Treasury Management Systems Guide 2014/2015 by bobsguide

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Treasury Management Systems Guide 2014/15

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Welcome to the bobsguide Buyer's Guide to Treasury Management Systems 2014/15 Treasury management systems (TMS) are vital for corporate treasurers that want to manage their cash and exposures as efficiently as possible. Within the Guide you will find a variety of feature articles that examine some of the important issues related to TMS today. Firstly we look at the new innovations offered by TMS, and how new technology is expanding the boundaries of what is possible for treasurers to achieve today. Our second feature looks at the steps that should be taken to ensure a new TMS can be implemented both on time and, just as importantly, on budget. Also included is an overview of the TMS market. With SunGard and Wallstreet Systems dominating the market in terms of size, we look at how other vendors are responding to this challenge and what effect recent changes in the market may have on corporate treasurers. Finally, a feature on connectivity examines where a TMS sits in the overall IT architecture of a treasury department. In addition to the editorial, this Guide includes a comprehensive functionality matrix of TMS offerings in the market, to help you compare the options that are available. I hope you enjoy the Guide.

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Treasury Management Systems Guide 2014/15

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Treasury Management Systems Guide 2014/15 Editor Ben Poole ben@ben-poole.com CEO Anne-Marie Rice annemarie@bobsguide.com

Ben Poole, Editor

Sales Director Stephen McMaugh stephen@bobsguide.com

Contents

Business Development Manager Stefano Perciballi stefano@bobsguide.com Design & Artwork Donna Jones donna@missjonesdesign.com

We Have the Technology: TMS Innovation

The world of technology is always moving forward, and the treasury technology space is no exception. We look at the new innovations.

Implementing a TMS On Time and On Budget

What steps should you take to ensure that you can successfully integrate a new treasury management system (TMS) into your treasury department without wasting time and money?

21 16

Functionality Matrix TMS Market Overview

With two vendors dominating the treasury management systems (TMS) market after a period of growth via acquisition, is there enough choice for corporates? What positives do the largest vendors offer corporates and what implications has this recent trend had for smaller vendors?

Plugged In: TMS Connectivity

Treasury management systems are sometimes viewed as all-encompassing. However, they often require connections to other systems.

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Treasury Management Systems Guide 2014/15

We Have the Technology: TMS Innovation Words: Ben Poole The world of technology is always moving forward, with innovation driving change that makes a difference in every aspect of the world around us. The world of treasury is not immune to this, with treasury management systems (TMS) evolving in a way that reflects the changing role of the treasurer. In the consumer world, there has rightly been a lot of attention on the rapid evolution of smartphones and tablet devices, enabling us to access information wherever we are, day or night. If you apply this to the corporate

world, there are a lot of benefits that can be harnessed by treasurers, which is currently generating a lot of interest. “In every RFP we have seen over the past couple of years, both mobile technology and mobile device support has been included,” says Paul Bramwell, SVP of treasury solutions at SunGard. A number of TMS providers include mobile apps as part of their system offerings today. Treasurers can use these to view reports generated on the TMS, as well as carry out payment workflow approvals, for example. There is also a trend for tablet devices in the workplace. “Tablets are better

suited for productivity tasks compared to smartphones - we are going to see more of these in the board room over the next couple of years,” says Eric Pannese, VP Product Management at Kyriba. “In this situation, we are thinking about what we can do to allow our software to work seamlessly across all devices. This will allow treasurers and CFOs to be able to access all of the data that they want, where they want it, on demand.” Even a lot of the look and feel of consumer products from the likes of Apple and Microsoft has been adopted by some of the TMS vendors.

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Treasury Management Systems Guide 2014/15

“ Currently everybody is talking about big data, but you can't find anyone that is actually doing it”

“Look and feel does seem to be a competitive space right now,” says Damien McMahon, partner at PricewaterhouseCoopers (PwC). “IT2 adopted the look of Windows 8, for example. Treasurers are used to seeing this on their PC screen and when they switch to their TMS they see the same intuitive layout.” IT Integration Integration is a lot more prevalent in today's TMS. A corporate can buy its data feeds, investment management software, confirmation system, SWIFT connection and TMS, while only being required to sign one licensing agreement for the whole package. “We take the stance that our community of treasury users should only worry about one thing - remembering their Reval log-in.,” says Justin Brimfield, chief marketing officer at Reval. “Everything else should be taken care of by their treasury solution partner. In the end, the treasury organisation wants streamlined workflows, but the treasurer shouldn't have to worry about getting all of their vendors to work together to integrate their offerings.”

