Do Boards Need a Technology Audit Committee?

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. 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.The core asset of flourishing and lasting business is the ability to respond or even anticipate the impact of outside forces. Technology has become a barrier to organizational agility for a number of reasons:o Core legacy systems have calcified
o IT infrastructure has failed to keep pace with changes in the business
o Inflexible IT architecture results in a high percentage of IT expenditure on maintenance of existing systems and not enough on new capabilities
o Short term operational decisions infringe on business’s long term capability to remain competitiveTraditional Boards lack the skills to ask the right questions to ensure that technology is considered in the context of regulatory requirements, risk and agility. This is because technology is a relatively new and fast-growing profession. CEOs have been around since the beginning of time, and financial counselors have been evolving over the past century. But technology is so new, and its cost to deploy changes dramatically, that the technology profession is still maturing. Technologists have worked on how the systems are designed and used to solve problems facing the business. Recently, they recognized a need to understand and be involved in the business strategy. The business leader and the financial leader neither have history nor experience utilizing technology and making key technology decisions. The Board needs to be involved with the executives making technology decisions, just as the technology leader needs Board support and guidance in making those decisions.Recent regulatory mandates such as Sarbanes-Oxley have changed the relationship of the business leader and financial leader. They in turn are asking for similar assurances from the technology leader. The business leader and financial leader have professional advisors to guide their decisions, such as lawyers, accountants and investment bankers. The technologist has relied upon the vendor community or consultants who have their own perspective, and who might not always be able to provide recommendations in the best interests of the company. The IT Audit Committee of the Board can and should fill this gap.What role should the IT Audit Committee play in the organization? The IT Audit function in the Board should contribute toward:1. Bringing technology strategy into alignment with business strategy.
2. Ensuring that technology decisions are in the best interests of shareholders.
3. Fostering organizational development and alignment between business units.
4. Increasing the Board’s overall understanding of technological issues and consequences within the company. This type of understanding cannot come from financial analysis alone.
5. Effective communication between the technologist and the Committee members.The IT Audit Committee does not require additional board members. Existing board members can be assigned the responsibility, and use consultants to help them understand the issues sufficiently to provide guidance to the technology leader. A review of existing IT Audit Committee Charters shows the following common characteristics:1. Review, evaluate and make recommendations on technology-based issues of importance to the business.
o Appraise and critically review the financial, tactical and strategic benefits of proposed major technology related projects and technology architecture alternatives.
o Oversee and critically review the progress of major technology related projects and technology architecture decisions.
2. Advise the senior technology management team at the firm
3. Monitor the quality and effectiveness of technology systems and processes that relate to or affect the firm’s internal control systems.Fundamentally, the Board’s role in IT Governance is to ensure alignment between IT initiatives and business objectives, monitor actions taken by the technology steering committee, and validate that technology processes and practices are delivering value to the business. Strategic alignment between IT and the business is fundamental to building a technology architectural foundation that creates agile organizations. Boards should be aware of technological risk exposures, management’s assessment of those risks, and mitigation strategies considered and adopted.There are no new principles here-only affirmation of existing governance charters. The execution of technology decisions falls upon the management of the organization. The oversight of management is the responsibility of the Board. The Board needs to take appropriate ownership and become proactive in governance of the technology.Do Boards need a Technology Audit committee? Yes, a Technology Audit Committee within the Board is warranted because it will lead to technology/business alignment. It is more than simply the right thing to do; it is a best practice with real bottom-line benefits.

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Site Promotion Tools – What’s in Your Toolbox?

