Treasury transformation: part two — strategic planning

As the complexity of treasury operations continues to increase, organisations need to change in order to keep pace. Treasury transformation requires embracing change, moving faster, and responding faster to deliver better experiences for your customers. It means continuously striving towards greater efficiency.

Any transformation initiative can be broken into three distinct phases:

• Phase I — documentation, benchmarking, and assessment
• Phase II — building strategic and implementation plans
• Phase III — implementation, rollout, and management

This article covers some key topics to think about during the planning process, which is the second stage in treasury transformation. At this point, you’ve completed the first phase of documentation, benchmarking and assessment and you’re ready to start building a strategic implementation plan.

Think strategically

Once you’ve gotten the prerequisites out of the way, you can move on to the planning process. Some of this is fluid, as while you were identifying areas for improvement you no doubt came up with ideas for how these things could potentially be improved.

Your plan should include resources, technology, processes and policies. It should take into account regulatory needs and security needs. Once you have the big goals in place, you’ll drill down to the incremental goals.

Planning process checklist

To build a strategic plan, start by answering the basic questions: what, why, who, where, how, when, and how much.

• What — What changes are you planning to make? What processes will be affected?
• Why — If you aren’t 100 percent clear on why you are implementing changes, you won’t be able to plan effectively.
• Who — Who will be impacted by the changes? Who needs to sign off on them, who needs to buy into them? Who will be responsible for ensuring each piece of the plan is executed on time and within budget? Define the roles of each group to determine when to engage with them.
• Where — Where will the changes take place? This extends beyond the physical location — this could include departments, such as changes that will be made to treasury staff or processes.
• How — How will you make these changes?
• When — When will you start and when will you be complete? Will the project be broken down into phases? This is the timeline-building phase of your plan.
• How Much — How much will your plan cost? This should be broken out by each segment that requires budget allocation, for as much clarity as possible.

The role of technology providers

For any treasury transformation effort, technology plays a key role. Your technology provider should partner with you to create an implementation plan that meets your criteria and goals. As they are experts, they can advise on how long each step in the process may take.

Start by looking at your strategic goals. If you want to achieve global cash visibility, what will that take? There will be technology involved, but also people. Who will be the project manager, what people or processes are critical to success, and who will be responsible for each task? What should those tasks even be? How long will it realistically take?

How many staff do you have working on the project, and what types of expertise to they have? For example, if you are setting up a TMS, you will likely have someone from the treasury team involved and also someone from IT. IT will ensure everything is working on the technical side, but a treasury analyst will be able to provide valuable input on processes: what’s working, what’s not, and what changes make sense from a business perspective.

In the assessment and benchmarking phase, you came up with measurable goals. Talk to your technology provider(s) and consulting partners about ways they can help you achieve those goals.

Key planning considerations

The implementation plan is where you start turning strategy into action. Much like your strategic plan, your implementation plan should include resources, technology, processes and policies — but will be focused on the tactics you will take to achieve your goals, metrics, and the timeframe for each goal and phase. These should all map back to your strategic plan.

If one of your drivers is to be prepared for any regulation, such as PSD2, or to be ready for open banking, be aware of any key components that are critical to compliance, and any key dates. These may become milestones within your plan.

Nothing happens overnight

A timeline is an important part of any implementation plan. In fact, you may end up creating one large timeline that is then broken down into smaller phases or sections, in order to expand all the action items required for success.

It’s important to be realistic about timeframes. Regardless of all the hype you may be hearing about cloud technology, APIs, and integration technology, anything complex is likely to take longer than you think it will. It may not be the two-plus year implementation process that a legacy ERP or TMS once required, but it’s also not going to happen overnight.

Setting up connections to multiple banks, for example, often takes six months to a year. Some banks are straightforward, others require file format conversions or non-standard batch transactions. If straight-through processing is a goal, be aware that your systems will require some integration and success may to some degree be reliant on the banks you are using and processes you are using to connect to them.

Consider incremental change

At some point, you also need to put a stake in the ground. Maybe your transformation initiative involves adopting some new best-of-breed SaaS offerings. But that doesn’t necessarily mean that your TMS is obsolete and needs to be thrown out the window.

The benefits of planning incremental change are that it is more affordable, less overwhelming, and allows for future growth — in other words, the ability to build in more changes.

If you completely rip out an old system, or multiple systems, and replace them with new systems and processes all at once, you then need to spend a significant amount of time on training. This may require bringing in new staff, which then requires training on the business as well as the specific systems. Ultimately, this can result in more delays than a phased approach of combining the old with the new.

But whatever your goals are, and whether your plan is to achieve them within a six-month or five-year timeframe, building a strategic implementation plan will help set you up for success.

To find out how seamless multi-bank connectivity has helped corporate treasurers around the world transform their treasury operations, you can view and download Fides case studies here.

Simon Kaufmann leads sales and marketing for Fides, including customer relations and partnerships. He has more than 18 years of experience in banking, and came to Fides in 2014 from Credit Suisse. Simon holds a Bachelor’s degree in Business Administration from the HWZ University of Applied Sciences, Zurich.

This is part two in a series of three articles. Part one was published in February and part three will be published in August.