What does FedEx, Pfizer, Wachovia, 3Com, Mellon Financial, Shurgard Storage, Sempra Energy and Proctor & Gamble have in common? What board committee exists for only 10% of publicly traded companies but generates 6.5% greater returns for those companies? What is the single largest budget item after salaries and manufacturing equipment?
Technology decisions will outlive the tenure of the management team making those decisions. While the current fast pace of technological change means that corporate technology decisions are frequent and far-reaching, the consequences of the decisions-both good and bad-will stay with the firm for a long time. Usually technology decisions are made unilaterally within the Information Technology (IT) group, over which senior management chose to have no input or oversight. For the Board of a business to perform its duty to exercise business judgment over key decisions, the Board must have a mechanism for reviewing and guiding technology decisions.
A recent example where this sort of oversight would have helped was the Enterprise Resource Planning (ERP) mania of the mid-1990’s. At the time, many companies were investing tens of millions of dollars (and sometimes hundreds of millions) on ERP systems from SAP and Oracle. Often these purchases were justified by executives in Finance, HR, or Operations strongly advocating their purchase as a way of keeping up with their competitors, who were also installing such systems. CIO’s and line executives often did not give enough thought to the problem of how to make a successful transition to these very complex systems Trizetto login . Alignment of corporate resources and management of organizational change brought by these new systems was overlooked, often resulting in a crisis. Many billions of dollars were spent on systems that either should not have been bought at all or were bought before the client companies were prepared.
Certainly, no successful medium or large business can be run today without computers and the software that makes them useful. Technology also represents one of the single largest capital and operating line item for business expenditures, outside of labor and manufacturing equipment. For both of these reasons, Board-level oversight of technology is appropriate at some level.
Can the Board of Directors continue to leave these fundamental decisions solely to the current management team? Most large technology decisions are inherently risky (studies have shown less than half deliver on promises), while poor decisions take years to be repaired or replaced. Over half of the technology investments are not returning anticipated gains in business performance; Boards are consequently becoming involved in technology decisions. It is surprising that only ten percent of the publicly traded corporations have IT Audit Committees as part of their boards. However, those companies enjoy a clear competitive advantage in the form of a compounded annual return 6.5% greater than their competitors.
Tectonic shifts are under way in how technology is being supplied, which the Board needs to understand. IT industry consolidation seriously decreases strategic flexibility by undercutting management’s ability to consider competitive options, and it creates potentially dangerous reliance on only a few key suppliers.
Until recently, we have witnessed the evolution of mobile technologies from the radio frequency technologies right up to the 3G technologies that are currently making waves all around the world. A new technology has now come to us, 4G mobile technology. This technology is nothing but a new technology for the next generation of mobile phones. It was made available commercially in the USA from the year 2009. But, in India it is a relatively new wave that has not yet reached a crescendo. In India, right now we are in the midst of the 3G wave of mobile technology.
To simplify matters, 4G refers to the fourth generation of mobile technologies. We have got to this stage due to the evolution of technology from its primitive 1G version, through to 4G technology. In other words, 3G mobile technology covers the carrying of data in its digital formats. This activity leads to enhanced information services like websites in their original formats, etc.. The famous Apple iPhone is a silent testimony to the success of 3G mobile technology. Although we have not reached there yet, the 4G mobile technologies are the next wave of improvisation in mobile technology.
This technology has not yet established itself, and it does not have any agreed set of standards and rules, not to talk of protocols. However, it is sure to revolutionize the way people use the internet on their mobile phones. This technology is not yet fully defined, and so it cannot be said to be totally discovered. This new technology involves enhanced security features since data transfer is increasingly being done through fiber optic cable networks, wireless networks, etc.. 4G technology talks of the security measures to be provided by these enigmatic technologies.