A number of TMS vendors work to identify the niche elements in treasury workflow - such as FX trading, money market funds, integration to an ERP, for example - and then build a connection with the partners in these areas. In this scenario, the TMS vendor can enter into agreements with the third parties and commit together to work together around their product releases to ensure that the integration is as deep and complimentary as it can be for the corporate. Managing Big Data With this type of integration now possible, the amount of data that is easily accessible to the treasurer has increased markedly. This brings up one of the technology industry's key buzz-phrases of recent years - big data. “Currently everybody is talking about big data, but you can't find anyone that is actually doing it,” says PwC's McMahon. “However, I think there are a lot of vendors that are currently working on this. We are likely to see systems that

are able to crunch large volumes of data coming from the business. These will be very beneficial for cash flow forecasting, and also with FX exposures as companies increasingly focus on hedging from a macro basis.” Database structures in treasury technology have advanced and there is a lot more efficiency in aggregation tools. “Corporates are looking at to see if they can integrate treasury data within other data in the organisation to get a better idea of company risk and cash flows,” says SunGard's Bramwell. “There is also a tie-in with payments through days payments outstanding (DPO), and also with receivables through days sales outstanding (DSO). If you can pull all that information together, it gives you a far better holistic idea of where your cash is, where your cash flow risks exist, and your liquidity

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Treasury Management Systems Guide 2014/15

position as a company.” The manner in which such data is presented, both for reporting requirements and strategic decisionmaking is also evolving. “Data visualisation is a key trend,” says Reval's Brimfield. “With the expanding role of the treasurer, the relevance of the insight that the treasurer can provide has gone beyond the CFO's organisation to include the board and various business units. Having the ability to access and format information for different audiences in different mediums is key.” TMS and the Changing Role of the Treasurer Since the financial crisis in 2008 the role of the treasurer has grown within the organisational structure, becoming more operational and touching several areas of the business in a far deeper way than previously. This change of role has resulted in TMS vendors offering increased functionality in a number of different areas. There is a far greater integration of the treasury into the financial supply chain today, which is having an effect of the

offerings of TMS vendors. “There are a few TMS vendors that are getting more into factoring and supply chain finance,” says PwC's McMahon. “Also, if you have a payment factory or an in-house bank, your payment factory is going to be managing the vendor payments. If the system can stretch back a little bit further and link in to the actual invoicing route and link to your bank then it can also do the supply chain finance side of things.” This also ties in with risk management, which is a much bigger burden for treasury than it was before the financial crisis. “It is about data and the data transparency that treasury needs to work with,” says Carsten Jäkel, partner, finance & treasury management at KPMG. “Without that full transparency, how can the treasurer calculate their exposure to the different financial risks? You can look at commodity risk management, both with treasury and the supply chain. Commodity risk is not just about managing the risks from the treasury perspective, the whole process starts with the purchasing, it is part of logistics, and it goes through the whole supply chain.”

Another legacy of the financial crisis is the increased regulatory burden felt by corporates. This is a highly complex area, with treasurers facing global, regional and local regulatory requirements, which in some cases can appear to be at odds with each other. “You have to look at the scope of the G20 regulations - different regulatory requirements around the globe that all need to be covered by a TMS,” says KPMG's Jäkel. “As of today, systems and vendors are not ready for this.” Expect this to be an area of ongoing development in treasury systems over the coming years. One last glimpse into the future for TMS is on the payments side of the business. “Some of the bigger TMS providers are looking at how they can do payments - not just treasury payments - but payments to individuals using PayPal or Google Wallet, for example,” says PwC's McMahon. “I think you'll see TMS moving more into the alternative payments arena.”

