Treasury Management System Adoption

White Labelling our Treasury Management Suite

Sujith Nair — Fri, 25 Jun 2010 20:33:18 GMT

Over the last few months our product team has received multiple requests on whether we can white label our product suite for a bank or another financial institution. i.e. can we make the treasury sciences suite of products available to say, the customers of a bank via the banks portal. This post describes how a bank or a financial institution can go about white labeling our products and how it will work providing potential benefits for the bank and the bank's customers.

I am making an assumption upfront that you are the bank and that you have had conversations with us, have seen our product demonstrations, believe that our Cash Management Operations module (for the purposes of this post) will be beneficial to your customers and have decided to white label one or more of our modules- say our Cash Management Ops module.

Working backwards from the end result, the integrated white labelled solution will work as shown in the picture below.

Your bank's customer's account manager would be able to login into your banks backend administration portal and make the TS CMO product available to the respective customer - the integration that is needed will be accomplished by our product team working with the technical folks at the bank. The TS CMO system can be setup such that all relevant customer accounts are automatically loaded into it from internal bank system - again an integration point that can be accomplished at the backend. In addition to this, the third integration point at the backend between TS CMO and bank internal systems will ensure that prior and current day reporting files are automatically loaded into the TS CMO instance for the customer.

Now let us discuss some of the other key questions or features that potential customers of the bank would expect out of a Treasury Management System.

Multi Bank Connectivity

So the bank's customer is now ready to use the bank branded TS CMO product for their cash management purposes using the accounts at the bank fairly quickly . What if the customer has additional accounts at other banks that would contribute their cash position? The customer has 2 choices, they could manually upload any bank reporting files from any number of banks into their CMO instance with minimal end user setup OR setup automated connectivity between their other banks and TS CMO. Our product support team could do the integration or the bank's internal IT staff could do that.

Training

A key element here with regards to bank customer on-boarding is training the customers users. Each feature and functionality provided by our products is available as short videos that are available to users 24x7, so users can view the demonstrative videos and perform their daily tasks. Our product support team could always train the bank's support staff as well as needed. Most importantly, all our products are intuitive and easy to understand and use, there by reducing the training needs considerably.

Product Features

All treasury management features that are supported by the product module chosen will be available to the customers of the bank. A detailed look at all our product modules and the features and functionality supported can be viewed here. For this post I have chosen CMO as the product module being white labelled but do note that all our product modules can be white labelled.

Integration with a customer's internal systems

Configurability and Integration are a core strengths of our product- be it integrating into one or more GL systems to enable straight through processing or multiple systems that can forecast transactions; our product suite enables XML based standard integration features out of the box. What this means to the bank's customer is that they can use the integration features provided out of the box to integrate with any internal system they have by simply transforming the output file provided or input files required by the treasury sciences suite. Our product suite could always help them with these needs as well.

We believe that by white labeling our CMO module, a bank or financial institution can provide enterprise treasury management functionality to their customers in a seamless, cost effective way. Do let me know should you have any questions.

Bank Treasury Workstation, Treasury Workstation, White Labelled TMS

Why should an organization migrate from Manual Positioning using Excel Spreadsheets to a Treasury Management System (or Treasury Workstation) ?

Sujith Nair — Fri, 15 Jan 2010 08:08:21 GMT

The reason for the post is a question from a potential customer of ours. After spending an hour or so on our Cash Management Operations Module, a cash manager of a large retail chain told us that they were intrigued by it, believed that the features provided by our product will be very useful to them and wanted like to try the product out. Then he had a question.

"How do I justify the cost of a Treasury Management System? I can hire an analyst and use a spreadsheet to continue daily positioning, it has worked for us so far".

I will make an attempt at looking at the possible benefits in the rest of this post. Hard cost benefits of using an enterprise TMS typically include 3 types of cost benefits (reduction in cost).

Detection of Errors: Detection of errors in forecasted data or in early detection and cancellation of inaccurate electronic payments can result in operational cost savings. Detection of errors in banking data can result in accurate positions.

