Making the Right TMS Decision - Part 3: The Selection Process
The second article in this series addressed the need to identify very clearly your needs for a treasury management system (TMS), explained the opportunity for stepping back and reviewing all of your treasury processes and examined the optimum fit with other treasury and related technology within the company. Having built a secure foundation for the project, this article moves on to study the process of identifying a short list of those systems most relevant to your company and the various stages of selecting the correct solution.
Establishing the timeframe within which the whole selection and implementation is required to take place must be realistically estimated at the outset. A project plan for the selection process should be constructed and a broad-brush indication agreed internally as to when the implementation of the chosen system should be completed. The implementation project plan should be considered in more detail towards the end of the selection process and ultimately will be finalised with the chosen supplier.
You will now be in a position to draw up a long list of potential suppliers. Keep the list as short as possible although ensuring no opportunities are missed, so probably no more than 10. Identifying the relevant companies in the market can be difficult and the following sources of information can be employed:
The long list can then be reduced by comparing their offerings with your company’s functional requirements and IT standards by examining their web-based information and/or by sending out a request for information (RFI). This should provide a summary of your anticipated requirements and, as a minimum, ask for information on:
The first short list achieved through an initial sifting of the suppliers should number no more than five or six. They should be contacted for an initial discussion followed by a high-level demonstration of their product. In order for this demonstration to be meaningful, you will need to provide them with an overview of the company’s treasury system requirements and specific information relating to the most important of those requirements. The length of those demonstrations will vary depending upon the size and complexity of the treasury operation but typically each would take between half a day and a day.
To help you in the decision process, a score sheet should be drawn up that reflects the elements of your decision criteria. For the initial demonstrations, the matrix would need to be at a relatively high level and should seek to expose the important deal-breaker issues. Make sure, in advance, of the terms of reference you are using in the score sheet so as to be confident of the short-listing process. You do not want to find that after seeing the demonstrations from your short-listed suppliers you cannot make a decision and have to go back through the process all over again. This would be enormously time consuming and costly to yourselves and would not impress the potential suppliers.
The demonstrations should be managed closely by the project manager in order to ensure a fair and thorough process. All of the suppliers should have equal time and facilities; you should also decide if the demonstrations are to be at the premises of the buyer or the supplier. The agenda should be set by the project manager and agreed before the sessions begin.
The previous article, Making the Right TMS Decision – Part 2: Identifying the Need, stressed the need to obtain financial commitment from senior management for the project. Having run through the first short-listed supplier demonstrations you should be building a pretty good estimate of the final cost of the TMS project and this is a good time to return to senior management to reaffirm commitment both to the project and the estimated cost. Bear in mind that the final cost will embrace:
The request for proposal document (RFP) should be drawn up from the original requirements definition. It provides the suppliers with the necessary detail of the needs of the company for them to describe a complete solution fit and costing. The structure of the company and the structure of treasury within the company should be addressed, as should all of the technical and functional requirements. Questions within the RFP should be framed to ensure that any gaps are identified and can be addressed. The size and scope of this document will vary dependant upon the complexity of your treasury operation. The project manager should carefully manage the manner and timing of the responses of the suppliers.
The presentation and content of the first round of demonstrations will be discussed by the project team and if a scoring system was employed the results should be compared. The aim is to achieve a final short list of two and certainly no more than three suppliers who will be invited to provide workshops in which the systems will be explored in more detail specific to the needs of the company. These suppliers should be sent copies of the RFP for their completion and return as part of the final selection process.
The final demonstrations should be arranged in an interactive workshop format and should be based around a sample of your own specific treasury requirements. The suppliers should be provided with some test data to reflect the type of transactions you will be processing through the selected system.
In order to select a ‘preferred’ supplier you may decide to employ a more detailed score sheet for the final demonstration and workshop exercise including all of the functionality and highlighting certain aspects, such as appropriateness, ease of use, attitude of supplier’s staff, help facilities and supplier’s interest, etc. It is useful to incorporate weightings within the score matrix and these should be agreed before the workshop process begins.
The usefulness of this matrix will become apparent when you begin to analyse the large amount of information that the suppliers will send to you and that you will accrue throughout the workshops. It is all too easy to underestimate the length of time required for you to assess and compare the respective offerings.
It is also possible for the suppliers to organise a hands-on workshop environment, where a number of your own treasury staff can spend a day learning to use the system and processing some of your own transactions, thus building confidence in the system, the supplier’s approach and their professional ability to help you achieve a successful implementation. This is more likely to be agreed if the supplier has been given ‘preferred’ status.
The task of making the right choice should, by now, be a good deal easier if you have conscientiously moved through the selection process. The analysis via the score sheets, coupled with the demonstration and workshop activities, should present one of the suppliers as the most suitable to meet your treasury requirements and for you to work with. The implementation is often a long process and will need a sustained effort by both the supplier and purchaser’s teams; so it is imperative that they feel comfortable with each other at this early stage. References are very useful in confirming your impressions and to understand other companies’ experiences with the supplier when they had problems to overcome. Naturally, the acquisition of a treasury system will have been made with the longer term in view and so the future viability of the chosen supplier is important, but this should have been determined in the initial stages of the selection process.
Once your preferred supplier has been selected, then you can begin work on the implementation project plan while the final price and contractual negotiations take place. These often take longer than you will have anticipated so it is important that the project manager is strong enough to exert influence on his commercial and legal departments, so as to keep up the momentum and drive towards meeting the goal of achieving the live running date.
Companies frequently employ specialist independent consultants to assist during the selection process and this maybe for the complete needs identification to final selection or simply for specific parts of the project. They will have a methodology for taking companies through the procurement process and this can be invaluable in assessing the timeframe. They will also have access to information about suitable suppliers and the knowledge gained from working with them on previous projects.
The selection process outlined above is described on a high level to be relevant to all organisations that are seeking to review the use of technology within their own treasury environment. The process will need to be adapted to particular circumstances and needs and to fit within corporate procurement guidelines, although the fundamental principles and project stages should always be followed.
The next article in this series will address those issues relating to the implementation of the selected TMS.