Digital transformation is inching upwards on the executive priority list, but as companies look to reap the benefits of emerging technologies like generative AI, members of the executive team such as the CFO need to shift their thinking as well. 

Historically, technology was viewed as a cost to be managed, placing it squarely in the finance chief’s purview, but in this new environment, that is no longer the case, said Martha Heller, CEO of executive search firm Heller Search Associates.

“Of course technology contributes — is a value creator. Of course data is going to drive revenue,” Heller said in an interview.  “As such, CFOs must become comfortable with technology leadership being here at the executive table, rather than something under them to be managed as a cost.”

Creating an agile investment strategy

Opening up a space for technology leadership at the executive table is critical for organizations to be able to compete in the emerging “data economy,” regardless of company focus or industry. Whether it’s a retail, automotive or insurance company, data and software is “moving to the center of what we do,” Heller said.

Treating one’s technology investments as an area of value creation for one’s business can also help to attract key talent: 89% of software companies are already tapping AI as a product differentiator, CFO Dive previously reported, putting data scientists and related skills at a premium.

Therefore, executives “really have to start getting a little more knowledgeable about the impact that technology’s going to have on your business,” Heller said.

However, while companies are turning their money and funds to digital transformation, the current approach taken by many may not be yielding the best results: about half of digital transformation investments fail to impact performance or profitability, executives said in a recent survey by KPMG, for example.

That’s because investing in technology just for the sake of having technology is a “no no,” Heller said. For finance chiefs, leaving that mindset means understanding that the “entire way that you have funded and budgeted technology investments and projects is changing,” she said. “We are moving from capex [capital expenditures] to opex [operating expenses].”

Before, buying a new piece of technology was essentially a one-time deal, Heller said, but that’s changed with the advent of the cloud or subscriptions like software-as-a-service offerings. CFOs now need to think about their technology budgets in terms of agile development, rather than as a one-time capital expenditure, she said.  

Learning to talk tech

Effectively managing one’s technology investments nowadays also requires a shift to the traditional reporting structure which placed tech solely under the CFO’s remit. As they look to develop agile tech strategies, finance chiefs need to make room for newer leadership entrants — such as chief data or digital officer — which are pulling up chairs at the executive table.

Technology should not be “buried under the CFO anymore,” but financial leaders should “instead get behind your CIO or CTO or chief data officer or chief digital officer to promote the fact that technology is part of a value or a profit line, not merely an expense,” Heller said.

This can be tricky for finance chiefs at first glance: CFOs looking around at the changing C-suite are “going to see a lot of roles that they aren't used to, and what they're going to see is spender, spender, spender, spender,” Heller said.

For these emerging technology executives and the finance function to work together successfully, it’s important to learn to speak the other’s language, Heller advised.

“All those other executives are learning to talk finance so they can communicate with you — why don’t you learn a little tech so that you can communicate with them?” Heller said of CFOs. At the same time, the “lingua franca of the executive committee is finance,” she said.

“What I would do if I'm a new entrant in an executive committee, especially with an old company where they've been there for a long time, is I would first of all learn, what are the key metrics for this business?” she advised.