Viewpoint: Harriet Edelman
Is the Sarbanes-Oxley Act of 2002 encouraging boards to hire CIOs?
I believe the seeds of increasing interest in CIOs as board members preceded Sarbanes-Oxley. At the same time, I think that Sarbanes-Oxley is adding some fuel to that trend, both directly and indirectly. Directly, Sarbanes-Oxley requires boards to have a high degree of understanding and assurance of internal controls, many of which are documented and certified through an understanding of a corporation's information architecture, its application architecture, and its business processes and flows. The oversight and governance around internal controls that Sarbanes-Oxley requires definitely will be enhanced through an understanding of IT.
Understanding internal controls also means understanding business process management. Often, CIOs are process-oriented and understand program management and other elements that are involved in complying with Sarbanes-Oxley, so the Act, I think, has raised the bar in terms of the [value] of an astute information technology executive to a board.
There's a second, indirect way that Sarbanes-Oxley is adding more fuel to this trend. This entire area of corporate governance, inclusive of Sarbanes-Oxley, has put a lot of new responsibilities and pressures on board members with regard to their time commitment and the selectivity of being on boards. This is causing companies and executive recruiters to widen the circle of titles that would be considered for boards, inclusive of CIOs and CFOs and other positions. So, directly as well as indirectly, Sarbanes-Oxley is contributing to a heightened interest by corporate boards to bring CIOs to the table. Over time, with more businesspeople being CIOs, and CIOs rotating through the business, I think you'll also see the profile of the CIO change. More of them will have business experience over time, and the combination of business and technology expertise will make CIOs more attractive to boards. I predict you will see more CIOs being hired to serve on boards in the future.
How is your IT expertise especially valuable?
With regard to Blair, my expertise was especially helpful on the major technology and business process change initiatives the board had, which involved a massive transformation of its pick-and-pack distribution. I also helped to shape the company's Web strategy, I brought a business continuity plan to the table, and my questions, counsel and my ability to help translate also were helpful. My peer board members might have a question they might not be able to translate into something the CIO would be able to understand, so sometimes I was able to assist in that. I've been able to pick up on a peer board member's concern and make sure the CIO is answering it.
What's the ideal relationship between the CIO board member and the CIO of that particular company?
Ideally, you win two ways. One, the CIO feels there is someone on the board who speaks their language and can help translate what the IT function is, recommending whether a significant capital outlay or even a strategic shift in the business is required. Similarly, the board is hoping that the board member with a technical background will be an additional subject matter expert so that they can feel more comfortable carrying out the full duties of the board. A CIO director is really playing to improve the effectiveness of both [sides]. In my experience, I've tried to work to foster a relationship with the CIO of the company on whose board I'm serving, but staying also within what a board member should be doing versus operating management. Always, though, I take the lead from whether the business wants that contact or is looking for it. I actually believe you can be an effective second set of eyes, a counselor, and collaborate a little. But at the same time you need to stay in position as a board member, too.
From the standpoint of competitive advantage, technology is critical. How a company's customers and channel partners interact with you is fundamental to your ability to gain market share and keep customers, and technology is such a huge part of that. I believe a board has to understand that and get involved in a branding strategy, a channel strategy. It also must understand where the company is along a spectrum of leveraging technology for the consumer.
This article was originally published on 06-16-2003