bob’s guide to treasury management systems: How to ensure your TMS is a perfect fit (part 1)

By Leonie Mercedes | 15 June 2017

So you’ve decided that it’s time to invest in a new treasury management system. What now?

Investing a great deal of money into new technology, and implementing the system in a process that could take up to 18 months is a daunting prospect, made worse by the fact that it’s likely no one within the business would have undertaken such a project before.

Choosing a system that aligns with the needs of the business while streamlining everyday processes is just the first step of this journey. But how do you ensure you choose the right one?

Over the last few months, we’ve been speaking to experts in treasury technology about how to get the TMS selection and implementation process right, and making the process as manageable and efficient as possible. We’ve boiled down what we learnt about the process into the following four steps:

1. Assemble your team
2. Settle on the system requirements
3. Meet with the vendors, and test the systems
4. Make your selection, and put it into place

In the next two weeks, we’ll cover each of these steps in greater detail. In the first part of a two-part series about TMS selection, we’ll look at who treasury teams should involve in the process, and how to determine exactly what the business needs, so you don’t end up investing in technology you don’t need, or end up with a system that is woefully inadequate to current, or future, needs.

1. ASSEMBLE YOUR TEAM

Each step in the TMS procurement process should prepare the treasury function for implementation, the most important stage. Although it’s a step that comes much later in this process, in order to get it right, treasury teams must ensure they have the right people on board from the outset.

Who should be involved?

“Treasury is becoming an integral and critical point in any organisation, therefore the effort to design the future scenarios must be a team effort,” says Enrico Camerinelli, a senior analyst from Aite Group.

According to Richard Warren, a senior manager from Brickendon, many different areas of the business need to be consulted at the beginning of the TMS process. These include:

Treasury department, and its related investment teams, such as foreign exchange and money markets, both front office and back office. “Consulting with the risk managers will provide an understanding into the day-to-day activities, workflow management, current limitations and any particularly problematic areas that need to be addressed,” he adds, such as complex spreadsheet processes that currently fall outside the ability of the existing system.

CFO, CEO and company strategy team, so that you can understand the future direction of the company and possible new areas of research, says Warren. “This will enable the firm to plan for scalability in the event of growth and/or acquisitions, whilst ensuring transparent and comprehensive reporting.”

IT development and implementation teams, to understand the required level of integration, the feasibility of timelines, and to determine the current skill level of employees that will need to support the implementation, Warren adds.

IT security and audit/compliance teams, Warren continues, should also be involved to analyse the authentication and the fraud prevention capabilities, and put a value on the level of risk and possible reputational damage. This final point is a serious consideration for emerging fintechs, he adds.

Each of these teams should also be involved during the implementation process, but in varying amounts, Warren says. “A delegate from each team should be involved in all the stakeholder meetings to provide transparency to their wider teams for each element of research,” he adds.

“It is essential that all parts of the business, including the IT and change departments, are involved to ensure the company’s infrastructure and employees can support the new system,” Warren adds.

Ken Lillie of consulting firm Lillie Associates recommends including key personnel from treasury, accounts, and IT, but warns against making the team too big to manage. Nominating a project manager for the treasury and project management experience, as well as getting backing from stakeholders, is also recommended, he says.

2. SETTLE ON THE SYSTEM REQUIREMENTS

After assembling the project team, it’s possible to create a list of functions that are required from the treasury management software. This list should reflect the needs of each of these teams, and will help the team determine what is most important, so the business doesn’t invest in functions it does not need.

In 2014, research by software provider Bottomline Technologies and treasury consulting firm Strategic Treasurer found that just 28% of businesses investing in treasury management software use 80 to 100% of the modules they purchased, and nearly half use less than 60% of the modules they acquired.

This was due to a variety of factors, including not just buying modules that weren’t needed, but also misunderstanding the functionality, lacking the resources to implement the services in a timely manner, or failure to train staff on how to use the module. If staff don’t know how to use the system, they’ll fall back on old ways of working, rendering the new system useless.

How do I work out what features I need from the software?

“One of the common pitfalls when selecting a new system is to think either too big or too small,” Warren continues. “This results in either the adoption of expensive systems, which as well as being confusing a difficult for users, leaves much of functionality redundant, or an inadequate system that isn’t scalable.”

He says that it crucial to have full knowledge of the current day-to-day functions employed by the treasury team in order to understand the business requirements of a TMS.

Camerinelli recommends mapping the organisation’s ‘as-is’ processes, and defining the desired or expected configuration of the system. “The organisation should operate by scenarios, selecting a technology solution that can accommodate multiple possible outcomes,” he says.

The arrow goes the other way, too. As well as understanding the treasury function’s processes back to front, it’s important to understand what the TMS can offer, Warren says. “The understanding of what a TMS can offer is a great starting point for analysing the synergies between the business’s current processes and system architecture.”

He advises running a series of team workshops to determine the TMS requirements, ensuring that all key members of the business are consulted and listened to. “It is also important to involve the CEO and CFO to ensure any decision is in line with the direction the company is moving,” he adds.

Lillie continues: “Take a step back and review all of your current treasury processes and how technology is currently employed.” If budget allows, hire an experienced treasury consultant who can take an objective view of the existing environment, he adds.

Lillie also recommends building a Requirements Definition document, detailing everything the business will want from a new TMS, distinguishing essentials from nice-to-haves.

Join us for part two next Thursday, when we’ll cover meeting with the TMS vendors, testing the systems, and implementing the new software.

Missed the last three articles in the series? Catch up here:

bob's guide to treasury management systems: About to invest in a new system? Read this first

bob’s guide to treasury management systems: How financial professionals can prepare for GDPR

bob’s guide to treasury management systems: How to tell if it’s time to invest in a TMS