The notion of a TMS spitting out data such as FX exposures, hedge positions, investment holdings and allocations, accurate forecasts, global cash balances, current bank accounts and account signers, all on a daily basis, sounds like a dream. Many companies have achieved much, if not all of this nirvana state, but not without significant investments of time, energy and money.
A recent NeuGroup Treasurers’ Group of Thirty 3 session explored how to get there, featuring two members and their TMS infrastructure along with a review of member experiences in selection, implementation, performance, and vendor satisfaction. Follows are a few takeaways.
When do you get rid of a Ferrari? In other words, isn’t it time you went with the Ford pickup that you really only need? The answer is ASAP, especially when it goes faster than you need and wasn’t assembled properly. The Ferrari analogy was suggested by one member of the group who had been given the SunGard Quantum TMS when they were spun-off from their former parent company. For the size and complexity of this organization, Quantum was simply overkill. And, what was worse, it hadn’t been implemented properly in the first place, so it tended to be problematic in its capabilities.
Consequently, the company went back to SunGard and negotiated an exchange for a more practical product, Integrity, and completed the implementation of that solution at the end of 2014. This implementation was done by the treasury team that would be using the product and was therefore much more applicable to the operation.
When not to RFP
It is common practice to issue an RFP for something as integral and costly as a TMS. However, it is not always the logical approach, as neither of session the presenters did. In the case of one of the presenters, they were happy with their provider and simply leveraged the existing relationship to acquire the most suitable product. In the case of the second presenter, they were more drawn to the fact that they already owned the Oracle treasury module and simply wanted to activate it. They were also drawn to the seamless integration with the broader ERP.
At least five participants were currently in the process of a RFP, and two others were planning to be in the next 12 months. Still others may find themselves needing to change products or vendors and will certainly benefit from the experience of other members.
Clearing up the cloud
The TMS landscape has been evolving for several years from the traditional model of software and hardware on-site, to vendor-hosted servers, to the more recent cloud-based, software-as-a-service solution. Opinions vary on the benefits and shortcomings of the cloud solutions. Some practitioners believe they are more secure by having the product installed on-site, but one member noted that this thinking is “an illusion,” and believes that TMS vendors have far better cyber-security than most corporations. The big advantage to cloud solutions is that no company IT support is needed to implement and maintain them. Most treasurers find this feature to be a huge advantage, but also have their legal and IT departments heavily involved in the contract negotiations and product review to ensure the company is covered in the event of a security breach or other failure.
The consensus was that the cloud-based solution will continue to grow in favor over the on-site alternatives and also expect the technology and functionality to continue to improve until sometime in the not-to-distant future.
Measure twice and cut once
It’s an old saying in the construction business, but also applies to TMS installations. One member noted that “whatever solution you use, you need to take the up-front time to implement it properly.” Another member suggested that you negotiate hard on SLAs with the vendor and also interview their implementation manager to make sure you are comfortable with their skill set and that they are a fit for your company.