October 22, 2023 In Consultancy


A case in point

One of the scenes of the movie iRobot, raises a moral dilemma in decision-making by robots that have been designed as work-force for society i.e. police, domestic helpers, emergency services etc. The specific dilemma in this instance related to a robot saving occupants of a vehicle which had crashed into a river. The robot had to decide in a split second whether to save an adult cop (Will Smith) or a child instead. In its “wisdom” the robot decided to safe the cop and the child was unfortunately left to drown. This is because the robot made a calculation that the cop had a better chance of surviving than the child did. Keep in mind that humans would’ve designed the decision-making framework of the robot. This scenario, which will certainly become the norm in the immediate future begs the question: “how should society address the Internet of Things (“IoT”) in a way that maintains the boni mores (“moral values of society). This article is aimed at addressing the business elements of 4IR Governance.

Technology as an enabler

The 4th Industrial Revolution (4IR) has become a new risk in the management of institutions. Most, if not all, businesses are 100% reliant on the proper functioning of their Internet of Things (IoT) systems in all aspects of their business i.e. Customer Relationship Management (CRM), Payment systems, manufacturing and industrial automation, robotics, block-chain, drone technology and knowledge management etc. This creates serious institutional risks where systems crash, are manipulated or are hacked.

The pervasive use of technology has created a critical dependency on IT that calls for a specific focus on 4IR governance. Boards and management expect IT to deliver business value by providing fast, secured, high quality solutions and services, to generate reasonable Return on Investment (ROI), as well as to enhance efficiency and productivity gains and business effectiveness.

What is of importance to Management is to know that their IT systems are likely to achieve their objectives, are resilient enough to learn and adapt, judiciously managing the risks it faces and appropriately recognising opportunities and acting upon them.

Critical success factors

The important issues for 4IR Governance include 1) Strategic alignment, which focus is on aligning with business and collaborative solutions 2), Value delivery, concentrates on optimising expenses and proving the value of IT, 3) Risk Management – safeguarding IT assets, disaster recovery and continuity of operations, 4) Resource Management – optimising knowledge and IT infrastructure, 5) Performance Measurement – tracking project delivery and monitoring IT services.

Successful enterprises align their IT strategy with their business strategy, cascades IT strategy and goals down into the enterprise and provide organisational structures to facilitate the implementation of strategy and goals, it also creates constructive relationships and effective communication between business, IT and external partners. Boards must therefore insist that an IT Control Framework be adopted and implemented and must measures IT’s performance.

4IR governance is no longer an isolated discipline; it is an integral part of overall enterprise governance. Therefore, it should not be practised in remote corners or ivory towers. Increasingly, educated and assertive stakeholders are concerned about sound management of their interests. Board members are required to exercise due-diligence in their roles. Investors also realise the importance of sound governance and are willing to pay a 20% premium on companies that show good governance practices. Therefore, the goals of 4IR enterprise’ governance is to provide strategic direction, ensuring that objectives are achieved, ascertain that risks are managed appropriately and verifying that the use of enterprise resources are used responsibly.

Consequences of poor 4IR Governance

Inefficiencies in IT systems result in business losses, reputational damage and weakened competitive position. It may also result in the inability to obtain or measure ROI from IT, failure of IT systems to bring innovation and benefits they promised, inadequate or obsolete technology and unmet deadlines and overrun budgets. It goes without saying that this is the “Internet of Things” age and enterprises that ignore the critical role of IT management are at a greater risk of unrealized benefits and missed opportunities. Organisations are also exposed to potential claims for damages from shareholders and other stakeholders where IT systems, processes or usage are abused or misrepresented.

Ronny Mkhwanazi is a Partner at Mkhwanazi Inc., a specialist Corporate Law and Governance law firm.