Independent TMSs that are acquired often lose expertise and support 
The consolidation of TMS providers over the last several years hasn’t benefited corporate treasuries very much, according to experts and treasury practitioners. In many cases, as with the numerous independents gobbled up by Ion and SunGard in recent years, technical experts involved in the early development of the products leave the acquired companies as the larger acquirers put an emphasis on sales due to increased competition. This leads some products to whither due to a lack of attention and support.
Take for instance Reval, a provider of treasury and risk management systems, which was acquired by ION Investing Group in late 2016. According to several treasury executives at a recent NeuGroup peer group meeting, services offered by Reval have declined markedly since the acquisition. As a result, several members said they have either decided to changed providers or are considering it.
In the meeting’s first session addressing the treasury projects and priorities, at least six of the 20 attendees acknowledged using some or all of Reval’s treasury suite; five were highly critical of current support while four of those had either moved to a new solution or were considering their options.
“The service level with Reval has been steadily dropping, and there are persistent rumors that Ion is going to sunset the system, so we don’t want to be a part of that,” said one executive, who said his company is currently looking at treasury management systems (TMS) that provide the same breadth of functionality as Reval.
Alternative TMSs discussed by members included GTreasury and SunGard’s Quantum, which is now a part of FIS. Interestingly, Kennett Square, PA-based Chatham Financial drew the most interest, with two in the process of moving to Chatham and a third strongly considering it.
“After the Ion acquisition of Reval, our service has fallen off the plane,” said another participant, adding that ownership of that vendor relationship in her company is shared across accounting, treasury and procurement. “We all agreed that Reval is no longer a good business partner. We were recently at a meeting hosted by Chatham, and they crushed it. They’re really building FX muscle.”
After the acquisition, Reval co-founder and former CEO Jiro Okochi became the CEO of Reval Holdings, and he left that position in October 2017. Since then he has mentored entrepreneurs at the Capital Factory in Austin, Texas.
An Ion spokesperson attributed the perception of less service to a change in the process for dealing with customer requests, and said the company remains committed to improving communication with customers to minimize any negative impact.
“Reval’s commitment to outstanding customer service remains unchanged and has not been affected by the ION acquisition,” the spokesperson said. “In fact, the number of support tickets is decreasing due to a significant improvement in process, product quality, and release management. Customer satisfaction remains very high.”
Great Presentations
All too often, according to Susan Hillman, a founding partner of Treasury Alliance Group, noted recently that, treasury staff are swayed by sales presentations and haven’t evaluated their company’s specific needs. Implementation can prove more expensive and lengthier than anticipated since many functions, including intercompany applications such as netting, customized forecasting, debt compliance management and even more complex hedging processes, must be developed specifically for the company.
What’s to be done? The first step is to determine what the company really needs from a business perspective and then assess whether a TMS is the answer, Ms. Hillman said. The requirements may be simple enough so treasury’s objectives can be met by a specialized software provider, or its existing banks for cash management and multibank reporting.
“If you’re using two or three main banks globally, the larger global banks have excellent electronic-bank platforms that can provide liquidity and risk management tools, forecasting, receivables tracking and payment modules, as well as traditional multibank balance and transaction reporting,” Ms. Hillman said. She added that reports generated from banks’ electronic platforms “can be downloaded and configured to create journal entries as required.”
TMSs Take Time
Participants in NeuGroup’s recent meeting agreed that it realistically takes about 18 months to implement a full TMS, and for many companies the full package is appropriate. One participant at the meeting noted later that his company uses Reval, and in light of the vendor’s poor service, treasury is now looking at other TMSs, making sure they can handle all of Reval’s derivatives functionality.
“We think it makes sense to warehouse everything in one system if possible,” the executive said.
Meanwhile, NeuGroup members’ interest in Chatham may stem in part from the advisory and technology firm hosting and sponsoring meetings of treasurers and assistant treasurers in recent years. Also, while Chatham has the reputation of specializing in FX and hedging, it provides a full TMS covering treasury-related risk, including interest-rate and commodity risk. In fact, the long list of regulatory and accounting changes over the last decade, not to mention the global initiatives to move away from Libor, has made managing risk ever more important. And while there are a plethora of vendors offering cash-management tools, the vendor options for risk-management tools narrows sharply.
Joe Siu, managing director of client technology solutions at Chatham, said that the firm’s treasury risk business has grown significantly over the last four to five years, and it has accelerated in the last two, due in part to ever changing requirements such as the new hedge accounting standards, Dodd-Frank and EMIR, as well as the forthcoming transition away from Libor. Another reason, he suggested, is that most competing vendors are backed by venture capital that is driving growth in order to exit via an IPO or selling to a larger conglomerate. Either way, a change in the TMS vendor’s management may pose challenges for ongoing maintenance and service of the TMS software—a case in point seemingly in the Reval situation.
“If you look at the landscape of corporate-treasury software, there are different camps,” Mr. Siu said, noting the “all-in-one massive TMSs” that provide numerous features but “may not be built with great user experience in mind, so treasury staff end up serving the software rather than the other way around.”
On the other end of the spectrum there are highly specialized technology firms that address a narrow slice of risk, such as AtlasFX and FiREapps, whose software tackle currency exposures. Chatham offers a middle ground, with modules addressing risks across the spectrum (currency, interest rates, and commodities), and include end-to-end activities such as managing risk exposures, trade recommendations and execution, accounting, and analytics to explain treasury’s activities to stakeholders.
“Treasury has a very tough and sometimes thankless job because it’s doing so much work with fewer resources. So our software automates a lot of the burden, while our analytics tool can raise the visibility of treasury. We make it easy to create management reports to enable the C-Suite and board to understand the value treasury brings,” Mr. Siu said.