Directors are becoming much more attuned to the important role that information technology will play in their company’s future. According toPricewaterhouseCooper’s (PwC) 2014 Annual Corporate Directors Survey, 82 percent of directors believe that their company’s IT strategy contributes to and is aligned either “very much” or “moderately” with setting their company’s overall strategy.1As the pace of technological change continues to accelerate, it becomes ever more difficult to stay abreast of changes, much less grasp their implications. This poses significant challenges for management and the boards of directors overseeing management’s plans.
Perhaps nowhere are the advances in technology more prevalent than in the information domain. The explosion of mobile technologies and social media is changing the way companies compete. Directors need to understand how these technologies are shaping the competitive landscape and fundamentally changing the rules of engagement with customers. In a digital world where one tweet or one Facebook “like” regarding a company’s products or services can go viral in a matter of seconds, the power has shifted to the customer, who is increasingly socially-connected and well-informed regarding products and pricing. Directors need to assess how these changes in customer behavior, as well as the rise in e-commerce and advances in IT, will affect the company’s business model, particularly for companies in the retail sector. Cyber Monday 2014 set a record for the biggest online shopping day ever.2And by 2017, e-commerce sales are expected to account for over 10 percent of retail sales in the United States, and 60 percent of all U.S. retail sales are expected to involve the Internet in some way, either as a transaction or as a part of a shopper’s research.3This dramatic change in the retail experience requires to consider difficult questions, such as how much brick-and-mortar the company needs, whether the company needs to revise its pricing, advertising and marketing strategies, how the company should deal with lead generators, and whether the company is efficiently utilizing its employees, office space and supply chain and distribution channels.
Directors also need to understand and weigh the risks created by the use of mobile technologies and social media by company personnel and ensure that appropriate policies are in place. Nearly 80 percent of companies now have a social media policy,4and 46 percent of directors say they are at least “moderately” engaged in overseeing employee use of mobile technologies, which is nearly double from what it was two years ago.5A company’s social media policy should align with company values and highlight transparency with honesty, respect and common sense. Restrictions on employees using social media to share confidential, classified, material non-public information about the company and its customers, as well as private or personal information concerning individuals is also a critical component.
Thanks to the ubiquitous interconnectivity of today’s world, companies now have available to them a mind-boggling quantity of data that continues to grow at an alarming pace. “Big data” represents a vast wealth of information, and how companies use this data is becoming increasingly important. Both large and small companies are using big data to track customer buying habits, manage capital spending, target their marketing efforts, customize products, forecast sales and increase cash flow. According to a recent study, 84 percent of enterprises see big data changing their industries in the next year.6And 66 percent of executives believe that there is an urgent need to adopt big data technologies to avoid losing market position.7Despite the impact big data is expected to have on companies, when asked if their company takes sufficient advantage of big data, only 12 percent of directors responded “very much” and 41 percent responded “moderately.”8
This post was excerpted from our annual Top 10 Topics for Directors in 2015 alert. To read the full alert, please click here.
1PwC’s 2014 Annual Corporate Directors Survey, at p. 27.
2Sarah Skidmore Sell, “Cyber Monday Shatters Record,” The Huffington Post (Dec. 2, 2014).
3Amy Dusto, “60% of U.S. Retail Sales Will Involve the Web by 2017,” Internet Retailer (Oct. 30, 2013).
4Dan Pontefract “Social Media in the Workplace is Going Backwards,” The Huffington Post (July 15, 2014) citing results from “2013/14 Survey: Social Media in the Workplace Around the World 3.0.”
5PwC’s 2014 Annual Corporate Directors Survey, at p. 29.
6Louis Columbus, “84% of Enterprises See Big Data Analytics Changing Their Industries’ Competitive Landscapes In the Next Year,” Forbes (Oct. 19, 2014).
7Howard Baldwin, “Big Data Taking Industries by Storm,” Forbes (Oct. 28, 2014).
8PwC’s 2014 Annual Corporate Directors Survey, at p. 26.