BusinessDay: CFOs play a crucial role in steering AI strategy beyond the balance sheet

The executive owner of AI decisions in an organisation should be the head of finance and not the head of technology.

By Johan Steyn, 21 February 2024

Published by BusinessDay: https://www.businesslive.co.za/bd/opinion/columnists/2024-02-21-johan-steyn-cfos-play-a-crucial-role-in-steering-ai-strategy-beyond-the-balance-sheet/

In my consulting career, I have seen many artificial intelligence (AI) initiatives fail as they are normally driven solely by the technology department with little regard for the business cases they need to address and even less regard for the long-term financial impact on the business. 

AI has emerged not merely as a technological marvel but as a cornerstone of strategic business transformation. This shift has fundamentally altered the conventional view of technology investments, positioning them squarely within the realm of financial decision-making rather than being confined to the IT department. 

The rationale behind this transition is rooted in the profound impact AI initiatives have on a company’s financial health, competitive positioning and long-term sustainability. As organisations navigate the complexities of integrating AI into their operations, the decision to do so transcends technological considerations, demanding a meticulous evaluation of cost, return on investment (ROI), risk management and strategic alignment with corporate goals.

CFOs, with their comprehensive oversight of companies’ financial strategy and risk management framework, are uniquely equipped to steer AI initiatives. Unlike traditional IT investments, AI projects are multifaceted, influencing not just operational efficiency but also opening new revenue streams, enhancing customer experiences and redefining business models. 

These broad implications necessitate a financial perspective that balances investment against potential gains, assesses risks and ensures alignment with the broader financial strategy of the organisation. Thus, the decision to implement AI technologies is fundamentally a financial one, requiring the insight and foresight of the CFO to navigate the intricate interplay between technological capabilities and financial objectives. 

This paradigm shift underscores the evolving role of CFOs as strategic partners in driving innovation, underscoring the notion that technology decisions, particularly those involving AI, are intrinsically linked to the financial fabric of the company.

The CFO plays a pivotal role, not only in guiding financial investment but also in shaping the ethical, strategic and operational dimensions of AI deployment. Tasked with risk assessment and mitigation, CFOs should scrutinise AI investments through the lens of ethical considerations, data privacy and the potential for biased outcomes. Their deep understanding of regulatory compliance and risk management positions them to steer the responsible implementation of AI technologies. This involves ensuring that AI applications align with legal standards and ethical norms, thereby safeguarding the organisation against reputational harm and financial penalties.

The CFO’s role extends into fostering cross-functional collaboration, leveraging their unique position at the intersection of various business functions to champion the integration of AI across departments. This integration is crucial for harnessing AI’s full potential to enhance companywide efficiency and innovation. By facilitating the seamless incorporation of AI into operations, sales, customer service, and beyond, CFOs act as the linchpins of a cohesive AI strategy. Their efforts ensure that AI initiatives are not siloed within IT departments but are instead embedded across the organisational fabric, driving transformative change and creating a competitive edge in the market.

CFOs are instrumental in driving financial performance through AI, using advanced tools and technologies to refine forecasting, cash flow management and fraud detection. Their strategic investments in AI and analytics not only optimise financial processes but also empower all organisational levels to make data-driven decisions.

I always implore my clients to make financially sound decisions on technology, and not solely on the latest and greatest that new platforms can offer.