Harvard Business Review on Aligning Technology with Strategy

Information Technology and the Board of Directors

by Richard Nolan and F. Warren McFarlan

EVER SINCE THE Y2K SCARE, boards have grown increasingly nervous about corporate dependence on information technology. Since then, computer crashes, denial of service attacks, competitive pressures, and the need to automate compliance with government regulations have heightened board sensitivity to IT risk. Unfortunately, most boards remain largely in the dark when it comes to IT spending and strategy. Despite the fact that corporate information assets can account for more than 50% of capital spending, most boards fall into the default mode of applying a set of tacit or explicit rules cobbled together from the best practices of other firms. Few understand ...