BackMany corporate boards still face shortage of tech expertise
But more CIOs are expected to earn a seat as the pandemic forces companies to lean on digital
PremiumCorporate boards could soon be on the hunt for fresh technology expertise as digital business models pursued in the wake of the coronavirus pandemic reshape business strategy.
Companies over the past several months have rushed ahead with investments in AI-enabled analysis of business data, automation and new forms of digital collaboration. The moves, aimed at business continuity, are finding permanence as processes change across industries.
Enterprise-technology leaders and industry analysts say such shifts would be difficult to accomplish quickly without an established digital strategy and effective technology leadership, forces that corporate boards must incorporate quickly.
“If you didn’t have a digital strategy, you do now or you don’t survive," said Guillermo Diaz Jr., chief executive officer at software firm Kloudspot, and a former chief information officer at Cisco Systems Inc. “You have to have a digital strategy and digital culture, and a board that thinks that way," he said.
Mr. Diaz was recently named to the board of Oakland, Calif.-based insurer Blue Shield of California. He said most companies have been slow to include CIOs and other corporate tech executives on boards, even as cloud computing and advanced software spread across the enterprise.
Corporate directors make strategic decisions on behalf of shareholders, set company goals and assess top executives’ performance. Long before the pandemic, these duties were becoming intertwined with spending and hiring decisions related to technology.
Walmart Inc. began including digital technology experts on its board nearly a decade ago as it faced increased pressure from Amazon.com Inc. and retail competitors with a substantial online presence. One of its earliest tech-sector board members was Marissa Mayer, co-founder of Lumi Labs Inc. and former CEO of Yahoo Inc., who joined the board in June 2012. Today, the board also includes Sarah Friar, CEO of social-media platform Nextdoor.
“We saw how retail was changing," said Randy Hargrove, a Walmart spokesman. “Evolving the company through technology started at the boardroom," he said.
Yet despite the rapid and widespread adoption of digital-business tools in recent years, many large companies continue to operate without board-level tech expertise, said Martha Heller, chief executive of tech recruiting firm Heller Search Associates.
The number of CIOs and other information-technology executives on corporate boards has never been high, Ms. Heller said. During the coronavirus crisis, she said, that number may even have inched down. “Because of the pandemic, the CIO’s operational responsibilities have grown so dramatically that their CEOs are less willing to loan them out to other boards," Ms. Heller said.
Roughly a third of CIOs at large firms said they don’t sit on their company’s board, according to a recent global survey by IT recruiting and outsourcing firm Harvey Nash Inc. and KPMG International Ltd. The survey, fielded before and after the pandemic struck, included responses from more than 4,000 corporate technology leaders with a combined IT budget of over $200 billion. One in every 10 companies have no tech executives on the board at all, the report said.
“We fully expect board-level involvement from tech leadership to increase," said Sean Gilligan, president for North America technology recruitment at Harvey Nash.
The scramble to get business-continuity tools in place and keep businesses running underscored the growing reliance on technology by companies across the economy, Mr. Gilligan said. “We would imagine that, because of this, the importance of tech will be more visible to all and over the course of this year additional board seats will go to the CIO," he said.
Kim Hammonds, founder of consulting firm Mangrove Digital Group and a former CIO at both Deutsche Bank AG and Boeing Co., said corporate boards need tech expertise in areas like strategy and succession planning. But boards also set the tone for the company from the top down.
“Digital transformation is not just an IT responsibility, the strategic thinking must span enterprisewide," said Ms. Hammonds, who is a board member at Zoom Video Communications Inc., Box Inc., Tenable Inc. and UiPath Inc., among other tech firms.
“Boards play an important role in building the leadership team and guide it through different phases of a company," said Mohammed Farooq, chief technology officer at artificial-intelligence startup Hypergiant Industries Inc.
Mr. Farooq, a former general manager at International Business Machines Corp.’s global technology services group, said being on the board at Hypergiant enables him to mentor the CEO and management team.
“I can educate the board in the complexities of product choices and technology options," Mr. Farooq said.
Technology research firm International Data Corp. last month unveiled a program offering executive coaching in digital-technology basics for board directors. The program operates in partnership with Digital Directors Network, a leadership development firm focused on digital and cybersecurity risk oversight.
CIOs and other enterprise-technology executives have not always been considered important voices in the boardroom, said Bob Zukis, Digital Directors Network’s founder and CEO.
“The pandemic has altered that mind-set."
Write to Angus Loten at angus.loten@wsj.com
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