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Treasury Management Systems Guide 2014/15

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Treasury Management Systems Guide 2014/15

Implementing a TMS On Time and On Budget Words: Ben Poole

What steps should you take to ensure that you can successfully integrate a new treasury management system (TMS) into your treasury department without wasting time and money? 12

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Treasury Management Systems Guide 2014/15

Implementing a TMS is a big project for corporates. The process does not just affect the treasury department, but also IT and any business unit with connection to treasury. It is therefore vital that the implementation can stick as close to the budget as possible, and that 'project creep' is avoided.

“ To get an implementation project to run on time, it is vital to spend time on selection”

Start As You Mean To Go On For a successful implementation to occur, it is first important to take the time to ensure that the selection process has been gone through properly. “There are not that many systems out there, so corporates can tend to put together a list of the five that are most suitable for them and then stick a dart in the dartboard to decide which one they will pick,” says Damien McMahon, partner at PricewaterhouseCoopers (PwC). “Many corporates believe that all the systems do what they want to do. The problem that can occur at implementation is that the system may do what you want to do, but the right scope hasn't been agreed with the vendor, or the right people may not be on the implementation team.”

A Clear Vision Ensuring that a TMS implementation comes in on time and on budget also depends on your expectations at the start of the project. It is important that these are realistic, otherwise you may already be setting yourself up for disappointment. “It is important to have very specific and clear expectations about what you intend to leverage out of your investment,” says Paul Bramwell, SVP of treasury solutions at SunGard. “This includes a clear definition of why you are buying the system, what you intend to get out of it, and a clear and measurable expectation of when the project is finished and you can declare it to be a success or not. This point does not have to be when you are 100% live, it could be based on an achievement, such as you have been able to stop using spreadsheets, or you have turned off the old system, for example.”

When defining what the scope of the project is going to be and choosing which vendor to go with, corporates also get to select the people within the vendor that they want to work with. However, this may not be as straightforward as you may imagine. “One of the large TMS vendors always tell us that they have 400 trained implementation consultants that can go on these projects, and yet whenever we are working on an implementation with them it is always the same four staff,” says PwC's McMahon. “As we are working on multiple implementations, we know that these four staff are already busy on two or three other projects. This could delay the project.” In this situation, if the scope of the implementation project has not been set out in detail during the selection, the implementation consultant could be likely to implement something that is similar to the work on their other projects, as this will take the least amount of time and effort for them. “To get an implementation project to run on time, it is vital to spend time on selection,” advises PwC's McMahon. “This is where you agree who is going to work on your project, you agree the scope, you agree the pricing, and you agree how important you are to that particular vendor.”

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Just as expectations over the duration of a project need to be thought through clearly at the start of an implementation, the same is true of the price. “The treasurer should always aim to go for a fixed price offer from both vendor and implementer,” says Carsten Jäkel, partner, finance & treasury management at KPMG. “This is possible. It may sound difficult and require more effort at the beginning of a project, but once you have defined your functional requirements and processes and you know exactly what you want, then the vendor and implementer knows exactly what they have to deliver. At this point they should be able to offer a fixed price.” While achieving a fixed price may be more difficult for highly complex processes that go across the whole group - such as centralised payment processes or reporting on a groupwide level - for core functionality and processes it should be possible. The final part of the jigsaw before starting an implementation project

is to ensure that the right project manager is in place. The strength of the project manager is often critical to a successful implementation. “In a TMS implementation you typically have three different parties involved - the vendor, the client, and usually other third party systems that need to be implemented into the TMS,” says Robert Pierson, VP professional services, North America for Kyriba. “Treasury has traditionally been rather disparate and has many systems - Excel, their ERP, connectivity to other parts of the business. Now that these are being moved into one system, it is key that the project manager understands how the data integration has to work and be presented in the dashboard to the treasurer.” The Implementation Phases Once the pre-implementation planning has been completed, the project can begin in earnest. When the project begins, it is important that all participants are aligned to their roles, responsibilities and milestones for success. “Often people do not spend sufficient time evaluating the implementation plan as part of the buying process. It is almost considered as an afterthought, but it actually is one of the most important parts of selecting a treasury partner,” says Justin Brimfield, chief marketing officer at Reval. “Implementation plan review tends to come at the end of the selection process, but that is when selection fatigue can set in, compromising the right amount of time necessary to clarify vision and scope.” The key phases of an implementation project are the design, build, and testing stages before going live with the new system. “It is important to spend a good amount of time on the design stage,” says PwC's McMahon. “You need to be very clear on what your scope is, and then document it. Nobody likes doing documentation, but the fact that you have documented it really forces you to think through the details. We even get clients to document all of the options

