Treasury Management Systems: A Vendor’s Perspective
All of those who work in corporate treasury regularly
hear reports on the state of the treasury management systems (TMS) industry,
from their treasury-focused experts, consultants, and peers. Exposure to the
evaluation and selection process, along with several implementations per year,
have granted these individuals and groups the clout to write about and inform
others on what is happening in this space.
are often quoted, interviewed, or consolidated into industry research. As they
are the ones who have recently moved from spreadsheets to a workstation – or
from an old system to a new one – their non-TMS peers are eager to learn of
their experiences. A group commonly overlooked but able to grant insight into
the TMS space is one that is part of every evaluation and selection process and
who respond to every RFP, attend every product demonstration and play a key
role in each TMS implementation. They are the TMS vendors.
goes without saying that a TMS vendor must have some level of bias when
discussing their own industry. Each will have their own strengths and
weaknesses, so will want to accentuate the former and avoid addressing the
latter. What many do not realize, however, is that even the smallest TMS vendor
will be granted exposure to 20 to 40 treasury operations in a given year with
the larger ones seeing several hundred. Just through osmosis alone the vendors
are able to glean some facts and trends that prevail in this industry, so
without bias the following are a few observations from a vendor’s
The TMS Industry is Growing
Without doubt the TMS business has grown over the past decade. Ten to 15
years ago there were only a handful of TMS solutions available and only the
largest or most financially well-off companies were afforded the luxury of
installing one. These systems tended to be big and clunky and presented as many
‘issues’ as they did solutions.
Today, with the growth in
competition and the maturity of the systems in general, more and more
organisations can explore the TMS space for solutions that fit their unique
needs. Much publicity has arisen as a result of the recent acquisitions within
the vendor space, but there are more entrants into this industry each year than
there are assimilations or exits. The net effect of this is more choice for a
wider range of potential buys. Any trip through the exhibit hall of your local
or regional tradeshow will highlight the growing number of vendor booths set up
and available to offer treasury practitioners solutions to their problems.
Acquisitions and mergers have been and will always be part of the TMS vendor
space, but historically and inevitably this opens the door for competition to
target an underserved market and offer something unique. The result of this
trend is greater variety and a better selection to serve organisational needs
and those of the treasury department.
and Demand Better Tools
One of the main factors affecting
the growth in TMS solutions are the practitioners themselves. Any treasury
professional who has used a TMS can testify to the efficiencies they can bring.
Even in cases where their system was antiquated or the implementation was less
than perfect the treasury professionals were still able to see the value that a
TMS can bring.
As a practitioner if you spend your life cutting
down trees and your existing tool is an axe, the purchase of a chainsaw seems
like a simple decision if you’ve seen or heard of its greater efficiency. Even
if the chainsaw no longer works, needs oiling or parts are faulty, doesn’t
alter the fact that a chainsaw is a better tool than an axe. This is where our
industry sits today – today’s TMS systems are a major advance from both
spreadsheets and the early prototypes. The practitioners who have either used
them or seen their potential refuse to go back and help their colleagues swing
axes when they move from one treasury department to another. As treasury
professionals transfer from one organisation to another they bring with them
their knowledge of current market tools and help educate their new companies
about what TMS systems are out there and available to them.
Companies are Buying Better
of a TMS starts no later than at the buying stage and in most cases, even
before that. If you are in the market for a new vehicle it’s important to
decide whether you want a truck, car, or a van before going on the weekend to
go test driving. Organisations looking for a TMS are learning that not all of
them are created equal, and as noted earlier some have weaknesses where others
have strengths. Couple this with the fact that no two treasury shops are equal
and you realise that certain products or providers are innately a better fit
for certain operations. Because of this you need to know what you are going to
buy before you set out shopping.
The purchasing process has
improved significantly over the years. Experienced buyers, industry
consultants and peer communities have helped non-TMS organisations establish
their true needs and help steer them in the appropriate direction. This helps
educate the new buyer to focus in on what they should be in the market for and
how to go about purchasing it. Once the focus and budget are determined the
next step is usually the request for proposal (RFP) – aka request for
information (RFI), request for survey (RFS) or TMS product demonstration.
By in large, the industry has really improved upon this process. In
the past RFPs and demo scripts were vague in nature and did little to help
guide purchasers to their appropriate vehicle. From a vendor’s perspective the
generic nature of these requirements made it harder to differentiate their
offerings as often true requirements were omitted. Today’s demo scripts and
RFPs tend to be much more focused on organisational-based requirements. This
means that potential TMS purchasers will know by the end of this stage whether
they are looking for the equivalent of a car, a van, or a truck. Again, from a
vendor’s perspective, many of us have begun to blur the lines of the respective
offerings by augmenting our systems to handle more breadth, but as a purchaser
of any future system it is important to distinguish internally between what is
vital and what is merely ‘nice to have’.
This is an area which
future purchasers of TMS systems could improve on. It is fine to have a stack
ranking of requirements, but if every requirement has equal ranking, or given
equal weight, then the process becomes moot. Each industry and each company
within it is different. Your needs are precisely that, so don’t assume you need
what your neighbour needs or your industry peer needs, and don’t be ashamed to
voice these needs early and often.
As vendors, we want to solve
our corporate clients’ problems, but they need to clarify to us what is
important. A good idea to ensure stack rankings will work for you is to
determine ahead of time – assuming a 1-5 stack ranking – how many of your
criteria should sit in any one of your predetermined numbered buckets. For
example you could divide up your issues as follows: 15% as critical, 30% very
important, 25% important, 20% ‘nice to haves’ and the other 10% as wish lists.
Then you make your internal list of requirements, and before ever seeing a
vendor solution you force your own requirement list into your predetermined
buckets. This will help to clarify with your internal team the true objectives
of the project.
There are more TMSs purchased every year and the
trend shows these numbers continue to increase annually. This will only mean
that the vendors will have to continue to adapt, invent and adjust, as those
who fail to do so will die. For practitioners this is encouraging, as this
means from your perspective you can demand more from your ‘chainsaws’. As
vendors perspective we want you to keep using our chainsaw, although we have
the vision of replacing it with a clear-cutter.