In light of digital transformation, many boards recognize the need for greater involvement in the governance and surveillance of IT. Accordingly, many board members are seeking guidance and advice on how to achieve this type of board-level engagement. Antwerp Management School focuses on Board Level IT Governance in a collective research program in conjunction with the University of Antwerp, Cegeka, KPMG Belgium and Samsung Belgium. One of the case studies is Agfa-Gevaert, a company that develops, produces and distributes a range of analog and digital imaging systems and IT solutions.
Despite the digital transformation, research shows a lack of strategic governance and surveillance of IT (IT policy, or governance) in many boardrooms. The majority of board members acknowledge the importance of including directors with IT policy (governance) knowledge, skills and experience in the board.
To help directors cover this need, we report several cases in the study in which we identified best practices concerning the engagement of boardrooms in IT policy. In that context, you will read a few brief findings from Agfa-Gevaert’s case.
Digital expertise in the boardroom
A first important question is how many of the board’s directors possess clear IT expertise and how that expertise has been built. In Agfa-Gevaert’s case, six out of seven board members have got clear IT expertise.
There are two ways in which Agfa’s board members built their IT expertise. For starters, two board members have IT-related educational and professional backgrounds. In addition, several members have a certain level of expertise because they were involved in large IT projects or active in an industry highly dependent on IT.
Trust and involvement
The board has monitoring and advisory roles. The way in which it executes these responsibilities can influence the effectiveness of board-level IT governance. A strong focus on monitoring suppresses the positive effect that board-level IT governance can have on the organization’s financial performance.
Agfa-Gevaert’s CEO points out that their culture of trust is one of the organization’s strengths, as it facilitates prompts decision-making. The composition of the executive management and its relationship with the CIO can also influence the board’s involvement in IT governance. At Agfa-Gevaert, the CIO reports to the CEO. This direct communication helps the board view IT as a strategic asset.
When the CIO doesn’t communicate directly with the CEO, but rather via the CFO or COO, this can influence the information that reaches the board. The KPIs of CFOs and COOs focus more on operational and financial matters than strategic ones. This can make them look on IT as a cost instead of a strategic asset.
Also, the CIO at Agfa-Gevaert is invited to attend part of almost every executive management meeting, which gives him a chance to discuss IT strategy, projects and budgets. But that’s not all: the CIO and CEO have bi-weekly face-to-face meetings to track the IT business. As such, the CIO has a close working relationship with the entire executive management.
There are three main reasons why Agfa-Gevaert succeeds in engaging the board in digital strategy and decision-making. Their first major strength is the board’s IT expertise. Furthermore, there is a strong culture of trust from the bottom to the top of the organization. And finally, the CIO works closely with the CEO.
Agfa-Gevaert’s case shows us that even with a board that keeps its distance towards the daily organizational management, it is possible to bring the subject of IT closer to the top level of an organization using the right IT governance mechanisms.
Read more about the structures for decision-making and digital strategy.