In an interview with Mark Lewis, Head of Product Management, Corporate Treasury at Bloomberg LP, we discussed the benefits of using spreadsheets, the role of treasury management system in different types of companies and whether or not customisation is necessary.
What is your role at Bloomberg?
I head up the strategic direction of the corporate treasury product that we provide and define the roadmap.
Does the size of a company define what type of TMS they implement?
There are different systems out there, but there isn’t one that can serve all corporations from a TMS perspective. Those at what I call “the top end of the market” operate more like a bank and could have a big treasury operation with up to 400 treasury staff for example. They tend to have multiple TMS systems and they have more of a “best of breed” approach because they are so specialised in each of their technical spaces within the corporate treasury; larger organisations need different systems for different functionalities as it is more technical. Also, bigger companies are more likely to be in the process of conducting a perpetual project which results in constant implementations and upgrades, all at the same time.
The next layer down has been addressed by the packaged corporate TMS systems market that you and I know very well. In the early 1980s, very simple packages were available but this has changed and those vendors have been trying to improve and make the systems more complicated in order to address the bigger ticket sales and in turn, make more revenue. However, 30 years ago implementation would only take five days, but it now could take from around 6 months to 2 years to even do an upgrade. We’re seeing this big shift in the way in which TMS systems have built themselves up over the last two or three decades and this has resulted in any change in the system becoming a very expensive habit. The next layer down, which I call the “middle market corporate treasury” cannot get on the stepladder because it would be hard for them to obtain a TMS, despite auditors asking for the adoption of one. Although, a three-man treasury team currently working on Excel and with multiple bank portals also have to deal with cash visibility and cash forecasting initiatives, but cannot do so because it’s just too expensive.
We have addressed this problem with a simplified solution which offers no customisation. Is Excel obsolete? No, but some outputs do need to be combined for ease of reporting for senior management and internal monitoring for anomalies. TMS has moved in a different direction but I’m seeing older trends return to this lower market space because of the search for simplicity.
What capabilities should a corporate TMS have?
Connectivity should be the first step; treasurers need to be able to connect with banks and the ERP or accounting system. After that has been achieved, cash visibility should be the next priority and then cash forecasting. Deriving forecasts from actual numbers rather than a random number from the subsidiaries is what clients are looking to do now so that it can be reviewed and analysed at a later date. However, if your categorisation of forecasts does not tie in with the way cash is delivered to you from the banking systems, it becomes very difficult to get that comparison with the actuals against it, except at a very high level.
Are there some benefits to using spreadsheets?
I don’t think you can cover everything with a TMS solution. TMSs have been trying to do it for the past 30 years and they still haven’t been able to replace Excel and I don’t think they ever will. You’ve got to be able to have these two programs working in parallel; the TMS will work with the core data ad report on what they need, audit, control and monitor to have all the right steps in place to provide security. But, Excel will have to be used in order to consolidate some of this information with other information that is available in house, but may need a link to the TMS. I don’t see Excel disappearing from a TMS ever, it’s complementary.
What do you predict a TMS system being able to do in the next 5 years?
For me, it’s about the user experience and the TMS systems as they are today, are still not user friendly. They are menu driven and display business applications in the way that the developers have designed, rather than for the end user.
These are the questions that need to be addressed:
* How does a corporate treasurer want to use a treasury management system?
* What information is absolutely critical for them?
* What functionalities should be front and centre?
If you build a TMS that is focused more on identifying things that need work or actions that need to be made, solutions to these problems need to be put in front of the treasurer. The system needs to react and prioritise what is important to you.
User experience is also beneficial because to learn a TMS today at a high end corporate can take up to three years, which is a high risk for a corporate treasurer. If you think about it in those terms, you employ people and once they’ve learnt the system, they hand in their resignation. You should buy a TMS that you know how to use instinctively or with very little training, that’s where the industry should be in 5 years’ time.
By Madhvi Mavadiya.