There’s still a big market out there for providers of corporate treasury management systems (TMSs). Most corporate treasuries continue to use Excel as their primary technology tool, nearly 50 percent don’t use any kind of treasury management system, and more than 70 percent primarily use bank online platforms to conduct treasury activities.
That’s according to more than 200 responses so far to Treasury Strategies’ 2015 Treasury Benchmarking Survey, which found that despite the continued reliance on Excel spreadsheets and a high percentage of treasuries not yet using TMSs, 96 percent of respondents view technology as an enabler for change.
“We see surprisingly that there’s still strong dependence on bank online platforms, and unfortunately on Excel, despite the inherent risks in these tools,” said Elaine Filus, principal at the consultancy, at the start of a recent webinar looking at steps corporate treasuries should take when choosing technology.
Survey respondents said they’re specifically looking to technology to measure financial risk, improve visibility to corporate cash, streamline operations, and facilitate regulatory compliance. But while technology promises to enable achieving those goals, embarking on the selection and implementation of TMSs and other complex technology will almost certainly be costly and could have a significant impact on the strategic success of a treasury department.
The first step for a treasury department is to question what it wants to achieve, so looking at current operations to determine which parts to retain, and what needs to be fixed, and completing the fixes even before deciding on new technology.
“We’ve seen many clients try to automate broken processes,” Ms. Filus said, adding that clarification of goals enables building a strong business case, including quantitative and qualitative benefits. “Treasury needs to think about how this initiative will address senior management’s goals, too, since they control the project’s funding.”
Then more technical questions come into play. How will the technology impact bank connectivity, straight-through-processing (STP), SWIFT messaging, controls in terms of systems access and transaction processing, as well as measures to ensure data security?
The new system’s overall architecture is also critical. The company may have existing third-party or internally developed tools, and it must determine the level of integration that will be required if it decides to keep some or all of them. Ms. Filus said corporate treasuries must also review their company’s internal information-technology (IT) support, and can it be leveraged to support a new TMS or other treasury technology.
In the case of considering a new TMS, additional questions include determining upfront which other systems it will have to connect to internally, such as those supporting accounts payable (AP), accounts receivable (AR) and regulatory compliance.
Then there’s the perennial question about whether to install the software internally or use a software-as-a-service solution, and since each has its benefits and pitfalls, depending on the company’s needs, that choice will narrow the choice of potential vendors. Indeed, the vendor may also be a consideration, since a big fish in a small pond will likely see better customer service from the vendor, but a deeper pond may better suit the company’s needs.
Ms. Filus added that it’s also critical to inform other departments about treasury’s goals and get their buy-ins, since there are likely to be concerns from areas like accounting, auditing, AR and AP.
“If treasury considers these various issues, it’s much less likely to fall prey to some of the hazards that can befall a technology selection,” Ms. Filus said.