A balanced approach

A holistic view of the business and its requirements are crucial to get the best from IT

Written by Jim Norton

A key element that chartered directors bring to the boardroom is an awareness of the need for balance in the direction and management of any business. Too much focus on particular areas, such as manufacturing and quality control, to the detriment of others, such as sales or marketing, is at the root of much boardroom angst.

The board needs to maintain a holistic view of the business, informed by high-quality and timely information about all aspects of performance and a good situational awareness of the immediate markets in which the company operates, as well as those upstream and downstream in the supply chain. This need makes an efficient IT function a natural requirement, both for the smooth running of the business and for effective direction and governance from the boardroom.

There are three areas in which a balanced approach, facilitated by excellent IT, are particularly crucial.

Sift wisdom from data

Today’s organisations are drowning in data. IT sector skills council e-Skills UK identified two years ago that: ‘The world produces more than two exabytes of unique information per year, more than 250MB per year for every man, woman and child on earth.’

The business intelligence software industry has coined the phrase ‘one version of the truth’. For many companies this highlights a pressing need – they have far too many versions of the truth, leading to endless confusion and irritation in the boardroom. Directors must demand consistent and timely management and market information plus analytical tools, and they must also provide the necessary resources. The IT function has a key role to play in delivering this.

Align people, process and business need

In too many organisations, the business processes and the people who operate them are not fully aligned with the mission and values of the organisation. Over time, some processes have failed to adjust to the development of the business and now destroy rather than create value.

A major concern for both executive and non-executive directors is to ensure that the key processes in a business are documented clearly, and that those who work with them understand their importance to collective success. Such processes often cross organisational boundaries and are vital to the sharing of knowledge.

Ensuring that these primary processes are properly supported through well-managed IT systems is a key way in which the IT function drives value in a business, creating a profit-centre rather than a cost-centre mindset.

Take a holistic view of security

How many organisations would finish on a Friday evening and leave the office door and safe wide open? How many would not bother with basic fire precautions?

None, and yet in personnel security and information systems security some organisations can still be very lax. They fail to take up references; fail to design key business systems so that critical actions are under dual-key fraud protection, with major changes only actionable by two independent individuals working together; fail to build – and test regularly – business continuity plans, both for the organisation and with its major partners.

Any UK-quoted company has a mandatory requirement under the Financial Reporting Council Combined Code on Corporate Governance to assess regularly the sources of risk, and the steps being taken to quantify and manage risk.

IT is very much a double-edged sword. Its use creates a whole series of new risks in the physical, personnel and information systems arenas, yet it is also essential to the processes through which risk is identified and managed down to an acceptable level.

Directors need to feel confident that their organisations do take a genuinely broad view of risk identification and management, seeing IT as part of the solution and not just part of the problem.

The IT function should be a vital partner and ally for the board. Timely and accurate information, with the tools to abstract genuine knowledge and not a little wisdom, are a prerequisite for business success.

IT operates across all the functional lines of an organisation, with the opportunity to identify where people and process are not aligned correctly with business drivers. It can be an important source of data for the identification of risk and improvement of the business.

Professor Jim Norton is a chartered director, and senior policy adviser to the Institute of Directors

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