The CFO-CIO Partnership: Key to Driving AI Innovation

The CFO-CIO Partnership: Key to Driving AI Innovation

Chief financial officers (CFOs) and chief information officers (CIOs) say they collaborate, but 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, according to a new KPMG survey.

The survey, which included responses from 102 C-suite leaders and their direct reports, uncovers key insights to improve the CFO-CIO relationship.

“Transformational success is realized when CFOs and CIOs join forces, steering technology to meet business needs. Their partnership is the cornerstone of executing organizational strategy and aligning on ROI, investments and responsibilities,” said Sanjay Sehgal, KPMG U.S. Advisory Head of Markets.

ROI on Technology Investment: A Point of Contention

One of the most striking findings is that 39% of CFOs and 49% of CIOs consider the definition of technology ROI to be a contentious area. This disparity reflects broader trends identified in KPMG’s latest pulse survey, where 79% of leaders in January prioritized productivity gains, compared to October, when 51% were focused on revenue gains, underscoring the evolving priorities in technology investments.  

Authority over AI and Technology Investment

The survey reveals a notable division in perspectives from CFOs and CIOs regarding who holds primary responsibility for AI and technology investments. More than half of the respondents from both groups feel they are in charge, with 59% of CFOs claiming this responsibility, compared to 61% of CIOs. This overlap in perceived authority points to potential power struggles. CFOs and CIOs have different responsibilities that enable the success of technology investments. For example, the CFO is responsible for viability, budgeting and financial governance, while the CIO is responsible for the technical strategy, implementation and governance. Alignment on roles can optimize technology strategy, implementation and effective decision-making.

Innovation Budgets: A Mixed Bag

While 63% of companies dedicate more than 20% of their annual budget to innovation, perceptions about the adequacy of investment levels vary significantly. Nearly one-third of CFOs consider this budget insufficient, while a similar number of CIOs deem it excessive. CFOs and CIOs should align on the expected outcomes of a technology investment and how those outcomes will be measured.

“An open checkbook isn’t the answer,” said Marcus Murph, KPMG U.S. Head of Technology Consulting. “CFOs and CIOs need to collaborate to execute strategy and achieve goals. Whether through AI or cloud, efficiencies must stem from technology. CFOs and CIOs need to align with the business strategy and seek efficiencies to fund the technological investments driving business transformation.”

Collaboration: A Path to Enhanced Business Outcomes

CFOs and CIOs diverge on the benefits collaboration can have on improving operational efficiency and risk management.  

• 57% of CFOs think collaboration can significantly improve operational efficiency, compared to 37% of CIOs.
• 51% of CFOs believe collaboration can enhance risk management, while only 29% of CIOs agree.

“There’s an ongoing debate over the ownership of business transformation, with CIOs focused on building and securing technology, and CFOs on leveraging the infrastructure to refine processes,” said Sehgal. “Yet, both see themselves as responsible for driving business transformation.”

Action Steps for CFOs and CIOs

Despite the points of contention, the survey finds that nearly all participants (92%) describe their relationship as collaborative, with a majority rating it as “very collaborative.”

To strengthen collaboration and bridge existing gaps, KPMG recommends:

• Open communication: Regular communication can enhance mutual understanding, help align perspectives and address concerns. More frequent meetings can foster a more collaborative environment and facilitate timely decision-making and real-time adjustments to strategies
• Define role and responsibilities: Clearly identify areas of joint but differentiated ownership. Both CFOs and CIOs should take joint ownership of projects to ensure a unified approach.
• Develop a unified vision and strategy: Working together on strategy can help set clear goals and priorities.
• Establish a common framework and clear definitions, particularly for  how to measure ROI 

"By fostering collaborative relationships and aligning strategies, CFOs and CIOs can fortify their organization’s competitive position in the market," said Murph. “The need for a unified approach to evaluate ROI is even more critical as the allocation of budgets to technology investments continues to grow.”

The online survey targeted CFOs and CIOs from US organizations with $1B or more in annual revenue and 1,000+ employees, spanning various sectors including electronics, finance, healthcare, and retail. Participants were screened for relevant titles and direct reporting lines to CFOs and CIOs.

The findings underscore the need for harmonized efforts and strategic alignment between CFOs and CIOs to maximize the benefits of AI investments and drive financial outcomes. When CIOs drive the technology and align on financial outcomes with the CFO, organizations can realize operational efficiencies, sustainable growth or develop new or enhanced products.

About KPMG LLP

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