Reduced reporting costs via consolidation: Reports are run enterprise wide. Ensuring that all data from banks and other internal and external systems are consolidated and reported via an easy to use interface results in efficient reporting and reduces reporting costs considerably. Typically financial institutions charge customers for each generation of a report. As an example, a customer of ours with 8 subsidiaries is currently saving over 15,000 USD a month by not paying the bank for each report run- the data is extracted from the bank once and stored in our TMS, the data (up-to 7 years of historical data) is reported to over 150 users via our reporting tool.

Accurate and timely positions resulting in accurate investible cash sooner: The actual dollar benefits derived varies from one organization to another- the more complex an organization is, the larger the risk of inaccuracy and the better the chances of improvements in accuracy via the use of a system. In typical large implementations, we see improved position accuracy in tens of thousands of dollars almost daily; we also see improvement in predicting tens of millions of dollars of investible cash on a pretty regular basis.

The primary benefit in utilizing an enterprise TMS vs. manual process for cash positioning is the improvement in accuracy and the timeliness of cash positions day after day provided by automated forecasting, bank connectivity, reconciliation and positioning capabilities of an enterprise TMS.

There is more to a Treasury Management System but unfortunately not all of it is visible upfront, when you are making a choice. Let us look at some of the se benefits in a bit more detail.

Accuracy & Timeliness: Reduced manual intervention and increased automation results in more accurate forecasts and positions. Typical spreadsheet errors such as typos, formula errors etc are eliminated. Additionally, automation ensures that data that needs to be collected for forecasting and positioning is collected at the earliest available time - this typically results in automated, systematic positions being available sooner than manual positions. Accuracy results in better-informed investment decisions and timeliness ensures that your investments can be made at the earliest, ensuring that the best available investment options are available to you.

Scalability & Manageability: As the positioning process becomes more and more complicated, say by the introduction of new subsidiaries in multiple countries; it becomes more and more difficult to position cash on an enterprise basis using a manual process/spreadsheets. Organizations that stick to manual positions in such scenarios typically have 2 choices –(1) position each country/subsidiary/currency separately thereby losing visibility of enterprise cash or (2) try enterprise positioning with an excel spreadsheet typically resulting in inaccurate positions.

Consistency & Reliability: Systematic processes eliminate issues with consistency, not matter how complex or simple the cash positioning needs are resulting in reliable, consistent cash positions day after day. Typically, this eliminates the need to double-check each calculation. More importantly, it has been a regular experience for us to find errors reported by banks. If positions were created manually, typically there is limited ability to double check data reported by the banks. Enterprise TMS's typically calculate the CAB, OAB along with floats and compare it to the numbers provided by the banks ensuring that any discrepancy can be identified. Again, the more the number of banks and accounts the more likely an organization will find errors.

Security: An enterprise TMS typically encrypts all confidential data and the use of roles in a system ensures that users with the appropriate privileges see the data. The level of security and access restrictions provided by an enterprise TMS is way better than what can be achieved via an Excel document.

Multi-user Access: Enterprise web based TMS like the Treasury Sciences Suite of Treasury Management products provide unlimited access to multiple users of the treasury and across the enterprise. For example, delegating forecast input and management directly to the departments that are responsible for the forecast can ensure accountability and accuracy of forecasts. Additionally, you can have subsidiaries create their own positions in multiple currencies while having the ability to view consolidated enterprise free cash in a currency of your choosing. An excel system is typically useful for one user.

Compliance & Audit-Ability: Manual approvals and audit are not efficient ways to ensure the enforcement of organization policies and controls. Use of a TMS considerably reduces chances of fraud by tracking and reporting on each action by all users of the system and provides you the ability to enforce organization policies and processes across the enterprise. A system audit is typically much faster than a manual process audit as well.

Who wrote the macros in that spreadsheet?: This is something we have seen in multiple instances - a spreadsheet is created and updated over a long period of time. The person who wrote the macros is no longer with the organization and typically the organization is stuck with it. Even if the author is around, it does not take much for a spreadsheet to get very complex- well, it was never meant to be a treasury management system.

