Phil Pettinato, bobsguide Contributing Blogger.
Finance professionals in multinational corporations are working with a variety of different software applications, including ERP systems, bank portals, market data tools, trading platforms, risk applications and treasury systems. Working with all of these programs, companies often find themselves manually keying the same data more than once. This is not only burdensome and inefficient, but it is also a source of error.
But there is software that integrates treasury and risk management processes end-to-end, helping you to improve operational efficiency and eliminate manual intervention. As you do your research, you will run into solutions that have different delivery models. Basically, treasury systems can be installed on premise or accessed through the cloud. As straight-through processing and integration with your existing IT infrastructure are important to you, consider how differently installed systems and cloud platforms handle connectivity.
Why Installed Software Is More Difficult to Integrate and Maintain
With an installed treasury system, your IT department will provide the hardware, coordinate the technical side of the implementation and be responsible for ongoing system performance and security. The treasury system´s data base will be inside your company´s data centre.
The application is running on your company´s servers, so your IT team can access and mine the data base any time and connect your treasury system through APIs (Application Programing Interfaces) with the other solutions used in treasury.
Working directly in the data base is not only highly complicated, but also not state-of-the-art because:
- Manual intervention inherits the risk of human error
- Data manipulation is a potential source for fraud
- Performance might be impacted and slow down the application
Aside from security risks and performance issues, programing interfaces is no one-off effort. Interfaces need regular checks and updates to ensure smooth data exchange. Meaning, you are heavily dependent on internal IT resources to set up and maintain the interfaces between the treasury system and the other applications used in treasury.
Treasury requests tend to be treated with low priority by IT departments, so delays in setting up and maintaining the treasury IT infrastructure will cost you significantly, because again, you will require manual data manipulation and process workarounds.
Why cloud platforms are easier to connect and update
With cloud technology, no investment in hardware is needed as the cloud provider takes care of running and maintaining the application. Users only need an internet connection to the system, for anytime, anywhere access. The software provider also manages interfaces to third party systems to enhance treasury workflows and provide real-time connectivity to complementary software solutions.
From a technological perspective, the data base and data model are optimised for scalability and performance. Instead of working directly in the data base, web services are used to integrate the cloud treasury platform with other systems. As cloud platforms rely on web services, all issues related to accessing the data base are not applicable. Interfaces are configured by the cloud provider, who works directly in the application to make the process of connecting systems much easier.
Software-as-a-Service, or SaaS, cloud platforms really show their power when it comes to maintenance:
- Upgrades of the application and all interfaces are handled by the provider – There is no need for the treasury or IT team to update or help updating the cloud platform. The responsibility is completely with the service provider.
- Upgrades happen over the weekend – A company’s day-to-day business operations are not disturbed as the cloud provider releases its latest version outside of corporate work hours. If the provider has a regular upgrade schedule, it´s a routine process.
- Updates happen for all clients at the same time – SaaS cloud platforms are multitenant, so there is one version of the platform used by all clients. Only one update has to be done to deliver new functionality to all clients. This is not only efficient for the SaaS provider – keeping development resources focused on a single application - but it also ensures new features are available to the global client community on day one. This is especially important as companies face new and changing regulations.
- Updates are covered in the subscription – Cloud providers offer cost-effective subscription models. Companies pay a fee only for the functionality they use. This fee covers running and maintaining the application and all interfaces.
Overall, cloud treasury platforms keep treasuries more connected, offering a wide range of benefits that provide tangible returns on the investment.
By Phil Pettinato, CTO, Reval.