Treasury Management Systems Guide 2014/15

that were considered and the ones that were rejected.” Carrying out this level of documentation avoids people changing their minds midway through an implementation and questioning why the project is not being done another way - vital if you want to avoid repeat work and therefore a longer project.

test every eventuality. Normally we would have three iterations of testing - the first unit testing and then two cycles of user testing. There is always something new that comes up, even on the third cycle.” It is better to find these bugs during extensive testing than after the go-live. This avoids the budget creep that occurs when you attempt to fix faults once you are live on the new TMS.

By being very specific about the scope of the TMS during the design phase, the build phase of the implementation project should be relatively simple. “If you have been thorough in the scoping and design stage, the building stage should not actually require any thinking,” says PwC's McMahon. “This has all been done upfront and should be in the design blueprint. All you have to do when it comes to the build is literally just type this in.” The final part of the implementation process is the testing phase. “Vendors and some corporates are inclined to cut the testing stage short as they don't see the value,” says PwC's McMahon. “However, we think that you need to

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Treasury Management Systems Guide 2014/15

TMS Functionality Matrix

System Name

Call Deposits

Short Term Loans

Repos

Spot

Forwards

Swaps

Equity

Fixed Coupon Bonds

Floating Rate Notes

T-Bills

Zero Coupons

Serial Bonds

Commercial Papers

Private Equity

Money Market Funds

Cross-currency Swaps

Equity and Bond Options

Financial Futures

FX Options

Interest Rate Options

Interest Rate Swaps

DERIVATIVES

INVESTMENTS

Company Name

Fixed Deposits

MONEY MARKET

FOREIGN EXCHANGE (FX)

INSTRUMENT COVERAGE

3i- Infotech

Kastle Treasury

■

3V Finance

TITAN CUBE

Agile Financial Technlogies

Agilis Treasury

Agiletics Inc

Liquidity Management

ALOC A/S

SUPERPORT TMS

■

BELLIN

tm5

Box Automation Solutions (B.A.S.)

C2B

Calypso Technology

Calypso

Capita Asset Services

Capita Treasury

■

CCK Financial Solutions Limited

Guava

CGI

TWIN

Chella Software Private Limited

HORIZEN

■

CNS Treasury Ltd

CNS

■

Coprocess

Coprocess.Netting

Demica

Citadel

Die Software Peter Fitzon GmbH

Online Banking System

DIGITEC

D-3 Pricing System

Elysys

NAVInvest

■

Exalog

Allmybanks

Financial Sciences Corporation

ATOM

FinlogiK inc.

FinlogiK

FTI Treasury

FTI STAR

GTreasury

Gtreasury

Hanse Orga AG

Finance Suite

■

HazelTree

HazelTree Treasury

ICS Financial Systems Ltd

ICS BANKS

Infosys Technologies Limited

Finacle Treasury

■

IntellectEU Inc.

IntellectLink

International Turnkey Systems

Ethix-Treasury

Kyriba

■

Lextrea

ACUMEN

Manex Treasury Systems

Parity

MCC SOFT

Diapason

■

MIMICS, Inc.