Focus on more important things: There are typically more important things that a cash analyst or a treasury manager can do instead of downloading bank files manually or printing out multiple reports from multiple banks and entering the data into a spreadsheet. An enterprise Treasury Management System makes your life much simpler and lets you focus on how best to manage your cash.

All of the benefits mentioned above have a cost and a cost saving associated with it. What it is depends on your organization, the scale of your operations and your situation. Also note that the improvements in cash positions, cost savings and improved investments via the use of a Treasury Management System are typically not easily predicted upfront as there is an element of unknown-unknown's (manual positioning and related processes over a period of time in an organization typically result in hiding the possibilities of better forecasting and positioning) here.

The only way to find the true benefits for the organization is by trying out an enterprise TMS for a reasonable period of time and by comparing it to an organization's manual process. This has become a very long post. Thanks for reading and do let me know your thoughts at sujith@treasurysciences.com.

Barriers to Treasury Management System Adoption - Training Needs & Usability

Sujith Nair — Fri, 28 Aug 2009 09:19:28 GMT

A significant challenge to TMS adoption is enterprise wide rollout and the ability to train and get users upto speed with the new TMS, especially when additional features such as say, EFT capability is adopted along with basic treasury workstation functionality. i.e. if the system is required to support subsidiary origination of payments (decentralized origination, centralized approval), the user base could be scattered across multiple locations and thus classical training becomes a hassle. This is especially true for large enterprises that have multiple subsidiaries in multiple countries. In their case, even basic TMS functionality such as cash positioning could present a training nightmare.

Let us take an example of an organization with say 5 subsidiaries that represent 5 regions across the globe. Even if they are considering basic TMS functionality, there are still users to train across multiple continents. Classical training methods to solve this problem are often costly. i.e. you need to fly out a crew to each location and train users on the product. This in itself can be a considerable added cost to the product.

Additionally, there is the problem of availability of help when it is needed most. i.e when users start using the product after training. Upfront training, no matter how much time was invested in it; will not help answer some of these questions. Support time from the vendor and associated cost kicks in. Even then, there is no guarantee that adequate help will be available to the user to create that cash position before say, 8 AM. The only solution then is to sign up for 24x7 support, which of course will be the costliest support option provided by the vendor.

Then there is the issue of product user interface design. Some products are simply very complicated to use- this is typically true with products that are put together by vendor by purchasing multiple product modules from multiple vendors. Note that this a typical case with many treasury workstation products out there. With these products, end users typically end up having more issues and more questions resulting in reduced productivity and added cost. It may not seem to be much upfront, but over years of use these costs and inefficiencies add up.

However, there are other products that are easier to use and are more intuitive because they were specifically designed to be so. So usability should be a consideration while evaluating multiple products during vendor selection. The key here is evaluation of the product, however if the product was chosen by a paper based RFP process together with one or two demonstrations, chances are that the organization does not know how usable the product is, they will only find out when it is too late.

We utilize extensive usability analysis, design of intuitive interfaces and product videos that are available 24x7 to users of the product to help address the issues listed above. I will cover our approach in much detail in a later post.

Lack of Treasury Workstation Adoption ...

Sujith Nair — Thu, 13 Aug 2009 00:23:48 GMT

Even after a few decades in existence, Treasury Workstations and the more comprehensive Treasury Management Systems (TMS) have still not been widely adopted by corporations and government organizations. On the other hand, many adopted solutions have required organizations to commit significant costs and lengthy deployment cycles on solutions that may not meet some of their significant treasury operational needs. Although vendors have recently introduced new versions of products that attempt to overcome some of barriers to adoption; there continues to be a relatively low adoption of TMS, Note the excerpt below from the Annual AFP Benchmarking Survey conducted last year.

50% of organizations do not use a system! It is important to remember that this is in-spite of many studies and recommendations and proven examples of benefits of utilizing a robust Treasury Management System. What is further more interesting is that even after these many years, there is no Treasury Management System vendor that has achieved a near decent market share.

The above chart reflects that even the most well known vendor (Sungard) has only a market share of 6%. Manual processes and spreadsheets retain almost 50% of the market share among products that are used to manage cash and the only other double digit market share solution is the multitude of treasury functionality offered by banks via their business banking portals.

