TMS’s have been around for 30 years. Adoption has increased from bank and excel based approach to utilization of at least automation of cash. There are still hold outs.Most organizations we deal with are looking for more from their TMS. Now that they have accommodated basic treasury reporting and accounting needs they are looking to add further efficiencies and additional functionality. STP gains are still available.There has been further consolidation in the industry. That is impacting choices you have.SaaS while only 5% of the market for delivery 10 years ago is now the benchmark form of delivery. If a firm doesn’t offer true SaaS capabilities they at least offer a hosted alternative to installed.The financial crises resulted in a slew of new regulations that treasuries will be adjusting to for the next several years. Treasuries we know did not wait around for legislation. They are driving consolidate risk reporting and real time visibility to exposures on a global basisThe executive dash board is not dead! Big Data is the current hot buzz word for a few years now. Integration of systems not previously considered are being looked at. Just think of forecasting incorporating data from supply-chain AP and other sources. The desire for global high level view of all exposures (call it business intelligence) became more important after the financial crises. How many of you were asked what your exposure to this bank or that bank were over the last 5 years. Did you have your firms entire exposure to them?
We performed a survey in June of this year. One of the questions we asked was what was technology’s impact on the role of the corporate treasurer. 69% of respondents felt technology does increase a treasurer’s capability for strategic impact, 17% thought technology helps enable analytics. We also got a lot of comments on this one!Some of our clients feel that technology allows treasurers to spend more time thinking and less doing, which is where they can become more strategic. At the same time, you can’t have strategy without tactics to put it in play, and people feel that’s where technology comes in.In the past you saw organizations make an investment, deploy it and then go stagnant for a few years until the contract renewed. There were a lot of reasons for this, many of which were due to the technology being supported in house. This is one of the benefits of SaaS that companies appreciate. Treasuries are now thinking along the line of and budgeting for more constant investment.
We all know how many things have to get done, and in a Treasury 3.0 environment, things are moving even faster.We need more timely access to information.The treasurer wants to see the quarterly cash forecast by 10:00 am and it takes you 2 hours to update it. The architecture needs to be more flexible tomorrow than it is todayWe need to automate manual processes like bank account administration so we can spend more time on strategically focused activitiesYou’re goal should be to end the practice of relying on manual paper-based processes for regional treasuries to request a new bank account. Aim to handle that process in a system.Oh, and do all of that while lowering costs
We are in the era of Big Data. You need to have lots of information available and a way to easily access it.As treasury’s scope of influence increases, your technology and data architecture must also increase.This shift requires that you be able to transform mounds of data into actionable intelligence to support the firm’s objectives.As a result, we’re seeing the demands for and demand on technology increasing at almost all of our clients.As this develops, you’ll be in a better position to expand your risk management responsibility, provide strategic advice to key decision makers, and enjoy the benefits of full automation and integration.
Once you have the right technology in place, you’ll be able to:Be more proactive about monitoring the environment and assessing the impact of market eventsIts important in a Treasury 3.0 environment to provide intelligence to decision makers. The right technology helps you do that very quickly when you have integrated data with internal information and external informationYou’ll be able to spend more time on strategic activities cue to increased efficiency
Big data! There’s an explosion in the amount of data available to our clients, but is it accessible for quick decision-making? The good news is that TMS solutions are helping their customers harness the power of enterprise data, recognizing the amount of information contained in the platform.You are looking for more business intelligence capabilities. There is a lot of data at your disposal, so how do you mine and refine it? The focus is to make big data relevant and accessible through business intelligence.Meanwhile, regulation will continue to drive change in the industry. Regulatory changes have always impacted the space and is one reason you use TMS systems. The current slew of changes are in play now and have a multi-year tail on their impact.
Now we will discuss several strategic opportunities. These are …I will go through each of these next
How do you gather all your global information, on an as needed basis and be able to analyze. All organizations both FI and Non FI are focused on this. It took major banks weeks to provide a comprehensive view and it was still less than 100%.The ability to analyze your exposures and portfolio in a holistic comprehensive way is something many organizations are looking to accomplish.Most organizations piecemeal their valuations together from disparate sources and systems.. . .
Hedge accounting may be very tactical but it forces a risk discipline that will benefit in other ways. Most companies have been doing valuation and effectiveness using 3rd party quotes and excel. Not quite back of envelope but also not holistic as described in prior slide.If you have been in this industry from FAS52 to 107 to the most recent you know that eventually full analysis and disclosure is coming in the not to distant future. Some companies are getting ready now.Even though some of our clients opt for short cut or critical terms match they are also performing full long-haul regression analysis. Their concept is they want to be ready when they are forced to migrate. It has highlighted in some cases optimizations they can take in their hedging programs and how they will need to evolve the programs if and when regulators or accountants deem change is needed.
Integration is something everyone does at some point. Treasury systems at their simplest are integrated with bank reporting system and provide accounting postings to the general ledger. 90% of TMS systems are configured and accommodate these integration points.Even now in 2013 there are still higher levels of integration to be had and these are quite strategic. They are required to fulfill the promise of Big Data and business intelligence.Integrating internal items like supply chain information or AP with existing forecasting sources to improve forecasting or just global exposureYou would think with bank’s providing interface capabiliteies for so long there wouldn’t be much benefit here.Bank systems have always been integrated with TMS’s. The development over the last few years of SWIFT and better connection methods the reality of a true global position on a daily basis is a reality. Most companies have taken the 80/20 approach due to costs and effort constraints. “It didn’t make sense to log into all those banks and download their daily statements”. Now 100% visibility is possible and many of our clients have achieved that.On the bank side there are also bank fee analysis and FBAR statement reporting capabilities, while somewhat tactical they add true value in cost and time savings. And we can’t forget eBAM. As we mentioned before this is evolving but most organizations are eagerly preparing for it’s maturing.Finally trade execution and reconciliation processing. Many companies still execute trades via phone, others are fully automated on trading platforms and some are somewhere in between. TMS systems have evolved and are making the trade execution and confirmation process more seemless. One of the earliest and most obvios to look at automating is FX execution for both hedges and nuisance payments.If you thought there were no additional efficiency gains to be had there is a chance there are some. These are not just efficiency gains but also improved interfacing are keys to better control, risk management and treasuries evolution to becoming the financial nerve center of your organization.
Revisit – regulation changes organization changes.Where do you want to go? Define or re-examine your treasury objectivesWhere does your company need to go? Align treasury technology with organizational initiativesHow will you get there? Assess functional and technical requirementStructureResponsibilitiesStaffingHow fast will you get there? Plan future-state technology architectureWhat should be your initial focus?Prioritize
You’ve got all these demands that have to me met and an idea of what you want. Where do you go from there?The first thing we recommend to our clients is to establish a technology roadmap.You need to define or re-examine your objectives and align your technology initiatives with those of the firm.Then you can assess your functional and technical requirements and plan your future-state architecture.Finally, you have to prioritize. Many people find themselves with a laundry list of objectives and the hardest part for them is prioritizing them. If you’ve done a good job of aligning your treasury technology initiatives with the firm’s this should be easier.
More reasons to use a tms final v2
Jeff Diorio Bob Stark
Principal Vice President, Strategy
More Reasons to Use