Three Reasons to Take Action on Business Technology Governance Today
An Executive Research Report “Enterprise Technology Governance: Digital Leadership”, released by Researcher and Australian Governance Consultant, Elizabeth Valentine in May 2015, pulls no punches in explaining why Business Technology Governance must no longer be ignored, or side-lined by Business Boards, Owners and Executive Leadership Teams.
Based on international research, New Zealand research, and our own experience, this blog presents three clear reasons why business leaders should take action on Business Technology Governance (BTG) * without further delay.
1. Digital Technologies are changing the business landscape and impacting all sectors of the economy: every industry and every business will eventually be impacted.
Cloud, mobile, social, smart interconnected devices, big data, analytics, automation and other emerging digital technologies; and the rising power of the customer in all business activities; mean that business technology is no longer just supporting business strategy, it is actively driving it.
Factors that contribute to failure, or poor comparative performance, have already been identified from the so called “ultra-fades” e.g. Kodak, Blockbuster, HMV and Borders. They include:
No CIO or Strategic Business Technology advisor present on the Board or Executive Team
A lack of Digital vision and leadership
No sense of urgency in identifying and addressing Digital business opportunities and risks
Procrastination arising from perceived barriers to change: legacy organisational structures and legacy technology environments; and a lack of understanding regarding the true cost and nature of digital change (e.g. digital cost models and digital business models).
We identified and explored some of the competitive digital forces that are acting on businesses today in a recent blog “Past Experience May Not Prepare Today’s Businesses For A Digital Future”.
2. Digital Leadership and Investment Creates Measurable Competitive Advantage.
Ms Valentine’s report identified that businesses that have competent and comprehensive digital investment and change leadership:
- financially outperform their peers by 9%
- are 26% more profitable
- enjoy up to 12% greater valuation
In New Zealand, the use of Business Technology has been recognised as directly contributing to increased business sales and positive growth outcomes. Statistics NZ identified that:
- Businesses that use the internet to collect sales orders have higher rates of growth
- Export sales are higher for goods-producing firms that have online ordering systems
- Export rates are higher for those using ICT across all business sizes
You can access the full report “Strong connection between ICT and business-growth activities” from the New Zealand Government Statistics website.
3. Business Technology (BT) Governance is an assumed Business Governance activity and competency.
It is becoming increasingly difficult for Boards and Executives to abdicate or ignore their role in Business Technology governance.
Elizabeth Valentine offers a comprehensive definition of Business Technology (or as she prefers, “Enterprise Technology”) Governance.
“It includes the leadership, alignment and oversight of enterprise technologies with the organisation’s strategy, structure, systems, policies and governance processes”
- seeks to facilitate data-driven decision making and minimise risk through-out the enterprise
- creates value by optimising stakeholder engagement and strategic investments, and in deriving returns.
In reading this definition, Business Technology Governance is explicitly and unequivocally a Business Leadership responsibility (i.e. it is a key Business Governance role).
The more embedded technology has become in both business strategy and operations; the more important it is for business leaders to understand how technology investments are being used for competitive advantage.
The more open, connected and mobile their business technology is becoming; the more important it is for the business leaders to understand and mitigate the business risks.
Stakeholders, shareholders and regulatory agencies assume, and expect, that in the 21st Century, business leaders (i.e. Boards, Owners, and Business Executives) have the Business Technology Governance competency and capability to fulfil these fiduciary responsibilities.
* You may also see Business Technology Governance (BTG) referred to as:
- Information Technology Governance - ITG
- Information and Communication Technology Governance – ICTG
- Enterprise Technology Governance – ETG
- Digital Technology Governance - DTG