As technologies like artificial intelligence continue to evolve, business leaders need to make increasingly complex decisions to guide their companies along the most effective digital transformation paths. This means the relationship between finance and IT teams is closer than ever—and discussions between CFOs and CIOs should be based on the principle of strategy first, budget second, says Michael Perica, CFO of Rimini Street.

When talking with CIOs, "I don't want to hear about cost at the beginning," Perica said in a joint interview with Rimini Street CIO Joe Locandro. "If it's the best technology or path, regardless of cost, we should pursue it."

Value over cost

In recent years, as finance leaders take on more technology-related responsibilities and tools such as automation and AI become more deeply integrated into daily corporate processes, the need for a closer relationship between finance and IT departments has become increasingly apparent, CFO Dive previously reported.

The two departments can form a "powerful combination," Locandro said, because they can apply both financial discipline and technical discipline across the organization simultaneously—and since finance and IT teams "have cross-functional attributes within the company, we can view issues from an enterprise-wide perspective," he said.

For finance leaders, investing in the relationship with their IT counterpart is crucial, especially so the enterprise can achieve its strategic goals, Perica said. Most of his conversations with Locandro focus on "corporate strategy, and how we deploy IT resources and capabilities—not just internally, but also externally—to serve the overall goals of the enterprise," Perica said.

Perica has served as CFO of the Las Vegas-based ERP support solutions provider since October 2020, according to his LinkedIn profile. His previous roles include serving as vice president of finance for global energy systems at EnerSys, and a five-year tenure at Alpha Technologies, where he held multiple positions, including a three-year term as CFO.

Meanwhile, Locandro joined Rimini Street in February, leading the company's global IT strategy and driving "technology innovation initiatives that support Rimini Street's continued growth and customer success," according to a press release at the time. His resume includes 25 years of CIO and IT-related roles, including serving as CIO at building materials supplier Fletcher Building, chief digital and business transformation officer at the Australian energy market operator, and vice president of business technology services at the Emirates Group, according to his LinkedIn profile.

Before CIOs and CFOs can have effective conversations about strategy, they need to find common ground. For Perica and Locandro, it's important that the CIO and CFO are peers on the executive leadership team, and that each leader communicates with the other with a value-oriented mindset, they said.

For example, one frustration Perica has when working with IT leaders as a finance executive is "when they bring in technology for technology's sake," he said. Instead, the focus should be on "aligning technology and deployment with business objectives," he said.

On the IT side, "CFOs often view IT as a cost, rather than a potential advantage," Locandro said. When CIOs report to CFOs, IT has traditionally been seen as a cost center, rather than a necessary component of business operations or a value-add, he said. However, "when the CIO and CFO are peer members of the executive committee, they view things from a strategic perspective, focusing on value creation rather than cost minimization," he said.

Enterprise-wide technology management

Technology budgets can be a key area of divergence between CIOs and CFOs: a March survey by Big Four accounting firm KPMG found that nearly a third of finance leaders believe spending on technology innovation is too high, while only 16% of CIOs hold the same view, CIO Dive, a sister publication of CFO Dive, reported. Meanwhile, 12% of CFOs said technology budgets are "currently insufficient," while a third of CIOs held the same opinion.

One way to bridge this gap is to leverage the naturally enterprise-wide perspective of IT and finance departments to view technology implementation holistically. In Locandro and Perica's conversations on this topic, the two discuss "how to make IT investments from an enterprise-wide perspective—not just for my department, and not just for any specific function within the organization," Perica said. "And I think if people aren't taking that perspective, it's a huge miss."

Take AI projects, for example: "People are moving too fast and not taking an enterprise-wide perspective," Perica said. Many companies have already exceeded their cost estimates on technology, according to a recent study by Mavrik, an AI cost management solution provider. The survey found that 80% of enterprise AI infrastructure forecasts deviate by more than 25%, while companies also identified "hidden cost" areas such as data platforms and network access fees.

Forecast deviations represent a common stumbling block in technology implementation, Locandro said—companies chase technology hype cycles, "do a lot of proof of concepts, and then after completing a few, realize they have to introduce governance mechanisms," Locandro said. "So governance often becomes an afterthought, rather than a prerequisite."

If you don't have governance in mind from the start of implementation, "you end up redoing work, and then spending more money," he said. "And then you think, 'If I had known this from the beginning, I might have made a different sizing assessment and set a different budget.'"