Treasurers Still Waiting for TMS Promised Land

By Geri Westphal | 13 August 2015

There have been endless surveys and presentations that highlight the current state of treasury management systems, or TMS. This includes all sorts of demographics on what systems are used by individual companies, by size of company, complexity of global footprint and just about any other way you could think to slice and dice the data. But, there is very little attention given to the satisfaction level of users and the fundamental issue of TMS solutions not fully meeting the needs of their users.

Over the course of several NeuGroup Network peer group meetings, members have voiced concern and frustration over the perpetual “over sell/under deliver” mentality of TMS providers. In some cases, organisations have had to completely abandon their TMS projects well into their implementation timelines because functionality didn’t work the way it was presented in the early decision-making process. In several cases, entire projects have been scrapped.

To help bring light to this issue and to meet the needs of our clients, The NeuGroup has launched a cross-peer group initiative to create a benchmark for world-class treasury management systems. The initiative’s goal is to define world-class principles associated with the management and integration of a TMS with other systems, and the reporting capability of the data held within these systems. In the context of this initiative, “world-class” is defined not as a one-size-fits-all solution, but as a solution that best fits the needs of each company.

Based on recent statistics provided in the 2015 AFP/gtnews Treasury Management System Survey, half of the 400 respondents reported using a TMS, with the greatest single benefit identified as process efficiency. An additional 8 percent of respondents have taken the time and effort to build their own TMS system, presumably due to cost or lack of needed functionality. Of those responses, 54 percent reported using an installed third-party system, while 33 percent utilise a software-as-a-service (SaaS) offering. Only 13 percent use a treasury module within their organisation’s ERP system.

Since there will never be a one-size-fits-all solution, it is important for treasury professionals to categorise the priority of needs and select a TMS solution based on both current and anticipated treasury processes, systems connectivity, reporting and analytical demands, and the overall technology support framework.

As an aftereffect of the 2008 economic crisis and in conjunction with the continued push to standardise and centralise operations, having global visibility and centralised control over cash is paramount. Reflecting back on the series of events that occurred in 2008 when the world witnessed once-strong financial institutions suddenly teetering on the brink of collapse – or even worse, closing their doors – treasury organisations learned the hard way that they needed that better visibility and control. The result was an increase in the popularity of TMS solutions, and US multinationals quickly began to implement robust solutions.

In the wake of the crisis, the economic demands of the organisations strongly encouraged, or even mandated, implementation of the treasury module of the company’s ERP system as a way to quickly shore up their treasury systems. This linkage continues today, with IT departments urging treasuries to accept the ERP treasury module and implement it worldwide. What treasury professionals have found, however, is that there continues to be significant gaps in functionality when comparing these solutions to other major TMS products. And treasury departments often end up defending against pressure from other internal organisations in their quest for a more robust solution.

Another major challenge with finding the perfect TMS solution is that every organisation has different requirements based on the size and complexity of their global footprint. The world-class project will seek to define sample functionality matrices for prototype companies including cash-rich and levered companies at a variety of market-cap levels. With the endless possibilities of functionality requirements, compiling a sample set of TMS functionality matrices will prove to be very valuable. 

In the 2015 AFP/gtnews Treasury Management System Survey, 41 percent of respondents said that modifying reports and changing workflows via their organisation’s TMS is difficult. Although some of the challenge is associated with the complexity of the specific workflow or reporting requirement, many feel this area of functionality needs further attention by TMS providers. Most agree that TMS reporting lacks the flexibility and functionality required by a global multinational organisation.

An additional challenge for today’s TMS user is cash forecasting. In recent discussions among members of The NeuGroup’s Global Cash and Banking Group, cash forecasting was identified as a continuing constant struggle for many and is often not accomplished in an automated fashion. Manual intervention and Excel spreadsheets are too often the tools of choice for today’s treasury professional. Automation and linkage to other corporate systems like AP, AR and payroll sounds good in theory and seems pretty straightforward, but the reality is that it isn’t working the way many TMS users had hoped.

Historically, gaining IT support for a TMS implementation has been difficult since it stands alongside all other corporate-wide projects in the approval process and oftentimes ends up getting bumped to a lower priority since it is not viewed as a strategic project with corporate-wide impact. Thus, the surge in SaaS TMS providers that allows the implementation of a treasury solution without significant involvement from an organisation’s internal IT department. Treasurers view the SaaS solution as a way to solve the ever-present IT bandwidth issue and are happy to move forward with these turn-key solutions. Maintaining security, internal controls and governance are some of the primary concerns of an SaaS solution, but based on member feedback, there have been no significant roadblocks for those implementing SaaS.

As the advancement of our digital world continues at a record pace, it is important for today’s treasury professional to understand the TMS solution options available to them, while at the same time it is equally as important for TMS service providers to be ahead of the curve in understanding the functional needs of their clients. A joint partnership is critical to the success of any TMS project. 

By Geri Westphal, Senior Director, The NeuGroup

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