Spreadsheets provide no historical data storage, very limited to no audit capability and are most prone to user error. Honestly, it is downright embarrassing that established vendors in the Treasury Management System space have not yet been able to provide a viable alternative to potential customers. In the next few posts, we will look at possible reasons as to why it is difficult for customers to cost effectively adopt a TMS and present potential alternatives that may help increase the likelihood of their adopting a product that meets their needs.

Top Reasons for a Free Trial of a Treasury Management System

Sujith Nair — Sat, 06 Jun 2009 08:25:58 GMT

I have been explaining why a trial of a Treasury Management System is better than let us say- any other approach to adoption. To summarize it, I find no better way than to do a top 6 list.

See if it fits your Treasury's operational Needs. The elementary test to pass here is the first one and trying it out helps you know first hand- not from demos or product manuals or help manuals or the perfect sales pitch.
Does your team or potential users like to use this product? This is key and here is why. If your forecasting process is cumbersome and painful, chances are that no will use it, and as a cash manager you have limited visibility. The system should evoke responses such as "That was easy" and "Does not take much time to do that" and not "Well, do I have to do this every day? and "Can't the system create forecasts as soon as I originate a payment?""
Only true test of the configurability of the system. Ask to make a change, specify exactly what you need and see what the response is, and surely your Treasury Management System vendor has to provide you a very specific answer. Pointing you to a well written document or presentation that explains integration capabilities will no longer work.
Evaluate support team responses if you have questions during the trial period. You will know what to expect.
Easy and fast Adoption. If your key team members are using the product already to evaluate it, they are much more likely to start using the product on day 1 of adoption. In other words, your team does not have to read a "How to Manual" or attend a series of training sessions. Better still, you will not have to pay for those training sessions either.
Evaluate actual (not Expected) benefits of the system by comparing the new product to the old solution or process. This is critical as you would see the advantages of using the new solution first hand. And if there are disadvantages, you will know those upfront as well.

A Trial of Treasury Management Systems upfront could lead to the choice of a product that presents the least possible risk to your organization.

To top it off trials are free. Yes, it takes some of your time but it would be well worth it in the long run. BTW, if it takes too much time to get started with the trial, it may be time to move on to the next product on your list.

Excel Spreadsheet to a Treasury Workstation - A Simplified, Prioritized Approach

Sujith Nair — Sat, 28 Mar 2009 19:09:46 GMT

The talk about switching from Excel Spreadsheets to Treasury Workstations is now at least 6 years old. The switch has been listed as a best practice for Cash management by multiple experts but still, in any meeting or a conference if you ask for a show of hands for companies that use Excel Spreadsheets for cash Positioning, you are likely to see a few. Typically the percentage is at least 20 and if your audience is largely mid market companies, then chances are that the percentage of companies that use Microsoft Excel Spreadsheets for cash positioning is much higher.

There are multiple reasons why a mid market company would stay with Excel Spreadsheets even when they realize that the best practice to manage cash and forecasts is via the use of a Treasury Workstation. The first and most important factor is the time and cost investment required to get a classical workstation up and running. Higher cost leads to the obvious problem of return on investment, that being the next deterrent in the adoption of a Treasury Workstation. We have discussed the issue of time invested and return on investment before in the blogs. What could be the other reasons?

The answer could lie in over complicated Treasury Workstations and how organizations adopt them. Consider any Treasury Workstation that is available in the market today and you will realize that almost all of them promise better Cash Forecasting, Straight Through Processing, Integration with multiple banks and multiple formats and extensive reporting features. They are all correct, good Treasury Workstations help provide all of the above benefits and more. The real question to ask here is whether your organization needs all of the above on Day 1, agreed these benefits would be good to have but then again do you need to realize all of these benefits on the day you adopt a new Treasury Workstation? How about a simplified,prioritized approach instead of the typical all or none Treasury Workstation implementations? Let us look at some of the benefits we discussed above and see how it applies to mid-market organizations and adoption of Treasury Workstations. Note that some of the thoughts on prioritization could well apply to larger organizations as well.

