Prep the board for tipping-point technologies
Klemens Hjartar
Senior Partner, Copenhagen
The economic uncertainty on the horizon in 2023 is going to require boards to become more thoughtful and nuanced about technology decisions. In the past week alone, I’ve spoken with three CEOs who mentioned the need to shift the conversation on tech with the board.
While we can expect a flattening or reduction in investment in IT budgets, the bigger issue on the table for boards is how to keep energies focused on what matters for tech. This focus is important because many game-changing technologies, such as 5G, AI, and cloud, are hitting tipping points for mass adoption.
Our research shows, for example, that companies are looking to move about 60 percent of their IT estate to cloud by 2025.¹ And 50 percent of companies report they’ve adopted AI in at least one function in their business.²
That requires the board to keep the business pointed forward and prioritize budget for upgrading IT foundations that enable speed, security, resiliency, and reusability. These aren’t the sexiest things in tech, but automating processes, investing in data foundations, cleaning up technical debt, and continually renewing the IT architecture are needed for the business to have a chance of taking full advantage of the new technologies coming online.
The reason this is a job for the board is that IT’s priorities are too often shaped by individual business units or divisions. The investments in tech foundations—“IT for IT”—benefit the entire business, so they require the board, working with top management, to guide and direct the effort. A good rule of thumb is allocating 15 to 20 percent of IT’s change budget to this foundation work. For the board to be able to engage at this level, the CIO and CTO will need to have more continual and frequent dialogs with individual members of the board about tech priorities and needs.
¹ “Projecting the global value of cloud: $3 trillion is up for grabs for companies that go beyond adoption,” McKinsey & Company, November 28, 2022.
² “The state of AI in 2022—and a half decade in review,” McKinsey, December 6, 2022.