CFOs Look For Composable Finance Apps in New Tech Investments
December 8, 2022
Modular, Flexible Approach to Finance Tech Stack Increases Needed Agility and
who adopt a composable technology strategy will achieve higher revenue growth
than peers who take more traditional routes with their technology investments,
according to Gartner, Inc. By 2024, 60% of finance organizations will seek
composable finance applications in new technology investments.
Gartner has identified a new model for CFOs based on a composable technology
paradigm that focuses on modular technology solutions delivered by best-fit
vendors that enable specific finance capabilities. The framework is built upon
three distinct layers of composable platforms (groups of related finance
applications) based on the main purpose and the strategic value they deliver
(see Figure 1).
CFOs are near unanimous in their intentions to invest more in technology in
2023, yet most will be held back from achieving their objectives by legacy
mindsets in their approaches to upgrading their technology systems.
Traditionally, most finance department technology planning prizes elements that
are not compatible with agility and innovation, such as selecting large complex
systems that can be used by multiple departments and favoring a single vendor
approach for technology selection.
“The needs of the business and dynamic nature of new technologies have outrun
the traditional technology planning models relied upon by CFOs,” said
Bhandare, VP analyst, 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outdated and siloed systems, in what we call the ‘trap of traditional
Figure 1: The Three Layers in Composable Technology Architecture
Source: Gartner (December 2022)
“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. “Gartner predicts that those organizations
pursuing composable finance will enjoy 30% higher revenues than
traditional-minded peers by 2025.”
Each layer of the composable technology architecture is dedicated to the main
purpose and value it provides, and can be managed to different timelines,
governance models, and needs of the business.
Core Platforms aim to deliver standardization and compliance within finance
capabilities. The pace of change, and updates within these platforms, is
typically slow since these capabilities are well-established and common
throughout most industries.
Platforms enable unique or differentiated capabilities, including scenario
planning and insight differentiation, and those activities that allow finance to
support a specific industry. The pace of change within these platforms is
typically 1 to 3 years, reflecting the need to accommodate frequent updates and
changing business dynamics.
Innovative Platforms aim to support an experimental “fail fast” environment for
testing new ideas to support the company’s next competitive advantage. It is a
fast-moving environment where the pace of change, and need for updates, often
occur in under one year, since the capabilities these platforms support are not
always fully defined and can include emerging technologies such as predictive
analytics and AI.
Bhandare encouraged CFOs to explore a flexible technology governance structure
to match the agility that a composable architecture provides, where each layer
of the architecture can have tailored governance that better allows for the
exceptions that will occur more often among the differentiated and innovative
According to Akshay Sharma, CTO, Kovair Software, and
former Gartner Analyst, “We agree with the Gartner findings, that
newer Innovative Platforms supporting Business Composability, with Value Stream
Management must coexist with all other strategic efforts, like M&A IT, to
Digital Transformation, with Innovative Service Creation, and Solutions
Productization. We see solutions from Kovair providing applications integration
to newer Value Stream Management and Delivery supporting Project and Portfolio
Management to define the department people, projects, tasks, workflows, etc.,
and with DevSecOps, or ALM all supported by IT teams doing any development, with
the required Governance, Workflow Automation, Monetization, and Industrial