The wonderful world of site promotion tools is really about learning skills and either adapting them to your need or adapting you thinking to adequately utilize the tools available.As with the toolbox out in the garage you have many tools and not all of them are used for the same purpose. For example you wouldn’t use a crescent wrench as a screwdriver and you wouldn’t use a hammer as wire cutters.Some site promotion tools can be adapted for use while others may have a very specific use. Because our society is moving from a mechanical world to cyberspace it is possible that a new way of thinking is required when seeking to let people know about your site.For someone new to ecommerce the whole idea of promoting your website through SEO strategies and using html code to highlight keywords for search engines may resemble Greek more than a meaningful description of how to drive customers to your website.For these entrepreneurs there are web design experts that can guide you through every step of both web design and site promotion. This approach may be advisable in many instances, however I highly advise finding knowledge-based articles on site promotion and begin implementing strategies that will work to let others know about your site, offerings and ultimate solutions to their real or felt needs.As you begin to search for the site promotion tools that best fit your ecommerce business you will likely discover some tools that are either too advanced or ones you want to learn more about. Take small steps first. Utilize the tools that you do understand and then keep adding to your tool chest.You can add an incredible amount of tools to the workshop tool chest in your garage. Screwdrivers come in different sizes and blade widths, wrenches come in precise sizes and hammers come in differing weights and functions.This picture remains one of the best in seeking to describe the options available in site promotion. The truth is you can customize your approach using a series of tools you are both comfortable with along with a series of tools you are willing to learn to use.Perhaps one of the things that derail so many potentially viable sites is a fear us learning how to promote the site using the same (or similar) site promotion tools that the largest ecommerce sites on the web use. The information is available, the tactics are defined, and the tools are in the workshop. Commit to learning and then implement the skills you learn – and always be willing to look at more tools.

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Is It Time to Change Your Employee Time Clock Software?

Your company has been using the same Employee Time Clock Software for years now. You’ve adapted to the system but you are starting to think that there might be a newer and better solution out there for your company. Is it time to make a change? Here are 10 items to look at that may help you make your decision.1. Your software is getting slow and slower. The more time that passes, the slower it gets. You need software that can handle the database increases and adapt to your company’s changes and growth.2. Your software hasn’t been updated in years. So what if your software hasn’t been updated in quite a few years? Who cares? If your employee time clock software that was created in 2000 has the features of 2010, and there is little doubt that it wasn’t, then it’s clearly no big deal. Technology is constantly and rapidly changing and your software should be updated periodically to keep up with it. An outdated program only means that you’re missing out on exciting new features and improvements through technology changes.3. You are afraid to update your software for fear it might break. It’s been so long since you have actually had an upgrade you’re afraid that it may stop working if you do an upgrade. You don’t want to risk your precious (old) system for new features that you may not even use but this stops you from upgrading.4. You can’t email your reports. The way your company communicates has changed dramatically since you bought your software. Being able to email reports helps your company save paper and also eliminates time wasted in printing and gathering paper reports.5. Your employees request their time off via email or phone. Is this efficient? Are you still handling these requests directly into the payroll or HR departments and not letting your technology handle them for you directly to the manager who has the authority to approve it? Leave request systems are essential for any employee time clock system and can be automated through your software.6. Your software is limited in features. Technology has changed considerably over the years and this makes almost anything possible. Some features weren’t available in time clock software when you bought your system. You should find a Time and Attendance System that fits all of your needs, not just a few. Your employee time clock system should cover at least 80% of your needs, with or without customization.7. Your company still prints everything. Many companies have talked about becoming paperless but yours has missed the boat. Many time and attendance systems are now completely paperless, which can save you money and the environment at the same time.8. The user interface is antiquated. Who needs the headache of trying to learn old looking software? It is possibly even quite plain to look at. Having the right user interface is important and makes your job easier and you can get your work done faster.9. No support when you need it. It is important that you can reach out for timely, professional product support. Things happen. Situations come up. You need a new report fast. A clock breaks down at a busy time. Important information gets deleted. You shouldn’t be scrambling for help. Technical Support should be there at all times when you need it and for a fair price.10. There is nowhere to go for new features. You use your software daily. You know it inside and out and you have some ideas for new features that you would like to see in the software but no-one is listening. You have called the software provider but all they say is “we’ll add it to the list” and nothing ever happens and your ideas never appear. Very frustrating.If you think you have three or more of these items then it may be time to look into a new employee time clock software package. You can compare multiple systems on a single website at There are many vendors all listed in one place. You can even go directly to the free Time Attendance Software Survey.

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