The ability to get banks to push transactions automatically to your Treasury Workstation is a very useful feature. But most organizations that have been using Excel Spreadsheets for cash positioning would be downloading transactions from their banks. It takes anywhere from 2-10 minutes to download multiple files from a bank system. As a first step you don't really need automated communications with banks to download your reporting files. This is especially true if you have fewer banking relationships, which again is true for many organizations. As the need arises for multiple updates through out the day and if you decide to have multiple banking relationships, you can decide to add this feature. By not automating the download of files upfront, note that you have eliminated one of the most time consuming activity in adopting a treasury workstation- working with IT Teams at a bank(s) and setting up the communication.

If the Treasury Workstation your organization is adopting provides Ad Hoc reporting capabilities, chances are that you can create a report that can be imported directly into your GL System. Yes, it is a manual step but then again you have eliminated a major integration task upfront. You can add this feature as you go along, when this feature becomes your highest priority. Similarly, you can provide a web-based interface to multiple users/departments to enter your incoming and outgoing forecasts. Yes, Integration with payment system would have been better, but integrations take time. Integration with a payment system or a bank for echo-back transmissions could be prioritized for a later date.

Now, say that your organization adopted a simplified approach to adoption and adopted a web-based Treasury Workstation. What are the benefits your organization will have on day 1? You have the ability to forecast cash, upload bank transaction files and reconcile transactions with forecasts and create your daily, weekly and monthly Cash Positions. Based on the rules supported by your Treasury Workstation, you may even have Automated Reconciliations. You would also have a multi-user system and with centralized Ad Hoc reporting, the ability for multiple users to create, save and export data from your system. You also have centralized storage of data, unlimited transactions over an unlimited period of time that you could use at a later date to create your Long Term Forecasts based on historical trends. Yes, you have better controls and improved audit-able data (each action by each user user is stored) as well. Since you eliminated most of the time consuming activities upfront, chances are that your Treasury Workstation would cost a fraction of the cost of an employee. Are these not benefits enough?

Now consider this, if your organization is willing to take the above mentioned approach, your externally hosted, web-based Treasury Workstation could be up and running in less than a week.

Issues with the Treasury Workstation RFP Process

Sujith Nair — Sat, 21 Mar 2009 00:22:28 GMT

There are countless articles and multiple presentations that talk about Treasury Workstation RFP's. Articles range from how important selecting a Treasury Workstation is to how to go about making that selection- invariably pointing out that the best way to do that is via the RFP process. I am sure that you are well aware of it by now; if you are not, do a search on google and you can find out for yourself.

Here is how it works in short. You decide to finally retire the old Treasury Workstation or Excel based system that your organization has been using for countless years. The next step is of course to see what is out there while fixing or defining your internal controls and processes better. Now is time for the request for proposal or the RFP. Some one in your treasury organization or in some cases an external consultant is hired to write a detailed and extensive RFP. From responding to multiple RFP's over the last couple years, I can tell you that these are often very very detailed. They are so detailed typically that they cover almost every topic and every need in the space- a recent RFP that we responded to specified a need for Cash Positioning, Bank Polling, Reconciliation, Debt Management, Investments and Electronic Funds Transfer to name some.

It typically takes an organization between 3 months to 8 months to create the RFP. Add another 3-4 months for the first round of responses, another 3-4 months to evaluate the responses and eventually select a product. That is well over a year in just the selection process. It is important to note that after that year of extensive selection, users in the Treasury would have seen the chosen product maybe once or twice during one of the product demonstrations. When implementation starts, it is typically a "Big Bang" approach and all modules are implemented across the board. Even if the implementation is done module by module, it still takes the better part of a couple of years to get the implementation completed and for users to start using the solution, or more likely beginning vendor product trainning courses to learn how to use their new solution.

It has been a few years since the organization decided that it needed a new Treasury Workstation or Cash Management Solution. In a year, a lot can change- new technologies, new rules and regulations, newer standards, new business scenarios- almost everything can change. We recently talked to a prospect of ours who had spend 3 years on implementing a solution. Unfortunately, at the end of it they did not like the product they adopted- it did not meet their needs.

