Do Boards Need a Technology Audit Committee? – Technology Reviews

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.

Sharp Air Purifier Review – Technology Reviews

Company BackgroundAn overview of Sharp Corporation and the history of its Plasmacluster Ion technology are instructive in understanding the extent that this company believes that its very own futuristic state-of-the-art technology surpasses anything in the air purification market.Sharp Corporation was founded in 1912 in Japan. It listed on the Osaka Stock Exchange in 1949. Sharp’s business presence in North America has had a long history, with the setting up of its first overseas sales base in the US in 1962. Sharp Canada started up in 1974.The company is well-known for innovative products spanning audio-visual products, home appliances, information and communication products, solar cells and LCDs. Its business philosophy includes a dedication to “unique, innovative technology to contribute to the culture, benefits and welfare of people throughout the world”.With growing global awareness about healthy lifestyles, environmental care and energy conservation, Sharp has declared that it will contribute to the world through an environmental and health-conscious business as one of its visions. Plasmacluster Ion technology is at the core of this social vision.Chronological History of Plasmacluster Ion TechnologyOn 19 February 2001, Sharp announced that it had developed the world’s first Plasmacluster Ion air purification technology, described as airborne ions surrounding germs and odors.Interestingly, the first product to use this technology was launched earlier in 2000. An air purifier (FU-L40X), it was described as using Plasmacluster Ion technology that releases inactivating positive and negative ions into the air to surround and inactivate mold fungi.On 3 September 2003, Sharp declared that it had proof for the first time ever that Plasmacluster Ions deactivate airborne mite allergens, a main cause of asthma and atopic disorders.On 27 July 2004, Sharp announced that Plasmacluster Ions inactivate airborne corona virus – A World First.On 17 November 2004, Sharp explained the mechanism for inactivating bacteria by Plasmacluster Ions.A dramatic but seemingly unnoticed claim was made by Sharp on 6 June 2005 that Plasmacluster Ions had been proven effective against airborne highly pathogenic H5N1 avian influenza.On 21 November 2005, sales of Sharp products equipped with Plasmacluster Ion technology reached 10 million units worldwide.On 10 August 2006, Sharp introduced humidifying features into air purifiers. This amplified the effectiveness of Plasmacluster Ions.Stepping up the ante, on 3 August 2007, Sharp proved the effectiveness of Plasmacluster Ions in eliminating serratia bacteria in collaboration with Dr. Melvin First, Professor Emeritus, Harvard School of Public Health.Another dramatic announcement by Sharp on 27 August 2008 was headlined Higher Concentrations of Plasmacluster Ions Boost Virus Inactivation and Elimination, Inhibit 99.9% of Airborne H5N1 Avian Influenza (‘Bird Flu’) Virus. The verification was in collaboration with Retroscreen Virology Ltd, a UK company associated with virology Professor John S. Oxford, University of London.Though announced in the midst of the multi-year bird flu pandemic scare, the world did not seem impressed with Sharp’s claim. This, we believe, was primarily due to the lack of independent scientific peer reviews. We validated this belief by suggesting Sharp Plasmacluster Ion technology at several bird flu forums and met with this precise rebuttal.On 19 January 2009, Sharp announced plans to install 10,000 Plasmacluster Ion generators at its offices globally to combat a pandemic of new viruses. These ion generators produce 25,000 ions per cubic cm and catered to room sizes of 23 square m and 50 square m. The aim is to deactivate harmful airborne substances in all Sharp offices, thereby ensuring the safety of employees and to keep the company business running smoothly.Rare Revelation of Marketing StrategyOn 16 January 2009, Sharp announced that sales of products equipped with Plasmacluster Ion technology had reached 20 million units in 58 countries around the world.But what is worthy of greater attention was that in this same announcement, Sharp revealed their phased marketing strategy of Plasmacluster Ion technology. The concept of strategic phases was explained. Phase I focused on R&D of the technology. Phase II centered on efficacy of the technology and Phase III will zero in on efficiency. Coincidentally, these phases are part of our 5 Key Factors Air Purifier Review Model. At the core of their marketing strategy is the concept of academic marketing, the reliance on academia to back up their technological claims.Fawning Accolades Roll?This review is not a fawning accolades roll – it is a peek into Japanese methodology in achieving leadership and domination in whatever they set their minds to. That they may have invested more money than any other player in the ionic air purifier industry may be an understatement!The above chain of events from the year 2000 reflects the absolute confidence of Sharp in the integrity of the Plasmacluster Ion technology. After almost a decade in the market, there is no known legal action taken against Sharp for harm arising from using Plasmacluster Ion technology.That this is a multi-billion business may not be an exaggeration too. A Sharp air purifier costs about US$500. They have crossed the 20 million mark for various units sold with the technology. Using just US$250 per unit as a rough gauge, we are talking about a US$2.5 billion business that is growing everyday.Do not be surprised that the Sharp Plasmacluster Ion technology becomes the de facto standard of air purification. All that is lacking is an independent scientific peer review. I expect someone will choose this very technology to be the debutante peer review for the ionic air purifier industry.What Next?You will note that to date, Sharp’s approach has been to focus on efficacy (Phase II). They are now moving on to effectiveness (Phase III).