Burson-Marsteller
NASDAQ : WPPGY

October 19, 2005 07:45 ET

Global 500 Company Boards Remain IT-Deficient, Slow to Scale Up; India Takes Lead with Technology Expertise on Boards

NEW YORK--(CCNMatthews - Oct 19, 2005) -

Despite the increasing role technology plays in a company's success, only eight percent of Fortune Global 500 companies report having technology experts - a current or former Chief Information Officer (CIO) or Chief Technology Officer (CTO) - on their boards, according to research released today by global public relations consultancy Burson-Marsteller.

The research, A Missing Competency: Boardroom IT Deficit - Helping Your Board Get "IT," also reveals there has been a slight increase in board participation since Burson-Marsteller's 2003 IT Deficit Survey (from five to eight percent). Of the technology-savvy professionals who have board seats, the majority come from companies headquartered in North America or Asia-Pacific. These results highlight intensifying competition between the two regions for technological innovation.



Fortune Global 500 Boards
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2003 2004
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Companies with current or former
CIOs/CTOs on the board of directors 5% 8%
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Creating a New Seat at the Table

Burson-Marsteller's research reveals that, despite the proven importance of strategic technology advice, few Fortune Global 500 companies have welcomed IT executives into their highest management ranks and given them a seat at the boardroom table.

"To unleash innovation and economic growth, companies need to look beyond financial, managerial and legal experience and give equal weight to technology experience on their boards," said Jennifer Graham, chair of Burson-Marsteller's Global Technology Practice. "The capacity of technology to build strong revenues and shareholder returns, as well as greater return on corporate investments, increasingly makes its position in the boardroom a business imperative."

Indeed, a review of Fortune Global 500 companies with CIO board members shows that these companies delivered annual returns of 9.2 percent above relevant indices. While these gains can be attributed to many factors, there appears a relation between the board presence of a director with an IT background and higher returns.

Forward-thinking executives today are applying the power of technology to increase the profitability of existing offerings, and to generate revenue streams by launching new products and services. As companies across industries and geographies benefit from IT to reduce costs, manage processes transparently and respond faster to market dynamics, technology professionals will gain mindshare in the boardroom.

India: Ahead of Fortune Global 500

The largest companies in India take the lead in having board-level technology expertise, establishing a strong connection between IT know-how and a company's competitive standing. A separate Burson-Marsteller analysis of the top 25 companies featured in India's Economic Times 500 indicates that they are 10 times more likely than top 25 Fortune Global 500 companies to have board members who are or were CIOs (42 percent vs. four percent, respectively).

An analysis of the top 25 Chinese companies found that Chinese companies are more similar to global companies than Indian companies in terms of having boardroom technology expertise (six percent vs. four percent vs. 42 percent, respectively).

"Companies in India raise technology-adoption standards for businesses in the Asia-Pacific region and beyond," said Bill Rylance, CEO of Burson-Marsteller Asia-Pacific. "Their leaders' extensive IT knowledge brings success in managing large-scale workforces and delivering high-quality products and services."



Top 25 Companies
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Fortune Global China India's Economic
25 (Bloomberg) Times 25
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Companies with current
or former CIOs/CTOs on
the board of directors 4% 6% 42%
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Positioning For the Future

Despite pressures to sustain growth, few corporate boards pursue technology expertise to foster innovation, optimize business processes, deliver products and services efficiently, and yield the highest results. According to Dr. Leslie Gaines-Ross, Burson-Marsteller's chief knowledge & research officer worldwide and the architect of the study, "To remain competitive, companies need to regard IT as an integral part of their business strategy and redeem its value with strategic guidance and support from the highest ranks of the organization."

Methodology

Burson-Marsteller first analyzed the presence of CIOs on the boards and in the executive suites of Fortune Global 500 companies in 2003 and conducted the second wave of research in 2004. In both studies, Burson-Marsteller used secondary sources such as Hoover's Online, company websites and annual reports to identify those Fortune Global 500 companies with CIOs on their boards and executive management teams. Additionally in 2004, Burson-Marsteller referred to Bloomberg and the Economic Times for its research on leading companies in China and India. Both waves of the study encompassed those companies that provided biographical information about their board members and executive management teams.

About Burson-Marsteller

Burson-Marsteller (www.burson-marsteller.com), established in 1953, is a leading global public relations and public affairs firm. It provides clients with strategic thinking and program execution across a full range of public relations, public affairs, advertising, and web-related services. The firm's seamless worldwide network consists of 44 wholly-owned offices and 49 affiliate offices, together operating in 57 countries across six continents. Burson-Marsteller is a part of Young & Rubicam Brands, a subsidiary of WPP Group plc (NASDQ: WPPGY), one of the world's leading communications services networks.

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