Information technology (IT) is now one of the most important factors in organizational success across many fields and is increasingly viewed as a crucial management function. Mihaylo ISDS Professor Ofir Turel examines the importance of board of director-level IT governance on organizational performance in a study examining 171 board members.
“Getting the CEO of a company involved in technology oversight used to be quite an achievement,” says Mihaylo ISDS Professor Ofir Turel. Yet he notes that as technology becomes an increasingly vital aspect of corporate culture, IT has evolved from the 1970s and 1980s when it was largely separate from management decisions. Today, the chief information officer (CIO) is part of the top management team in many organizations and CEOs care more about how technology might help or impact their businesses. “The trend over the last several years has been to push management involvement and oversight even further and get the board of directors involved in IT issues,” he says.
Turel notes that there are several factors encouraging boards of directors to take a more active role in IT oversight. These include the boards’ responsibility to shareholders, which expect reasonable assurances on the viability and accuracy of data in keeping with the 2002 Sarbanes-Oxley Act; risk reduction; and considering new opportunities for technology use which may help companies gain or sustain competitive advantage.
“The board gets involved by asking management the right questions in meetings, thus triggering action within the organization,” he says. “For example, if the board asks the CEO and the CIO whether the organization has done enough to protect information assets, it may result in relevant IT security plans, purchases and procedures.