When productivity stagnates, costs rise anyway.
Economists call it Baumol’s effect, and it’s exactly what is happening in back offices across the United States and beyond.
The modern enterprise is more complex than ever before. Companies increasingly manage multiple entities across jurisdictions, all needing to report, transact and comply in real time.
Yet, the enterprise back office can still operate like it’s 1995.
Finance teams juggle sprawling enterprise resource planning (ERP) implementations, armies of consultants and outsourced operations, all stitched together with minimal automation. Instead of progress, complexity often compounds. Instead of cost-efficiency, overhead frequently balloons. Rather than transformation, peeking under the hood of today’s organizational operations can reveal something more like stagnation, only it’s dressed up in modern dashboards.
The proliferation of software as a service (SaaS) over the last decade has created a toolkit for chief financial officers. But with power comes complexity, and even fragmentation. The challenge today is not access to software; it’s orchestrating it.
Modern CFOs are seeking modularity and agility. Being tied to one monolithic system has its downsides, particularly in today’s fast-moving and increasingly uncertain operating environment where operational resilience is the new ROI of any back-office investment.
Modular architecture reflects how CFOs think about the business: as a matrix of interconnected capabilities rather than discrete silos. The back-office stack is increasingly coming to mirror this mindset.
Read also: You Can’t Teach an Old Tech Stack New Payments Tricks
AI Integration Is the New Differentiator for CFOs
The finance stack is now the nervous system of any 21st century company. What was once viewed as the administrative heart of the enterprise is now a hub for strategic decision making thanks to the SaaS stack, with back-office functions becoming key to feeding real-time data to executive dashboards, informing everything from pricing decisions to headcount planning.
Looking forward, the next frontier is composability. This concept — borrowed from software development — means treating every component of the back office as modular, swappable and purpose-built. With artificial intelligence-driven automation becoming mainstream, the back office is poised to become not just more efficient, but anticipatory.
Tools are already moving in this direction. The PYMNTS Intelligence report “Smart Spending: How AI Is Transforming Financial Decision Making” found that more than 8 in 10 CFOs at large companies are either already using AI or considering adopting it for a core financial function like accounts payable, or the process by which companies pay their suppliers, vendors and contractors.
AI copilots are emerging inside financial planning and analysis (FP&A) platforms. AP tools are using AI models to flag anomalous invoices. Payroll tools auto-generate tax compliance workflows across jurisdictions. The future isn’t just digital; it’s also intelligent.
Still, the path to digital optimization is not necessarily linear, nor universal.
“COVID was the most recent event that we all would have sworn would drive everybody to digitize their back office and get away from paper altogether,” WEX President of Corporate Payments Eric Frankovic told PYMNTS this month. “And I think it did push us in that direction. But we came out the other side, and what we’re seeing is there are still a lot of companies that are just getting back to doing whatever it is that they do. And digitizing their back office is falling down the priority list.”
See also: Trump’s Global Tariffs Position CFOs as New Supply Chain Architects
From Cost Center to Intelligence Hub
Building the right back-office SaaS stack isn’t about following a template. It’s about understanding your business’s specific needs, risk posture and growth trajectory. The best CFOs are not just buyers — they’re architects. They design tech stacks that scale, adapt and empower their teams.
Meg Garand, head of CashPro Payments and CashPro API at Bank of America, told PYMNTS last year that growing partnerships between banks and FinTechs are allowing ERP and treasury management system (TMS) providers to optimize their own software solutions.
“Companies can remain focused on running and growing their business without spending a ton of time on technical bank integration,” she said, noting that the ease of integration provided by bank and FinTech collaborations also results in the reduction of manual work, allowing staff to focus on strategic efforts.
The PYMNTS Intelligence report “Building Better B2B Relationships Through Payments Innovation” found that automation, virtual cards and digital payments are becoming cornerstones of B2B payments, with businesses increasingly recognizing their role in strengthening buyer-supplier relationships.
For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.
