Preparing for strategic opportunities is one key to success.
Treasury is the leanest and most efficient financial function at most companies—ahead of tax and internal audit, according to a recent survey. But the financial crisis nonetheless took many by surprise and highlighted shortcomings in many assumptions and processes. Now, treasurers are attempting to get ahead of the curve and allocate their resources to avoid being tripped up again.
That’s not particularly easy in this environment. Pressure to cut costs remains high, and treasury is already highly centralized in most companies (see “Treasury Escapes the Ax,” IT, June 2009), and becoming more so, with the growing popularity of both in- and outsourcing.
Nonetheless, improving one’s organizational agility, as a recent article in the McKinsey Quarterly called it, is key to a company’s ability to survive a crisis and thrive. McKinsey identified three types: strategic agility, portfolio agility, and operational agility. Strategic is the ability to pounce on rare but outsized opportunities. Portfolio agility is the ability to shift resources—including cash, talent and managerial attention—rapidly. Operational agility involves exploiting opportunities within your business models.
Post-crisis treasury provides ample room for improving portfolio and operational agility, as companies work to optimize their bank relationships to support their growth plans, invest in technology to keep abreast of the markets and optimize their investment and risk management strategies, and continue to centralize to improve efficiencies. But as treasury’s increasingly strategic role in leading-edge corporations expands, those moves will also better position companies to be nimble enough to strike when big opportunities arise.