IT Oversight: From "back-office" support function to strategic imperative

Annual Corporate Directors Survey

860 public company directors responded to PwC’s 2012 Annual Corporate Directors Survey. Of those directors, 70% serve on the boards of companies with more than $1 billion in annual revenue.

Board Composition and Behavior

Our study shows that 91% of directors find new board members through director recommendations, suggesting that directors are more comfortable with individuals recommended by someone they know and trust.

Risk/Crisis Management

A surprising number of boards (37%) have no clear allocation of specific responsibilities for overseeing major risks among the board and its committees.

Strategy

In our study, strategic planning topped the board’s “wish list,” with over 75% of directors wanting to devote more time to it during the next year.

IT Oversight

While directors see the opportunities in emerging technologies like social media, many are uncomfortable with the challenge of effectively overseeing IT strategy and risk.

The larger a company is, the more importance directors likely place on information technology's role in the company's business model and in creating shareholder value.  Smaller companies are realizing IT's role, too. That's why sound oversight of the IT function is critical and why boards express interest in giving the issue more focus.

Technology matters

 
  • Over half of directors (56%) believe IT is “very important” or “critical” to their companies, while only a small minority (7%) still think of IT as “primarily infrastructure.”
  • Fifty-seven percent of directors say they'd like to spend even more time on it in the coming year.
 

How critical is the effective use of information technology (IT) in creating long-term shareholder value at your company?


Question 20

Allocating time for IT

Our study finds the amount of time boards spend on IT oversight varies considerably:

  • Nearly half of directors (47%) spend between 6% and 20% of their annual board hours on it. A similar proportion (45%) spends less than 5% of their time on IT.
  • As the level of importance of IT goes up, so does the amount of time boards spend discussing it: More than one-third (38%) of directors who consider IT to be “critical” to the company’s business spent 11% to 20% of their time on IT. Only 5% of directors who consider IT to primarily be a “back-office” support function do the same.
  • Eleven percent of directors of “critical” companies spent more than 20% of their time on IT, while no directors of “back-office” companies spent over 20%.
  • Almost 60% of directors want to spend more time on IT in the coming year, a remarkable increase from only 36% in 2011.
  • Directors from the largest companies (over $10 billion in revenues) were the least likely to want to spend much more time on IT. Why? Perhaps it’s because those companies have deeper IT resources which directors trust to address the issues appropriately.

On average, what percentage of last year’s total annual board/committee hours were spent discussing oversight of IT risks and opportunities?


Question 25

Contacts Mary Ann Cloyd
Mary Ann Cloyd
Leader, Center for Board Governance
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+1 (973) 236-5332

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