MIMICS Treasury Management System

Misys

KTP

■ l

l l

■

l l

l ■ l

■

l ■

■

(1) Cash Flow Positioning, Cash Flow Forecasting and Cash Flow Management (2) P eriod End Accurals of interest, FX Gains and Losses, MTM Gains and Losses, Forecasting and Counterparty exposure monitoring and controls

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Treasury Management Systems Guide 2014/15

■ Some

FUNCTIONAL COVERAGE

Bond Issuance

Commercial Paper

LC's

Bank Guarantees

Bills of Exchange

Overdraft Facilities

Links to main e-dealing systems

CFP, CFF & CFM (1)

Subsidary deal requests

Pre and Post-Deal Compliance

Central Treasury Dealing

Confirmations

Payment Netting

Settlements and Payments

In-House Banking

Multi Currency/Accounting

Period End Accurals (2)

SWIFT interface and banks for Payments and Confirmations

Interface with Enterprise GL

Interface with Market Data Vendors

FX Exposure Management

Mark-to-Market Valuations

Hedge Effectiveness Testing

Sensitivity Analysis

Counterparty Exposure Testing

Deal Limit Monitoring and Enforcement

Cash Visibility

Liquidity Management

Financial Controls

Separation of Duties

RISK MANAGEMENT

Term Loans

E-DEALING

TRADE FINANCE

l Yes

FINANCING

KEY

■

l l

■

■ ■

■

■ ■

■

www.bobsguide.com

■ l

■

l l

■ ■

■

Treasury Management Systems Guide 2014/15

TMS Functionality Matrix

System Name

Call Deposits

Short Term Loans

Repos

Spot

Forwards

Swaps

Equity

Fixed Coupon Bonds

Floating Rate Notes

T-Bills

Zero Coupons

Serial Bonds

Commercial Papers

Private Equity

Money Market Funds

Cross-currency Swaps

Equity and Bond Options

Financial Futures

FX Options

Interest Rate Options

Interest Rate Swaps

DERIVATIVES

INVESTMENTS

Company Name

Fixed Deposits

MONEY MARKET

FOREIGN EXCHANGE (FX)

INSTRUMENT COVERAGE

MORS Software

MORS Treasury Manager

Murex

MX.3

■

OpenLink

Findur

Path Solutions

iMAL

■

Reval

Salmon Software Limited

Salmon Treasurer

Stahr GmbH

STS - Stahr Treasury Software

■

SunGard

AvantGard Quantum and Integrity

TCS

Treasury solution of TCS BaNCS

THEMA Consulting

MasterFinance

Torstone Technology

Inferno for Treasury

■

TRASSET International SpA

TRASSET

■

TwoFour

Uni Systems S.A.

Global Treasury System

■

Visual Risk

■

Whitewater Analytics LLC

FX Exposure

zeb

zeb.control.risk

■

■ l

l ■

■

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Bills of Exchange Overdraft Facilities Links to main e-dealing systems CFP, CFF & CFM (1) Subsidary deal requests Pre and Post-Deal Compliance Central Treasury Dealing Confirmations

Settlements and Payments

l Bank Guarantees

l LC's

l Commercial Paper

l Bond Issuance

Term Loans

l l l l l l l l l l ■ l l ■ ■

l l l l l l l l l l l l l l l

l l l l l l l ■ ■ ■ l l ■

l l l l l l l l l l l l l

l l l l l l l l l l l l

l l l l l

l l l l l l l l

l l l l l l l l ■

l l l l l l l l l l l l l

■ l l ■ ■ l l l ■

■ ■ l l l l l l l l ■

l l l l l

l l l

■ ■ ■ ■ ■

l l l l l

l l l

l l l l

l l

■

www.bobsguide.com l

■ l

■ l l

■ Separation of Duties

l Financial Controls

l Liquidity Management

l Cash Visibility

l Deal Limit Monitoring and Enforcement

l Counterparty Exposure Testing

l Sensitivity Analysis

■ Hedge Effectiveness Testing

■ Mark-to-Market Valuations

l FX Exposure Management

l Interface with Market Data Vendors

l Interface with Enterprise GL

l SWIFT interface and banks for Payments and Confirmations

l Period End Accurals (2)