It may be the case that RFP should stand for "Roadblocks For Progress" instead of "Request for Proposal"!

Now let us ask the all important question- After spending a few years in getting a comprehensive solution in place would the organization have the courage, the time, the money or management approval to check out another solution that seems to work better; just in case there are problems with the newly adopted solution? Sorry, but chances are that they are stuck with it.

An alternate and more agile approach would be to request Trial Versions of products that are needed. If the Treasury Workstation solutions out there are truly web-based, easily deployable and configurable to your treasury processes, they should be able to provide you a free trial within a week of your request. Do your cash positioning in parallel on the trial system for the first 1-2 months that you would otherwise spend on creating the RFP. Yes, do request for a feature list, identify what is supported or not and request for demos. Most importantly clearly identify your processes and needs- your current and future needs. However, do not do the extensive multi year RFP process. Get vendors to fill up a check list, ask them to demo the product to you and request that you need to try out the system for 1-2 months. You will not only have a system at the end of 2-3 months, you would also have a system that your users are comfortable using - you hit the ground running. Note that an RFP cannot tell you how adaptable and configurable the product is- A Free Trial of the product lets you do that first hand. Repeat the process for the modules you want to adopt based on your priorities and you will have a treasury solution that meets current and future needs, adoption will be easy and you will have the ability to change- especially if you choose a modular product that is easy to integrate.

So the next time you consider issuing an RFP, think about requesting a Free Trial from your vendor. It may just end up saving you a lot of time and money and you will get a system that meets your continuously changing needs.

Treasury Workstation Implementation and Return on Investment

Sujith Nair — Mon, 23 Feb 2009 07:46:53 GMT

Last week I had the opportunity to travel to Cleveland, OH and speak at the monthly meeting of NEOTMA. I presented a case study on how the University of California adopted a new SaaS Treasury Management Solution. It was a wonderful experience and I had the opportunity to meet with and speak to some great people. Towards the end of the presentation someone from the audience asked a question and that is what this post is based on. The question (not verbatim, but the basic premise is intact) was

"It is good that the new solution helps increase investments and reduces costs, but what about Return on Investment? When will a treasury adopting a treasury management solution achieve enough ROI to cover the costs of implementing the solution itself?"

I thought that this was a very good question and very relevant considering the current economic situation. The answer lies in the Pricing Model of the Treasury Workstation or Cash Management Solution.

Classical Treasury Workstation implementations would require very high startup costs. This would include multiple things such as licensee fees for software, consulting fees for multiple consultants from the workstation provider, a team of people working on connectivity to banks and of course your internal IT team working with the technology team from the workstation provider installing the new system at multiple locations. A process improvement consultant is of course an additional cost. What all of this translates into is a a multi million dollar investment upfront (not to mention the several months to implement), before you even start using the product. Now, say that all goes well and your improved processes and system helps you invest more cash or save on banking costs. It typically takes you a while, in the order of years to recover your upfront investment.

From a cost and ROI perspective, the solution, as I mentioned above is in the Pricing Model. And this is one of the areas the new wave of hosted, SaaS (Software as a Service) Treasury Workstations are different. They eliminate or considerably reduce upfront costs and allow for month to month contracts that let you pay for what you use. Our solution for example, does not require much upfront investment at all. Yes, there will be costs associated with internal process improvements and we highly encourage you to do that. Factors that add to a workstation implementation cost such as license fees, internal IT team costs and installation costs are completely eliminated. Bank communications cost is considerably reduced because of our reliance on new technology and global standards. We no longer have to create and test software that sends and receives information (payments, acknowledgements, reporting etc) as we already have done that with most major banks. Even if we have to, our software is configurable enough to accommodate these additions easily via configuration and not via new development. In most cases, we are able to get a customer up and running in the order of a few weeks to months with very less upfront cost. They pay on a month to month basis and are not required to sign a long term contract. As you may have noted, newer technology and standards helped create this pricing structure.

Implementing a new cash management solution should result in more invested cash and better processes. Eliminating most of the upfront costs ensure that an organization implementing the solution spends less upfront and does not have to go through an extended period of time trying to recover the cost. Immediate ROI.