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Why boards of directors don’t engage with IT

Digital & IT

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Businesses are increasingly dependent on “digital” to create value. Therefore, boards of directors can no longer afford to relinquish control of IT-related strategic decisions. However, research has shown that few boards of directors take responsibility for digital asset management. As a result, most not only fail to create the value expected from IT investments, but they leave their businesses open to major risks.

Corporate Governance Codes and IT

So, why don’t boards engage with digital asset management? Especially when, as several studies have shown, doing so has a positive impact on an organization’s performance?

Since boards of directors’ conduct is determined by corporate governance codes (for example, the Buysse and Daems codes in Belgium.), we examined to what extent national corporate governance codes address the importance of directors’ involvement in digital asset management and control.

Our investigation shows that, with the exception of South Africa’s King Code, most national corporate governance codes make little mention of IT-related controls or guidelines. An explanation for this is that many of these codes are based on OECD principles of corporate governance, and those do not include specific guidelines for IT governance.

 

Corporate Governance Codes 2.0.

Much research has shown that boards of directors need to be more involved with strategic digital asset management and control. One way of encouraging directors’ involvement would be changing the codes that govern their responsibilities.

Specifically, codes should include sections covering the role of boards of directors in strategic digital asset management and control. Within this study, we call upon the authors of these codes to include not only typical corporate governance themes, such as finance and legal, but also digital strategy and control.

You can obtain more details via Steven De Haes. Make the connection between management and IT yourself and achieve the expected value from IT investments with our Digital Business & IT programs.