l Multi Currency/Accounting

l In-House Banking

l l l l l ■ l l l l l l l l l l l l

l l l l l l l l l l l l l l l

l l l l l l l l l l l l l l l l

l l l l l l l l l l ■ ■ ■ ■ l ■ l

l l l l l l l l l l l l l l l l l l

l l l l l l l l l l l l l l l l l l l

l l l l l l l ■ l l l l l l l l ■

l l l l l l l l l l l l l l l l l l

l l l l l l l ■ l l l l l l l

l l ■ l l l l l l l l l l l l

l ■ l l l ■ ■ ■ ■ l l l l

l l l l l l l ■ l l l l l l l

l l l l l l l l l l l l l

l l l l l

l l l ■ l l l l l l ■ l l l l

l l l l l l l

l l l l l ■

Payment Netting

l Yes

E-DEALING

KEY

TRADE FINANCE

FINANCING

Treasury Management Systems Guide 2014/15

■ Some

FUNCTIONAL COVERAGE

RISK MANAGEMENT

l l l l l

l l

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Treasury Management Systems Guide 2014/15

TMS Market Overview Words: Ben Poole With two vendors appearing to dominate the treasury management systems (TMS) market after a period of growth via acquisition, is there enough choice for corporates? What positives do the largest vendors offer corporates and what implications has this trend had for smaller vendors? From the outside looking in, it could be easy to see the TMS market as being dominated by two major players that have grown through acquisition - SunGard in the previous decade and more recently Ion Group's Wallstreet Systems. Despite this, it is important to differentiate the market into the high-end segment, the midrange and the lower end. Market concentration has largely affected the higher and mid-tier offerings. “At the higher end, systems include the Wallstreet Suite, SunGard Quantum and, for corporates using SAP as their

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ERP system, there is SAP Treasury,” says Carsten Jäkel, partner, finance & treasury management at KPMG. “You could also include vendors such as Murex, while Findur from OpenLink fits the bill from a financial risk management perspective. There are at least three major systems out there from three major vendors, which in this segment does create enough choice.” This choice expands at the mid tier segment, where there are the various systems under both Wallstreet and SunGard umbrellas, software-as-aservice (SaaS) players such as Kyriba

and Reval, and regional or local vendors around the globe. “The market is competitive,” says Justin Brimfield, chief marketing officer at Reval. “That said, more choice for the customer is always better as less investment inevitably leads to less innovation.“ High-end Strategy With a market that seems to be competitive, it is interesting to look at the strategy behind the scale of SunGard and Wallstreet. ”These two vendors in particular focus on their high end systems for large multinational

Treasury Management Systems Guide 2014/15

corporates, but these types of corporates change over time,“ explains KPMG's Jäker. ”They spin off divisions and create new joint ventures that need new systems. The vendors want to cover these clients throughout every possible situation and provide them with an adequate systems solution. This could be a smaller solution for a division that is to go it alone or, conversely, a client in the mid-tier that is about to merge with another large corporate and therefore requires a more complex solution. The point is that it could still be with the same vendor.“ ”The largest vendors will try and focus on the few core products that clients ask for,“ says Paul Bramwell, SVP of treasury solutions at SunGard. ”We spend our investment dollars on the areas where we have the most clients. This effectively becomes a self-perpetuating cycle - you spend more on a particular product and it delivers more revenue as it becomes more popular with clients.“ An Acquired Taste Certainly growth by acquisition is a contentious topic. While Wallstreet's owners Ion Trading declined an interview for this piece, bobsguide spoke to other industry players about this strategy. ”We acquired other TMS vendors along the way, but actually stopped that process around seven or eight years ago,“ says SunGard's Bramwell. ”The only acquisitions that we have made since then have been in the peripheral areas of functionality that would enhance the life of a treasurer - such as connectivity, hosting options and managed services, for example.“ According to Reval's Brimfield, his organisation's plan is not to grow by acquisition: ”We think that having too many products is not good for innovation and that it dilutes your investment. We have a core, single version, multi-tenant SaaS application that we have historically invested in with over 30% of our revenue. Our plan is to continue to concentrate our investment and grow with a one platform strategy.” There is understandable concern from corporates that happen to be running a TMS from a vendor that is acquired by a larger market player. “Usually if a smaller vendor is acquired by a larger one then the speed of innovation and

