CFO, CTO are the “key players” in aligning tech investment with strategy

Artificial intelligence. Automation. Cybersecurity. Is it just us, or is the CFO remit starting to lean a little tech-heavy?

With myriad opportunities and risks associated with technology, CFOs’ tech literacy and their relationship with tech-focused cohorts—including chief officers of information and technology—are vital, experts told CFO Brew.

Daniel Meyer, CTO of process-automation software developer Camunda, said he sees the CFO and CTO as “two key players” in aligning investments in technology with an organization’s overall strategy in an era of digital transformation.

“The CFO has…that ROI and that investment mindset, often, and then the CTO has that technology strategy mindset that needs to be in alignment with the business objectives,” Meyer told CFO Brew. “I think companies where those two roles get along great and have a great working relationship will out-compete other companies.”

Dual mandate. CFOs have directives from the CEO to be more involved with company strategy while also reducing costs in their department, Daren Campbell, tax technology and transformation leader at EY Americas, told CFO Brew. In other words, for the finance function to become more agile, he said, it needs access to granular data in real time.

“The CFO does need to work with the CIO and CTO on the overall tech strategy because the underpinning behind all of this is data. You need a really solid data foundation,” Campbell said. “The CFO needs to be able to communicate the finance and tax requirements, and make sure that as the CTO is looking at what the overall tech and data strategy is for a company, that it’s aligned in a way that is going to provide the CFO with the information that they need to be a strategic business partner and at the same time reducing cost.”

Easy enough, or maybe not, since not many CFOs have come to an understanding with their technology counterparts, according to a survey conducted in late 2023 by company-spend platform developer Coupa. Nearly three-quarters (73%) of CFOs surveyed said they are never aligned with the CIO when it comes to their organization’s strategic priorities.

Coupa also uncovered some technology anxiety among finance leaders, particularly around AI adoption. According to the survey, 100% of respondents believed generative AI technology can provide value to their organization, but nearly nine of every 10 respondents were concerned about their company’s ability to implement its AI strategy. “This lack of confidence doesn’t come as a surprise,” given the disconnect between CFOs and CIOs, Coupa wrote in a survey report.

CFO-CTO alignment requires a Vulcan mind meld of sorts. Meyer said that, as a CTO, he must translate the tech opportunities he’s considering into the language of business operations. He has to ask questions like how the technology will help the business achieve its goals.

“If I speak that language, then right away, I have a very good common language with the CFO,” he said.

Tech literacy. Finance professionals do not need to become quasi-computer scientists to harness the power of technology like AI, but they should understand how to properly use it, Campbell explained. This requires “analytical mindsets” and critical-thinking skills, he added.

“The diversity of the technology and the sophistication has skyrocketed, but the usability of it has also skyrocketed,” Campbell said. “You don’t need to be a Python programmer now to use AI. You need to know how to interact with the AI and how to ask the right questions.”

This need is not just a one-way street. Meyer said that tech leaders need to develop a baseline financial literacy so they can better understand how technology investments will impact financial metrics like gross margin or cost of goods sold.

“If I have a good understanding of those key metrics, and if I’m able to reason about my technology strategy and my technology choices in the context of that, then I can have a really effective conversation with the CFO,” he said.

Decisions, decisions. There is no shortage of technology products that make big promises about boosting efficiency and profitability, but there’s not going to be a single technology” will solve all of an organization’s problems, Campbell said. For this reason, he believes the best tech is “one that works well in an ecosystem.”

“If it’s not connected and doesn’t integrate overall, with the technology stack, you’re going to spend a lot more time and cost on trying to get everything to integrate and talk to each other,” Campbell said. The good news for organizations is that tech vendors are increasingly allowing integration between their products and those of other companies, he added.

Campbell also stressed that, in order to fully benefit from AI technology, companies need to change their operating models. The real benefits come from freeing up entire days’ worth of work, rather than what Campbell describes as small breaks in a person’s regular 40-hour schedule.

“It’s not just a technology that you just plug into existing processes,” he said. “You can do that, and you will get some quick wins by doing that…but it’s not transformative if you do that. Where it becomes really transformative for companies is where they’re looking at the process [and say], ‘How do we actually do things differently?’”