By Kim S. Nash

Mar 26, 2015 4:21 pm ET

Corporate boards are struggling to keep up with the dizzying advance of technology, a force that is upending markets and models and is more than ever synonymous with business itself.

Only a small minority of corporate boards have technology committees, despite the fact that many companies rely on business models built on data analytics, algorithms and software tools. A scant 5.2% of public-company boards have created a technology committee, according to a survey of 1,013 public companies in North America by the National Association of Corporate Directors. That’s up slightly from 4.5% three years ago. Among the Fortune 100, just 15 companies have tech committees, according to proxy statements filed with the Securities and Exchange Commission and reviewed by CIO Journal.

Moreover, many companies simply don’t have directors with a strong background in technology, since board members are often selected for expertise in other areas, such as finance.

PHILIPPE LOPEZ/AFP/GETTY IMAGES Former Thomson Reuters CEO Tom Glocer chairs Morgan Stanley technology committee.

The lack of proper tech oversight threatens to become a bigger problem for companies as cloud computing, mobility, data analytics and software development play an ever-larger role in product development, marketing, logistics, collaboration and the development of new business models. Experts say that boards that fail to examine technology issues in-depth – as a formal committee makes possible – can miss prime opportunities for growth, along with potential problems inherent in technology-based business.

Among the Fortune 1000, FedEx Corp. has the oldest tech committee, formed in 2000. Other big companies with board-level tech committees include Procter & Gamble Co., Wal-Mart Stores Inc., World Fuel Services Corp., and Morgan Stanley.

“At its core, an investment bank is run on information and the technology to deploy it,” said Tom Glocer, chairman of the Morgan Stanley board’s tech committee and former CEO of Thomson Reuters Corp. “Morgan Stanley has been at the absolute cutting edge. It makes sense that it has this committee.”

At Morgan Stanley, technology permeates business and the traditional way the board tackled IT issues fell short, COO Jim Rosenthal said. The $34.3 billion equities and wealth management firm created its Operations and Technology Committee in 2011, amid all-time highs in trading activity on several financial exchanges. Until then, the board looked at technology issues piecemeal in risk and audit committees, as most companies continue to do.

“It was a period of time in which trading volumes were going up a lot. We had to make sure we had the technology resources to handle them,” Mr. Rosenthal said. “We were running out of agenda time in other committees.”

Morgan Stanley’s technology committee was designed to address both offensive and defensive technology strategy, to ensure the company’s IT investments pay off, Mr. Rosenthal said. Senior Morgan Stanley leaders, including Mr. Rosenthal and a cadre of CIOs who report to him, work closely with the committee. They discuss a range of issues, from the merits of specific Big Data tools to how changes to systems that control stock trading affect Morgan Stanley’s competitive position with Goldman Sachs Group Inc., according to people familiar with the matter.

The committee typically meets four times per year, with agendas that include detailed updates on key projects as well as thematic discussions of big trends. A recent meeting covered a full technology strategy review, including spending, architecture, new technologies and personnel. Then the directors focused on three key areas — Big Data, cloud, and mobile and social technologies – and how to invest in each to keep Morgan Stanley at the leading edge, according to people familiar with the meeting.

For example, Morgan Stanley uses analytics software from Palantir Technologies Inc. to analyze transaction and other data for fraud, security breaches and money laundering activity.

Last July, the committee met in Silicon Valley and afterwards, invited several leaders of local IT vendors to talk about their products and general technology trends. The group included Jayshree Ullal, president and CEO of Arista Networks Inc., a challenger to Cisco Systems Inc.

Morgan Stanley’s board, along with key senior technology leaders inside the company, meet with select startups at the bank’s annual CTO Summit, to learn about emerging technologies. The company often then uses a number of these products. Morgan Stanley was an early adopter of analytics tools from Dataminr Inc., to comb Twitter for potentially market-moving news. Mr. Glocer, who runs Angelic Ventures LP, invested in Dataminr early this year, a spokesman for the vendor confirmed. John Mack, the former CEO of Morgan Stanley, is also an investor.

The committee also delves deep into internal technology operations, such as monitoring the performance of the software and computer systems for stock trading – especially with respect to the competition.

Before boards strengthen their oversight of technology, they may need to bring in new members with expertise in that area. Generally, the quality and quantity of board-level discussion of technology is alarmingly low, said Betsy Atkins, a three-time CEO and a director at Darden Restaurants Inc., HD Supply Holdings Inc. and Schneider Electric SA. Relegating IT issues to risk or audit committees automatically narrows the conversation to problems, such as security and regulatory compliance. “It’s unrealistic to think many directors who specialize in finance or auditing will understand with depth the macro trends in technology and be able to apply this to the business,” she said.

The payoff of having a board with a deep understanding of technology and an appreciation for its strategic value can be huge, according to Rob Carter, FedEx CIO and executive vice president of FedEx Information Services. He and his team meet regularly with the group, providing dashboards with performance metrics as well as strategic discussion of new technologies.

FedEx’s committee is chaired by legendary technology strategist Jim Barksdale, who was COO and CIO at FedEx before taking the CEO seat at Netscape, whose Web browser helped take the Internet mainstream. “When I face my own team, I tell them this stuff gets paid attention to by the FedEx corporate board of directors,” Mr. Carter said. “That’s an amazingly empowering tool.”