“ Usually if a smaller vendor is acquired by a larger one then the speed of innovation and the client centricity changes” the client centricity changes,” says KPMG's Jäker. “Treasurers that I speak to are particularly concerned when the system that is acquired is in the same price range and market place as an existing system owned by the vendor,” says Damien McMahon, partner at PricewaterhouseCoopers (PwC). “That will push some corporates to the smaller vendors. As long as that system has enough other big and credible clients, it is not going to disappear. Also, because they don't have as many clients, the smaller vendors can be more focused on client service.” This shift is certainly welcomed by those vendors in position to take advantage of it. “It is good for us when companies that used to be formidable competitors are acquired by one of the larger vendors, as they are effectively taken out of the market,” says Bob Stark, VP strategy at Kyriba. Addressing this issue, SunGard's Bramwell says that his company has never discontinued a product: “We still have quite a sizeable number of our clients using products that have been around for 10 to 20 years. We think this sets us apart from the other large vendor in the marketplace, in that they have acquired the products and then gone quiet. This creates a lot of uncertainty in the marketplace.” A Technological Level Playing Field While growth through acquisition over the past couple of decades has created two very large TMS vendors in the market, the speed of the development of technology during even the past three or four years has allowed smaller vendors there own opportunity to create scalable solutions. The ability to run a TMS entirely in the cloud is one example of this. “For vendors that are purely cloudbased, it makes it easy to divert resources to areas such as product

development,” says Kyriba's Stark. “The cost to run infrastructure if you are not pure cloud are incredibly high, which takes away from developing products.” The willingness of corporates to embrace such new developments in technology is also vital to the success of this trend. “Around four or five years ago, we talked to a client about hosted application service provider (ASP) versus installed, and they were really against the hosted option,” says PwC's McMahon. “Their IT department were particularly against it, arguing that it was their data and their system. I was at a meeting recently that was the exact opposite, where IT were saying that the more that can be done in the cloud, the better it is for them. A lot of other IT systems in organisations today are run that way, so if the TMS can be as well, it makes things easier. You don't need the same critical mass of investment.” SaaS TMS offerings also keep every connected corporate updated with the latest version of the software. As well as avoiding running old software that may no longer be supported by the vendor, this has additional benefits for treasurers. Whenever a large corporate requires new functionality from a SaaS system and pays for to make happen, this additional functionality goes into every other users' version of the system too. “By the nature of being SaaS, they'll build it for one of their bigger clients and then it is immediately available to everyone else,” says PwC's McMahon. Developments such as this mean that there are viable alternative options to the 'big two' vendors in the TMS space. The most important thing to consider from a corporate perspective when selecting a new TMS is what your internal requirements are from such a system, both today and in the future, and then measure up these requirements against the choice of offerings that exist in the market.

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Treasury Management Systems Guide 2014/15

Plugged in: TMS Connectivity Words: Ben Poole Treasury management systems (TMS) are sometimes viewed as all-encompassing, supporting absolutely everything that treasury does. In reality, this is rarely the case. It is important to understand the connected world in which a TMS sits.

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Treasury Management Systems Guide 2014/15

This issue of TMS connectivity has grown in relevance in parallel to the rise of treasury, both a concept and an entity, within many organisations. With enhanced visibility and profile within the organisation, treasury has acquired other responsibilities. Risk management is a good example of this. A lot of treasurers are interested in managing their risk better and are investigating hedging methods and new ways to manage their exposures. TMS will often have modules that handle some or all of that risk. Some companies will decide that the TMS they have is not strong enough on the risk side and will look at other specific risk systems that they can then link to their TMS. In theory this works, but integrating different systems brings challenges that treasurers need to be aware of. “How do you pull data in and out of each system?” says David Kelin, director, business consulting at ViewPoint Nine. “As it is likely the connecting systems are from two different vendors, who is responsible when things go wrong? What technical support is there? These are the questions that treasurers need to be thinking of.” System Connections The TMS is a mission critical system within treasury, central to the IT architecture of the entire department. With the TMS as the hub, a number of different systems covering a variety of disciplines can be plugged into the TMS if the treasury department requires additional support. Electronic banking Treasury needs to get bank statement information into the TMS and send out payments and other files to the banks. This is a necessary connectivity, and vendors and banks have been coming much closer in order to make that connection work. “If you look back 10-12 years ago, this wasn't really recognised and the banks would not always be as willing as they are now to send information into a TMS,” says ViewPoint Nine's Kelin. ”Today they accept that treasurers do need this information and that this information flow must be supported.” There is also the question as to which standard this information is sent in. Organisations such as SWIFT and ISO are trying to create standards that

