Today’s Corporate Treasuries Looking for a New Breed of Solution
By the end of this year, more than 50 million Americans will be doing their personal banking online, striving to consolidate and automate finances using software packages that are integrated with banks, brokers and creditors. The treasuries of the world’s leading multi-national corporations are following suit, gravitating towards true treasury workstations – single-systems that are accessed through an internet browser, integrated with internal systems, and that accommodate all asset classes within the treasury organization.
The gravitation of corporate treasuries toward single, multifunctional, web-based systems can be easily explained – a system that is truly integrated, scalable and remotely accessible makes processes more efficient throughout the treasury organization.
A global, web-based treasury workstation allows end users to input data directly into the system for real-time access for all individuals with proper security clearance, eliminating the need for the complicated, risky worldwide trading of spreadsheets over e-mail. A single, global database ensures that the same data is viewed in real-time by all individuals within the treasury department, regardless of location. The data is initially input only once, dramatically reducing operational risk and, given the fact that the entire transaction is completely audited within a single data base container, any dual key input or redundancies have been eliminated.
A user in Southeast Asia can access his own user-configurable home page, enter foreign currency exposures directly into the application, and make that information instantly available to a currency manager in North America who can seamlessly hedge that position while dealing on-line with multiple banks. Upon deal execution, the contract can be electronically confirmed by another individual in the back office posting the entire hedge relationship general ledger entries online for an account to review. Throughout the transaction, internal transaction auditing within the application ensures Sarbanes-Oxley compliance.
The new breed of treasury workstation offers users a single point of entry into the tools necessary for transacting daily workflow, eliminating the need to navigate multiple systems or multiple areas within the same system. A trader can view his calendar to see what needs to be rolled on a particular day. He can easily run his cash flow forecast or settlement report and be alerted automatically when inter-company loans need to be reset. Likewise, a CFO can log into his homepage and access high-level, graphically represented position reports. Each user accesses only what he wants and needs.
The demand for these “one-stop shopping” solutions has prompted vendor response in the form of frenzied efforts to enable existing systems for the web. These rapid development efforts can lead to problems with new systems, most notably fallible web-enablement, falsely touted system integration, and a lack of global functionality.
Just to say that a system is web-enabled is not necessarily enough. Many leading treasury software providers have simply taken existing desktop products and deployed them through software emulation programmes to make them accessible through the web. This solution can leave a corporation with clumsy interfaces, latency and performance problems, and the need to download add-on components for the system. Add to that issue the complexity of security when delivering a full-scale global programme, and proprietary solutions delivered over the web just don’t measure up. A conscientiously developed, quality workstation provides all of the time-tested functionality of its desktop counterpart with an original web-based platform that was built from the ground up. This type of solution offers the functionality of a mature product with cutting-edge technology that can only be included in a brand new offering.
Corporations must also be wary of today’s vendors that are marketing a seemingly integrated solution that is in fact a hodgepodge of separate applications that are packaged together. A truly integrated system runs on one platform and uses one global database for all treasury functions.
The introduction of the application service provider (ASP) concept about five years ago was met with enthusiasm by corporate treasurers. However, considering concerns about security, the ASP concept materialized more as a corporate IT long-term strategy than as actual implementation. The main objections for implementing an ASP solution revolved primarily around two types of information security: sensitive information being transferred across the internet and proprietary corporate data being housed outside of the organization. The first hurdle has been virtually eliminated be the emergence of internet commerce as a commodity. The second, the releasing of proprietary databases outside of the organization, is still an obstacle.
However, now that ASP providers have formalized and commoditized their offerings, many corporations are finding this type of solution beneficial for a variety of reasons, most predominant are reduced IT support costs, greater security and disaster recovery procedures, and timelier support from software organizations that have better access to the product.