Amber Hickman |
Analyst firm Gartner predicts that by 2024, at least 60 per cent of finance organisations will seek composable finance applications when investing in new technologies.
Gartner’s research suggests that firms that adopt a composable technology strategy will achieve higher revenue growth than peers taking more traditional routes with investments.
However, while the research suggests that chief financial officers (CFOs) are intending to increase technology investments in 2023, most are held back by legacy mindsets. Traditionally most finance departments opt for large complex systems that can be used by multiple departments as well as favour a single vendor approach.
“The needs of the business and dynamic nature of new technologies have outrun the traditional technology planning models relied upon by CFOs,” said Nisha Bhandare, vice president analyst of research in the Gartner Finance practice. “What may appear to be efficient and practical on the surface actually keeps CFOs stuck in outdated and siloed systems, in what we call the ‘trap of traditional thinking'.”
Gartner has identified a new model to help CFOs move to a composable strategy using modular solutions delivered by best-fit vendors that enable specific finance capabilities.
The framework is built on three distinct layers of composable platforms (groups of related finance applications) based on the main purpose and strategic value they deliver.
The first layer focuses on core platforms, aimed at delivering standardisation and compliance. The second layer is differentiated platforms, which enable unique or differentiated capabilities including scenario planning. Finally, the top layer focuses on innovative platforms which support an experimental environment for testing new ideas to support companies in a fast-moving environment, for instance in areas such as predictive analytics.
“A composable architecture allows CFOs the flexibility and nuance to build a strategy that incorporates sustainable differentiation and innovative new processes, while still providing a secure and cost-effective base to support core finance processes,” said Bhandare.