SaaS seeks to simplify treasury as corporate risks become more complex.
Imagine being able to test potential treasury-related software when it is convenient and using actual data, and then purchasing the software, without ever ending up in a vendor cue or even having to talk to a vendor rep. Software as self-service?
Delivering treasury technology via Software as a Service (SaaS) is nothing new. However, the SaaS model, in which software is licensed on a subscription basis and centrally hosted, increasingly in the cloud, offers potentially game-changing opportunities to simplify the delivery and use of corporate treasury-related technology. And those opportunities, such as SaaS as self-service, are still unfolding.
Normally, a treasury department will contact the SaaS vendor, sign a contract, the vendor will request certain information and then set up the system, a process that can take several days. But TreasuryXpress has a different approach. It has prioritized low cost and rapid deployment for new customers of its treasury management software, C2Treasury, and on September 7 it announced its TreasuryXpress Lab, which it describes as the industry’s “first online store,” offering additional on-demand products and functionality.
The Lab’s first product, Forecast+, gives companies access to cash forecasting and cash-trend analysis tools, and they can set up those tools on their own, without talking to TreasuryXpress.
“There’s no need to call the vendor or send a note, be put into a cue, and have something set up three or four days later,” said Craig Jeffery, managing partner at consultancy Strategic Treasurer, adding that TreasuryXpress software can be tested using actual data, even by noncustomers. “This is: I need something, I can sign up for it myself, I can knowledge through self-discovery, and I can implement it on my own almost instantly.”
The extent to which SaaS gains hold remains to be seen. Nevertheless, facilitating treasury functions to reduce the processing element of treasury and to enable staff to pursue more strategic endeavors is clearly the direction in which treasury-supporting technology, aided by SaaS, is headed.
Risk management, for example, has become a major part of the treasury department’s mandate in recent years. Delivering tools to mitigate those risks on a “multi-tenant” basis via the cloud, in which all customers make use of the same software, enables technology vendors to devote more resources to research and development and improving their products. That has become particularly relevant in light of today’s risks, ranging from ever more voluminous and sophisticated cyber-attacks, to potential economic bubbles in a time of ultra low and even negative interest rates, to major new regulations becoming effective soon or looming on the horizon.
So one of the huge advantages of SaaS is there are fewer resources needed to support each client configuration,” said Bob Stark, VP of strategy at Kyriba.
For example, Kyriba launched a suite of risk-management modules a year ago covering risks that includes pre-trade exposure management to post-trade valuations, accounting and compliance. Rather than having to devote resources to working with clients to implement the software on their in-house servers or devoted cloud servers and make the necessary adjustments, Kyriba was able to focus on developing the most effective products. In addition, the numerous improvements Kyriba has made to its software since then have been delivered automatically to clients via SaaS.
In fact, Mr. Stark said, risk management has become so high on the list of priorities of corporate treasuries and their larger corporate enterprises that the purchase of new treasury-related technology now typically requires the involvement of C-suite management. He added that previously the head of treasury or the CFO might have solely signed off on the purchase, but now acquisition of treasury software also requires approval from a CTO, CIO, or CISO. The elevated threat posed by cyber breaches has prompted them to implement information security policies blanketing the entire organization, including treasury.
“That’s different than three or four years ago, when treasury was often left to its own devices in terms of determining what was sufficient security and related technology requirements,” Mr. Stark said. “Over the last year, those C-level resources have become more involved, sometimes leading the project. And they certainly have enough influence to be able to nix a certain provider if the technology doesn’t meet the information/security policy of the entire organization.”
As part of the trend of facilitating treasury functions with SaaS, data as a service and connectivity as a service have been available to varying degrees for some time. Reval’s start in risk management for independent derivative valuations and hedge accounting for the corporate treasury market has made it especially strong on the data front, connecting its software via the cloud to data providers and even cleansing the data so corporate clients don’t have to.
One of the big areas of focus for Reval, said Phil Pettinato, chief technology officer at the New York-based company, has been its connectivity model. In this it manages the connectivity to Reval partner products and other external products, including the data feeds or third-party software clients favor, within its software-as-a-service.
“We see SaaS as not just the software but all the services wrapped around that, including connectivity management,” Mr. Pettinato said, adding that recently Reval announced connectivity to Oracle’s enterprise resource planning (ERP) cloud solution.
The SaaS model facilitates access to software addressing other key concerns of treasury offices, such as working capital. Kyriba, for example, has developed supply-chain finance and dynamic discounting services, for which SaaS makes the latest versions readily accessible to clients.
The SaaS model has also simplified and accelerated the adoption of technology that has been gaining popularity but may have faced implementation challenges. For example, treasury executives’ quest to know where their company’s money is so it can be quickly mobilized has made the notion of in-house bank structures popular for years now. However, connecting accounts around the world to get a timely, accurate and consolidated view of cash positions has been challenging.
The focus on implementing such structures has significantly increased in the last year and a half, Strategic Treasurer’s Mr. Jeffery said, in part because SaaS enables a multinational’s offices around the globe to access easily the same in-house bank framework, even as they grow and add new banks, accounts or entities.
“That creates a new avenue of opportunity for them, because having all that visibility and accuracy for cash position flows allows them to do the proper risk management,” Mr. Pettinato said. “They’ve used robust SaaS technology to shift away from treasury as a processing center to treasury as a decision maker.”
SaaS offerings also appear to be leveling the playing field between the largest MNCs and all the other companies, which often have had insufficient resources to purchase and manage sophisticated treasury-related technology on their own.
“Now they can subscribe to what they need, and as their business grows they can scale up and perhaps bring on other subsidiaries globally, with more sophisticated and comprehensive treasury risk management software,” Mr. Mr. Pettinato said. “This is a big difference from legacy technology in the past.”
Reval CORE provides the basic functionality corporate treasury needs, at a more affordable price, to optimize its treasury operations with best practices on a cloud platform. Reval Choice then allows clients to layer on modules and more sophisticated functionality as they grow.
In fact, price is another element that the SaaS model has affected to the benefit of corporate clients. Mr. Jeffery pointed to Bellin TMS, which is used by more than 300 companies in Continental Europe and increasingly by US firms. It doesn’t charge for additional users of its SaaS-delivered software.
“One benefit of SaaS is that it lets people gather, enter and share information more easily,” Mr. Jeffery said. “Bellin’s mindset is that the more data clients have, the better for them, so they don’t want to make it more costly. If a client wants to add more seats, Bellin loves it, because the product becomes more relevant.”