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Many organisations ill-prepared for digital world, new report says
Post-pandemic, many boards and companies are ill-prepared for an increasingly digital world, new research has revealed.
Lauren Croft
A report released by the Governance Institute of Australia today (16 August), Driving the digital revolution: A guide for boards, has found that 21 per cent of organisations do not have a digital transformation underway in a concerning revelation post-COVID.
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A digital transformation could mean anything from implementing innovation and new tech at every level of the business, digitising processes or IT transformation — and in some cases, fundamentally changing the organisation to ensure survival.
Governance Institute chair Pauline Vamos said boards and senior managers need to prioritise digital as a matter of urgency or risk their organisation becoming obsolete — and argued that the report’s confirmation of a skills shortage had drawn a line in the sand on the need for a board skills renewal.
“While it’s great to see many organisations are on track with their digital transformation, a significant number clearly are not and this is concerning,” she said.
“Governance Institute is calling on organisations to seriously consider some significant board renewal in order to fill the digital skills gap. As a director, you don’t need to be a tech expert, but you need to understand enough to ensure you are part of the conversations that matter.”
Despite a rapid acceleration in the use of technology caused by the pandemic, many leaders remain under-skilled and struggling to keep up with a fast-changing digital landscape, according to the report.
“Technology is one of the biggest issues that boards are currently grappling with, particularly due to the rapid acceleration prompted by the pandemic. Cybersecurity, ransomware, virtual board and annual general meetings, the need for information and data in real time, data governance and security and other tech related issues now dominate many board agendas and navigating these well can be a core driver of success for an organisation,” the report stated.
“But technology skills are still not a priority at many board tables, potentially leaving many organisations exposed and struggling to steer their organisation through further tech accelerations.”
The report’s findings are based on a survey of 481 chief executives and C-suite executives, non-executive directors, and senior governance and risk professionals, as well as a working group of digital experts, including NSW’s chief data scientist Ian Oppermann.
Of those with no digital transformation underway, 40 per cent said it was not a priority, and 25 per cent said it’s because they don’t have the required skills. Furthermore, over half the respondents have few, if any, directors with technology skills as part of their core skill set.
In addition, only 33 per cent said their digital transformation involves strategic innovation and adoption, whilst 46 per cent rated their organisation average or poor when it comes to data management; an element considered crucial for an effective digital transformation.
And despite 93 per cent agreeing that discussions around technology issues should include the board, 34 per cent said their board is not currently able to deal with these issues competently.
“If your board director cannot participate in the conversation because they have no grounding whatsoever [in technology] then you’ve really lost access to a real asset,” Mr Oppermann argued within the report.
“Where the board doesn’t have the technical capability, it needs to find that technical capability ... and it needs to find a language and framework to say this is how we’re going to quantify the level of risk we’re willing to accept.”
The top technology risks to organisations are cyber security and cyber attacks (62 per cent), then data governance (49 per cent) and staff technology skills/knowledge (48 per cent).
As such, the report warns that the risks of overlooking digital transformation are “significant” and recommends that boards identify who’s responsible for executing digital and cyber strategy in their organisation and have regular communication with them.
“Remaining resistant will only leave organisations struggling to keep pace, or perhaps threaten their very existence. Technology offers an opportunity for innovation that can give a business a competitive edge. Digital strategy should therefore focus on innovation to maximise its benefits for the business,” the report stated.
“There are also opportunities for directors to learn new digital skills or deepen their understanding of technology, which they should embrace to ensure they too remain relevant and of value to their organisation. It’s important for directors to place digital transformation in a broader context and understand its implications for the people related to the organisation.”
