In a survey of the top 200 Australian companies, Talent2 International Ltd. found fewer than five percent of directors displayed any level of knowledge enabling them to provide support and guidance in IT strategy, and fewer than three percent have CIOs on the board.
Con Colovos, CIO Executive Council executive director, described the survey's findings as "headline grabbing," but acknowledged the council is working on similar figures, which "highlights just how bad it really is."
"The figures are indicative of an industry problem," Colovos said, adding that CIO Executive Council members estimate about 20 percent of CIOs are sitting on boards.
"There aren't many CIOs on boards in Australia, which is why the Australian Institute of Company Directors is developing programs to get CIOs on boards," he said.
Colovos said the institute will offer courses to define director's duties so CIOs can learn responsibilities around regulation and legislation. The courses will be available in the second half of the year.
IT managers report that business units still see IT as a cost center than as an asset that can provide a competitive edge. Marilyn Dignum, IT manager at Statewide Superannuation Trust of Western Australia, said this is "absolutely" the case.
"There is reluctance by corporate management to understand IT," Dignum said. "They are good at demanding [the IT department produces] without understanding the realities."
Michael Axelsen, director of information systems at BDO Kendalls Ltd., said despite few company directors having IT skills, such knowledge is not a prerequisite for the role.
However, BDO Kendalls has a dedicated IT strategic planning board. "It communicates to directors via members who attend both boards," Axelsen said. "There is a great deal of communication between IT and the board."
Paul Rush, CIO practice lead at Talent2, said businesses are putting their balance sheet and strategic direction at risk by failing to involve IT executives in boardroom strategy discussions.
"We should be following the European example with one in 14 of the biggest companies boasting a CIO or equivalent position on the board," Rush said. "IT bosses in Australia say this is symptomatic of the view of the IT function as a cost center rather than something that can provide competitive advantage.
"A seat in the boardroom remains elusive for most CIOs as businesses continue to exclude IT chiefs from high-level strategic planning," Rush said.
This is in contrast to companies in emerging technology markets in the Asia-Pacific region, including India, which are 10 times more likely to have a CIO on the board than elsewhere in the world, according to Talent2.
Experience shows that CIOs can generally expect to go no higher than being part of the senior management team, Rush said. "In terms of career progression, few CIOs go on to become CEOs or even COOs," he said.
"Only three percent of Fortune Global 500 companies have a CEO with previous IT experience," Rush said, adding that Harvard Business Review's research backed up the low figure and also showed that 95 percent of senior management do not know what their IT budget is spent on.