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everyone agrees to, which will make the information flow easier. E-dealing/E-trading systems Vendors in the trading space have given corporate treasurers the ability to do deals online rather than phoning up the banks to do these deals. This has really taken off in the past five or six years. An e-trading or e-dealing system is another connection to the TMS that could potentially become another problem point. Confirmation matching systems Once the corporate has completed a trade, an FX deal for example, it has to confirm that to the bank. There are separate electronic systems for doing the confirming and matching online. These are not always the same as the TMS and therefore need to be linked together, creating another potential connection point. SWIFT As well as providing standards for payments and other file transfers, SWIFT also offers ways for corporates to connect to its network. “SWIFT are looking at ways to pull into a TMS information that the corporate wants, from a bank statement for example, or sending information such as payment files out,” says ViewPoint Nine's Kelin. There are different options for corporates to connect to SWIFT. One way is through a SWIFT Service Bureaux (SSB), which essentially outsources the connection management. SWIFT itself has recently brought out Alliance Lite2, which is a plug and play direct connection. “Lite2 is an interesting development that stems from asking how do you make it simple for corporate treasurers to do the work they need to do in terms of the transmission of files back and forth,” says Kelin. “SWIFT is producing standards but also selling services to allow clients to do that.” ERP systems ERP systems, such as those provided by SAP and Oracle, will often need areas such as the accounting function or payables ledger connecting to the TMS. Other possible connections Beyond the common connections that are seen in most TMS set-ups there are other options that corporates

Treasury Management Systems Guide 2014/15

may decide they need to add. These can include pure cash forecasting systems, netting systems and electronic bank account management (eBAM) systems. In addition, the way that technology is evolving has added to connection planning in the TMS space. For example, treasurers now need to understand how mobile payments fit in to the picture, and how cloud computing can potentially make connectivity simpler. The Legacy Issue The ideal scenario for implementing a TMS is to do so in a new treasury set-up, but realistically this is rarely the case. The question then becomes how treasury can manage the connections to the TMS from the legacy systems existing within the department. Approaches to this can vary depending on how long the treasury has been running with its previous configuration. “I've seen a case of a large company where they had over 20 different pieces of technology linking into their TMS,” says ViewPoint Nine's Kelin. “That was a result of history. They bought a TMS a long time ago when that was the

best that was available and have been linking other systems to the TMS since that time. Suddenly they have ended up with a very complicated architecture.” With legacy connections such as this, treasurers can be faced with questions such as what to do when some of their vendors merge or even disappear completely. This may prompt the company to take a fresh look at its architecture. “If a corporate reviews its treasury technology architecture, it will probably raise the question as to whether it needs to go out and buy a new TMS, or whether it is possible to consolidate some of the existing systems and how that can be achieved,” says ViewPoint Nine's Kelin. “The key issue here is that, as treasury depends so much on technology, you can't make a mistake.” Technology Supporting the Rise of the Treasurer The expanded role of the treasurer has only been able to take place through the support of new and agile treasury technology. But the result of that is that there is a huge dependence

on technology, which creates this problem. Treasurers are not usually IT experts. “What treasurers really want is just for the technology to work,” says ViewPoint Nine's Kelin. “Treasury is a specialised area - to support the technology that treasury relies on you either require a hefty investment on an internal technical treasury support system, or else this support can be outsourced to vendors.” With this support in place, treasurers are free to get on with their main role, efficiently managing the company's finances and adding value to the organisation. This is made much easier if the varieties of connections into and out of the TMS are seamless and, ideally, use just one shared database. “Corporates want to be able to put into the TMS all their risk management data, do all their cash flows within the TMS and see the output of these two activities, seamlessly, for example” says ViewPoint Nine's Kelin. “Provided that all of the relevant information is seamlessly flowing through the system, you can really witness what the power of a TMS.”