The Power of Partnership: CFO-CIO Collaboration Drives Technological Transformation

Sanjay Sehgal, Principal, Advisory Services Head of Markets, KPMG US

Sanjay Sehgal, Principal, Advisory Services Head of Markets, KPMG US

Historically, the chief financial officer’s role has centered on financial stewardship and risk management. However, as the digital revolution places CFOs at the intersection of finance and technology, their collaboration with chief information officers, the C-suite keeper of technology, becomes crucial.

In fact, a healthy CFO-CIO relationship is becoming increasingly recognized as the backbone of successful organizational transformation.

This evolution was a key topic at a recent forum where Salesforce and several CFOs from leading companies shared valuable insights on how these executive partnerships are steering companies through technological change.

However, unsurprisingly, even though most CFOs and CIOs say they collaborate—92%, according to a recent KPMG survey— they hold distinctly opposite perspectives on how to measure the benefits of tech investments, whether investment budgets are adequate and which of them is responsible for making key decisions.

The survey found:

• 39% of CFOs and 49% of CIOs consider the definition of technology return on investment to be a contentious area.

• More than half of the respondents from both groups feel they are in charge, with 59% of CFOs claiming this responsibility, compared with 61% of CIOs.

• While 63% of companies dedicate more than 20% of their annual budget to innovation, nearly one-third of CIOs consider this budget insufficient, while a similar number of CFOs deem it excessive.

Four insights to drive CFO-CIO collaboration

In this era of unprecedented technological advancement, collaboration between these two key members of the C-suite is critical.

The CFO’s financial expertise, combined with the CIO’s technological acumen, drives initiatives that enhance operational efficiency and foster innovation. Together, these leaders ensure that technology investments align with broader business strategies, encouraging a culture of continuous improvement and agility.

1. If you can build a budget together, everything afterward is easier

Given the critical role of CFO-CIO collaboration in technological transformations, addressing the challenges of AI adoption becomes a shared responsibility. AI integration is now a cornerstone of many organizational strategies, promising enhanced efficiencies and new growth opportunities. However, it also introduces challenges, particularly in data governance and security.

“The collective strength of a well-aligned executive team far outweighs individual efforts, reinforcing the idea that synergy at the top can propel organizations to new heights”

A structured approach to AI adoption is imperative. Organizations need clear frameworks for prioritizing IT projects, focusing on those with the highest impact. This requires a disciplined budgeting process, where every dollar spent on technology must be justified by its expected return on investment. Rigorous prioritization and governance around IT spending ensure that companies invest in projects that deliver the most value. Moreover, companies should consistently evaluate projects for their ability to fund others on the roadmap and pay their way.

“New technologies are coming into the door every single day, and I think a lot of people are still trying to figure out what it is and what it means and what it does,” said one forum participant. “It really comes down to prioritization once you get a good handle on what decisions need to be made.”

2. AI tools can be a secret weapon

While AI introduces challenges, it also offers significant opportunities for a competitive advantage. In finance, AI-powered forecasting tools are proving invaluable. These tools can analyze vast amounts of data quickly, providing more accurate and timely forecasts than traditional methods can. This enables CFOs to make better-informed decisions, enhancing both the agility and strategic planning capabilities of the organization.

3. Gain trust through transparent guidelines before you move to implementation

Mutual trust and a shared vision are the bedrock of the CFO-CIO relationship. Effective governance and mutual trust are essential for navigating complex transformations.

Companies need to develop internal AI policies to manage data governance and security. Establishing these policies upfront provides clear guidelines and helps mitigate risks associated with data privacy and integrity. This proactive approach ensures that all technology investments are made within a well-defined framework, aligning with both regulatory requirements and organizational values.

4. Change depends on a growth mindset

Digital transformation has a significant cultural dimension. Encouraging a growth mindset within the organization is crucial. Employees at all levels must be open to embracing new technologies and processes through continuous learning and development in an environment where innovation can thrive.

CFOs and CIOs must foster a collaborative environment and encourage a growth mindset to overcome initial resistance to change. Employees should be reassured that AI and automation will not displace their roles but will enhance them, allowing them to focus on higher-value tasks.

There are several steps CFOs and CIOs can take to encourage employees to embrace new technologies. They should develop clear AI policies and communicate them effectively, which provides transparency and builds trust in the organization’s technological adoption process. They should also encourage a culture where innovation is valued, and employees at all levels feel empowered to contribute to technological advancements and process improvements.

The path forward

As the business landscape continues to evolve, the partnership between CFOs and CIOs will only grow in importance. This collaborative relationship is pivotal in navigating the complexities of technological transformation, ensuring that organizations can seize new opportunities while managing associated risks.

The collective strength of a well-aligned executive team far outweighs individual efforts, reinforcing the idea that synergy at the top can propel organizations to new heights. For CFOs, this means continually evolving their role beyond financial stewardship to become champions of digital innovation, working closely with their CIO counterparts to co-create long-term value for their organizations.

By fostering trust, implementing robust governance structures and embracing a culture of continuous improvement, CFOs and CIOs can drive their organizations toward a successful and innovative future.