6 minute read 31 Mar 2021
Male entrepreneurs discussing while standing in board room during meeting

How CIOs can support key board priorities and enable long-term value

Authors
Kris Pederson

EY Americas Center for Board Matters Leader

Boardroom champion. Corporate director. Strategy leader. Long-term value architect. Purpose-focused professional. Enjoys skiing, running and golfing with her family in the mountains of Boulder, CO.

Mazen Baroudi

EY Americas Technology Strategy Leader

Advisor to technology and business leaders. Passionate about technology and business transformation. Strategist, innovator and thought leader.

Brian Moore

EY Americas Tech Transformation and Trusted Intelligence Leader

Energized by client success. Mentor. Father to two children. Sales leader with an innovative and creative mindset. Avid runner.

6 minute read 31 Mar 2021

Today’s CIO is a strategic partner helping the board track metrics across risk and resiliency, plus consumer, human and societal value. 

Two questions to ask
  • What does the board want to hear from the CIO?
  • How can the CIO help the board achieve its long-term value goals?

Following the upheaval in 2020, boards will be more focused than ever in 2021 on building resiliency and finding a competitive edge. The EY Center for Board Matters recently identified six priorities for boards in 2021 (pdf). A strong, strategically minded chief information officer (CIO) can help the board address each of them.

Many of this year’s priorities focus on multi-stakeholder factors — human factors such as remote working and commitments to diversity and inclusion; societal factors such as environmental, social and governance (ESG) practices; and consumer factors such as regaining customer trust and loyalty as companies emerge from the pandemic. Metrics and KPIs around these activities might be new or unfamiliar to some CIOs, but they are essential for delivering value to the board.

CIOs can support boards by creating better board materials to address multi-stakeholder priorities, including a long-term value dashboard that includes data around these human, societal and consumer factors, as well as more traditional financial and risk-related information. If it’s built intelligently and updated regularly, the dashboard can give boards a head start on helping their companies achieve their top priorities.

This expands the notion of the CIO function. Instead of a narrow technology role, siloed in a cost center, the CIO becomes a full-fledged partner that adds value and bottom-line benefits to the business with direct support to the board and executive leadership through enhanced reporting and enablement.

Here are six board priorities and how CIOs can focus on them to strengthen their relationship with the board and provide long-term value for the business:

1. Oversee strategy to create long-term value

The board’s strategic responsibilities require an understanding of megatrends, market dynamics, financial flows and any other material business developments to bring an external view to the company. Today, technology often underpins those material business developments, and the CIO’s remit to the board is to understand those technology trends and share that strategic perspective.

CIOs must assess the fitness of new and emerging technology for their given industry sector and the business itself. Consider the emerging array of cloud services, which might be readily adopted by some businesses but kept at arm’s length by companies with institutional processes that tend to want things “in-house.” CIOs are technologically focused by nature, but they must balance that predisposition with a business mindset.

The board also needs data, but it also requires a perspective on how data can deliver a competitive advantage. That starts with information about the economic ecosystem in which a company does business.

In tandem with the chief financial officer (CFO), the CIO should gather and analyze data with an investor lens, including venture capital investments, M&A activity and other money flows both inside and in adjacent industries. Among other benefits, this shows who the company might partner with to grow the business and what competitive movements are occurring.

Internal data is also critical, as it helps the board improve its oversight of risk management. The CIO can add value here by helping the board see potential operational weaknesses, untapped business opportunities and potential strategic pivots.

2. Promote enterprise resiliency amid uncertainty

The board is the ultimate steward of business resiliency and, now more than ever, that means overseeing risks around technology. The CIO has multiple responsibilities to the board to drive enterprise resiliency — and thus multiple ways to add business value.

First, the CIO must make sure the board understands potential downside risks, particularly around cybersecurity. KPIs and other data should be focused in ways that enable the board to understand trends — the increasing prevalence of ransomware attacks, for instance. Working with the chief information security officer (CISO), the CIO should also run boardroom pilot risk exercises, such as simulating a cybersecurity breach, to both illustrate these risks and demonstrate the CIO’s plans to handle them.

CIOs should encourage the board to invest modestly, but steadily, in technology infrastructure upgrades to stave off technical debt and its risks. That “care and feeding” of the organization’s infrastructure is a proactive approach that the board is more likely to embrace than requests for large, one-time outlays.

It’s also crucial that the CIO demonstrate to the board the risks of technical debt and how to address it. Technical debt grows over multiple cycles of technology underinvestment and cost-cutting, resulting in outdated platforms. Technical debt adds risk, and as infrastructure ages and outdated technology accumulates, the benefits of digital transformation slip further out of reach.

