It's relatively easy for treasury departments to manage a few bank accounts, but once a company has multiple banking relationships in multiple currencies with multiple risk factors spread around the globe, the job becomes quite a bit more complicated. That's why, more and more, organizations are implementing treasury management systems to help rein in the variety of complex treasury functions.
But technology alone is never a silver bullet, warn analysts. What's more, good implementation can be as important as the technology itself -- and is not without challenges.
However, the good news is that with proper planning, well-led organizations can surpass the challenges that stand in the way of a successful implementation.
Why are treasury management systems important?
Treasury focuses on the biggest asset of a company: cash, said Steve Wong, director of Treasury Dynamics Inc., a treasury operations consulting firm based in Burlingame, Calif. "The need for a treasury system really comes from the fact that you have great complexity in functionality and an increasingly important role to play within the organization."
Treasuries are able to automate core treasury operations like cash management, foreign exchange risk management, currency positioning and compliance with specialty applications such as SunGard, Reval, Wall Street Systems, Kyriba or with modules offered by their current enterprise resource planning systems like SAP or Oracle.
"The goal of this [treasury management system] is to have the ability to see the whole financial picture of a company in one place, but also to have a robust analytical capability," said Jeff Diorio, principal at Treasury Strategies Inc., a Chicago-based consulting firm. "You have a large amount of data that needs an interface that allows you to understand it easily and to dig into it to get answers."
When a treasury department decides it can no longer successfully function by piecing together a complex array of spreadsheets and has done the hard work of choosing the right treasury management system vendor, then the critical task of a successful implementation can begin.
It's all about time and money
Time and money underlie all successful technology implementations. "Everyone wants to come in on time and on budget," Diorio said. "It's the Holy Grail of project management."
And in treasury management system implementations, the maxim "time is money" is especially apt. But there are a host of factors that can gum up the works.
First is lack of focus and resources. Most treasury departments aren't able to dedicate a full-time team to the project and more often than not, "you're asking treasury employees to double up," Wong said. And "there are only so many hours in a day."
A treasury management system implementation for a large global company can involve several departments across the organization with input from third-party vendors. Often it includes multiple foreign banks and a vendor that is likely juggling many projects at the same time. All of these factors can create a bottleneck, Wong said.
Another cause of delay is miscommunication between the company and the vendor. In some cases, the scope of the project might not be clearly defined. Or, even if it is, "a client might have a light-bulb moment and say, 'We should do this and we should do that,'" Wong said. "Potentially, this is a huge problem."
What's more, longer implementations have a tendency to lose momentum. "At the start, everyone is excited, but after a period of time they start to get worn down," Diorio said.
In other cases, Wong said, the budget and time schedule are simply too tight, and people begin to compromise in order to stay within the project confines.
Diorio recommends going after some quick wins up front. "Get a couple of quick hits everyone can be excited about and keep momentum up," he said, "Then later when you get into the heavy slog, people can appreciate that there is a light at the end of the tunnel."
Face challenges with planning and foresight
So how does a treasury department address the multiple challenges they face heading into a successful system implementation?
Whether an acute need is driving the implementation or a proactive move to become a better-equipped treasury, "you must have a plan," said Bob Stark, vice president of strategy at the San Diego-based Kyriba Corp., a Software as a Service treasury management system provider. "You blueprint it out: Here's what the objectives are, here's what we do already and need to automate to do more efficiently, and here are the things we need to do better and differently."
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"Organizations need to truly evaluate the future state of what they're trying to attain and do a really good job of describing it from a business process and a goals perspective," Diorio said. This becomes the "acid test" for every design and implementation decision the organization makes throughout the entire project.
There will be surprises, warns Diorio, and flexibility is a must. Compromises will have to be made, but if a treasury continually tests against the end goal, it ensures that the decisions being made along the way are all helping achieve that goal.
Another important warning from Diorio: "If the process isn't right to begin with, don't automate it. Fix the process first, then automate it."
Build a strong project management team
After careful planning, the next step is to adequately staff the implementation team, including project managers on the client side, the IT side and one from the vendor side who oversees the whole project, said Wong.
But this isn't always easy, warns David O'Brien, a treasury consultant at EE Treasury. Like most corporate departments, treasury is short staffed and implementation is going to chew up about 20 hours a week, O'Brien said.
What's more, treasuries don't typically have to do system implementations and heavy-duty project management, added Diorio. "You need to make sure you know which resources are supposed to be working on which tasks. And make sure you have realistic expectations and plan accordingly," he said. "Being sure not to overtax resources is key." He also recommended that treasuries leverage their IT departments and make sure they have good third-party support.
Despite assistance from IT departments, vendor representatives and consultants, "turn-key delivery" won't work for a successful treasury management system implementation, Diorio said. "Treasury staff needs to be invested in the design and implementation of your system and how it's supposed to be used from day to day." Otherwise the technology will never be used to its full potential.
Finally, O'Brien said it is essential to define success factors. "Up front you establish objectives. But at the end of implementation, your success factors should answer the question: Did I meet my objectives?" Oftentimes, organizations work very hard to put a technology in place and begin using it without determining whether or not it's truly working, he said.
After all, "Technology alone doesn't fix garbage," O'Brien said. "It doesn't resolve all of your issues. Your issues are resolved by you and your staff."
This was first published in September 2013