedicated Technology Committee, companies can also ensure that technology considerations are always included in strategy, risk, and governance conversations. Too often, technology is only discussed as an afterthought once strategy has already been developed. This is problematic because most business disruption and opportunities are driven by leveraging technology in new and innovative ways. Ignoring technology until the end of the conversation only serves to sub-optimize digital-driven business strategy and can increase the risk to the company, since the largest external driver of change, technology, is not being fully considered.
Companies can plug a Technology Committee into existing board committees, such as the audit or risk committees. This committee can be established as a standing committee, or it can be set up as an advisory committee. The appropriate structure and meeting cadence depend on the company's current state regarding the importance of digital or new technology.
If a company is embarking on a digital transformation that impacts customer experience or operating efficiency, a standing committee with regular reviews is required. However, if digital or technology is stable or not as critical, an advisory committee that presents to the board twice a year may be sufficient. The key is to let the company's priorities and external threats calibrate the right organizational structure and meeting cadence.
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