CIOs should encourage the board to invest modestly, but steadily, in technology infrastructure upgrades to stave off technical debt and its risks. That “care and feeding” of the organization’s infrastructure is a proactive approach that the board is more likely to embrace than requests for large, one-time outlays.

3. Focus on workforce transformation and new ways of working

Boards have been steadily supporting the organizational focus on building a workforce — and workplace — of the future. They recognize human capital as a key driver of long-term value.

Working from home (WFH) was a generally successful stopgap last year. But as hybrid models emerge in which a majority of staff split their time between working remotely and working in the office, CIOs must develop a long-term plan to manage new risks and new demands on the network—and communicate that strategy to the board. Boards are less interested in the degree of remote working than in the continuity, security and reliability of WFH practices.

Through a more traditional lens, CIOs can also help the board by partnering closely with the chief human resources officer (CHRO). Compared to IT, the human resources function is not always as adept at gathering and analyzing metrics. The CIO can help define, collect and report workforce-related data and KPIs to the board. Workforce oversight is a fundamental part of the board’s remit, and the right data will help it define and develop strategies around skill gaps, reskilling, recruiting and more.

4. Lead on diversity, equity and inclusion

Consumers and investors expect companies to demonstrate commitment to diversity, equity and inclusion (DEI) principles — both as a social good and a competitive advantage. Employee diversity across demographics builds better businesses via the power of multiple perspectives.

CIOs have two opportunities around DEI practices. With staff that’s both globally and cognitively diverse, IT is often the most diverse business unit (with gender as a notable exception). IT staff have less personal visibility in a company, which allows their work to more clearly speak for itself compared to other functions. That provides a potential showcase for CIOs to highlight their progress on DEI to the board and support diversity programs from first-hand knowledge.

The second opportunity is developing and delivering DEI metrics to the board, part of the long-term value dashboard. Data should include staff composition, career progression and other metrics against five DEI categories (age, race, gender, sexual orientation and cognitive diversity).

This will help the board develop a transparent governance structure around DEI, track progress and create accountability. It could also provide an example that might, in turn, drive change on the board itself. Research shows that board diversity, like company-wide diversity, improves its effectiveness and corporate performance.

5. Guide an ESG strategy that drives stakeholder engagement and value

Building a strong ESG strategy has surpassed the need to be a good corporate citizen. ESG factors are now driving growth and competitive advantage, and boards have a responsibility to help companies capitalize on these trends.

The CIO should take the lead in shifting to “green” and/or sustainable data centers and/or cloud providers — and then measure, analyze and communicate the costs and benefits of this transition.

This is another area where the long-term value dashboard can build awareness at the board level by identifying and tracking key ESG metrics. With the right data in hand, boards can define ESG priorities and align them with corporate strategy, a synthesis that delivers the greatest value.

The CIO should take the lead in shifting to “green” and/or sustainable data centers and/or cloud providers — and then measure, analyze and communicate the costs and benefits of this transition.

6. Challenge board composition and effectiveness

Boards must continually evolve to remain effective. They must challenge status quo thinking and refresh competencies and membership as needed. Coupled with ongoing education for board members, embracing change will help the board remain dynamic and aligned with stakeholder needs.

CIOs can help boards stay agile and forward-focused by presenting the right data in a way that can be readily analyzed and quickly acted upon. What’s needed here is not necessarily tactical or operational data — it’s strategic information that gives the board a way to understand the entire business and competitive landscape, reducing the large reporting packets that most boards still use to prepare for meetings.

To help understand what to present to the board at large, CIOs should have open lines of communication with the general counsel (i.e., the secretary of the board) and the chairperson. Those relationships will guide the CIO to gather and present the most valuable and sought-after data.

These actions illustrate the overarching dynamic that a CIO should work to achieve with the board. By understanding board priorities, the CIO can deliver timely and insightful information that adds long-term business value. The CIO now has a strategic role in helping the board chart the best course of action based on ever-changing market conditions.

Summary

The CIO has a strategic role in helping the board demystify technology, capture data from inside and outside the company in real-time dashboards for improved decision-making and drive competitive advantage from emerging technologies. With these efforts, the CIO becomes a valuable advisor to the board.

About this article

Authors
Kris Pederson

EY Americas Center for Board Matters Leader

Boardroom champion. Corporate director. Strategy leader. Long-term value architect. Purpose-focused professional. Enjoys skiing, running and golfing with her family in the mountains of Boulder, CO.

Mazen Baroudi

EY Americas Technology Strategy Leader

Advisor to technology and business leaders. Passionate about technology and business transformation. Strategist, innovator and thought leader.

Brian Moore

EY Americas Tech Transformation and Trusted Intelligence Leader

Energized by client success. Mentor. Father to two children. Sales leader with an innovative and creative mindset. Avid runner.