Selecting and Implementing Treasury Technology. From the Corporate Perspective

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1 Selecting and Implementing Treasury Technology From the Corporate Perspective August 2012

2 Overview The case for treasury technology has never been stronger. The financial crisis and recession have changed our global economy. The outlook for corporate treasury has evolved as a result. Now, it is even more imperative that treasury respond quickly and strategically to both internal and external stakeholders. However, successfully selecting and implementing a treasury technology system remains a challenge for many corporates. Understanding the factors that determine success will enable corporate treasuries to realize many benefits from these important tools as departments move toward Treasury 3.0. This third generation of treasury has already started to transform the scope and influence of treasury departments which are becoming the financial nerve center of the organization. During the second quarter of 2012, Treasury Strategies reached out to 150 corporate treasury professionals from around the world. These executives helped us better understand the key success factors of treasury technology selection and implementation. We found that risk perspectives have altered. Treasury technology is now an essential. Corporates demand and in some cases, are required to have current, global financial information with sophisticated analytics and intuitive reporting. More corporates are considering bank connectivity for treasury technology projects, in keeping with the variety of solution offerings from Treasury Management System (TMS) and other technology vendors. Good TMS tools and streamlined bank connectivity are no longer optional. Technology Selection Vendor selection can be time-consuming and confusing. It can be difficult to find meaningful points of vendor differentiation. It is also difficult to assess how the system will work in the corporate s environment. Treasury Strategies found three key areas of success in the selection process: strong project leadership, a comprehensive process, and detailed vendor demonstrations. Firms that combined external consultants with internal treasury resources to lead their selection project report the highest overall satisfaction. 70% of companies that reported less than satisfactory results did not use outside resources. Most organizations include a business case, Request for Proposal, vendor demonstrations and calls to references among the steps in a system selection project. Companies that used custom vendor demonstration scripts in their selection process report a higher satisfaction with both selection and implementation. Experienced outside consultants use their knowledge of company-specific requirements to design vendor demonstrations that showcase the most relevant product capabilities. Tailored vendor demonstrations are the most crucial part of a treasury system selection.

3 Technology Implementation Implementing a treasury management system is a major undertaking, with the inevitable budget constraints, overburdened staff and tight timelines. Strong project management is the key driver of success. Companies that used an external project manager are markedly more satisfied with their implementations than those that used a treasury staff member or other internal resource to manage the project. 56% of respondents who only used treasury resources were disappointed with their implementation results. Delayed timelines are the most frequent source of implementation dissatisfaction. Overburdened vendor resources and lack of access to internal resources were cited frequently in low satisfaction rankings for implementation. Scarcity of internal resources and access to stakeholders during implementation occurred in almost half of the implementations surveyed. Good project management is critical for a good implementation. Implementations can be complicated and lengthy; resources from several areas are usually involved, and missed deadlines can be painful. All these issues underscore the need for a project manager who really knows treasury implementations, who can identify and solve problems as they arise, marshal internal resources, oversee the vendor relationship and keep the project on track. Treasury Technology Trends The treasury technology landscape is active with change; there are several trends to be aware of. Companies that have a TMS are glad they do. 66% of respondents use a TMS and report that they are satisfied, very satisfied, or extremely satisfied with their system s functionality. Firms that expect to buy new or additional technology are most interested in Software-as-a- Service to reduce dependency on IT support. This trend may reflect the frustration with internal resource scarcity noted by many implementers. Cash management (cash reconciliation, cash position, forecasting) and treasury accounting are the most in-demand functions from a new TMS. Bank account administration is now on the shopping list for almost 55% of respondents. Use of financial risk management tools is on the rise. Of respondents who have treasury technology, 60% use a TMS, while 12% use the Treasury modules of their ERP system (SAP, Oracle, PeopleSoft, etc.). The top secondary treasury platform functionality is for FX trading. 36% of companies use this type of platform. 44% of respondents expect to select/implement some new technology in the next 18 months. These plans include replacements for outgrown or old systems, plus specialized functionality that bolts onto a current system.

4 Methodology The study was conducted via online questionnaire and in-depth phone interviews during the second quarter Approximately 150 treasury professionals participated in the survey. They represent corporate, non-profit, and government entities from North America, Europe and Asia. Respondents by Region 14% 3% 1% 6% 76% Conclusion The economic and regulatory environment have altered risk perspectives and catapulted treasury to the forefront. Treasury technology is now an essential business tool rather than an optional commodity. Corporates demand and in some cases, are required to have current, global financial information with sophisticated analytics and intuitive reporting. Difficulties that plague software selection and implementation can be circumvented, which starts by not taking the do-it-yourself approach. Technology selection requires strong project leadership, a comprehensive process, and detailed vendor demonstrations. Implementation demands an experienced project manager who knows both treasury and technology implementations. Strong project managers help resolve problems, marshal internal resources, oversee the vendor relationship and keep the project on track. North America Continental Europe United Kingdom Asia Middle East/Africa Respondents by Revenue Size 17% 25% About Treasury Strategies, Inc. Treasury Strategies, Inc. is the leading Treasury consulting firm working with corporations and financial services providers. Our experience and thought leadership in treasury management, working capital management, liquidity, and payments, combined with our comprehensive view of the market, rewards you with a unique perspective, unparalleled insights and actionable solutions. Visit for more information. 11% 32% 15% For further details, please contact Laurie McCulley, head of our Treasury Technology practice; laurie_mcculley@treasurystrategies.com. Over $10 billion $5-$10 billion $1-$5 billion $500 million-$1 billion $0-$500 million 4

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