Advancements in technology have certainly changed the landscape across the majority of business functions and the treasury function is no exception. This post is not about discussing the benefits of a TMS (Treasury Management System), I’ll leave that to the software providers! What follows are Rochford’s key recommendations that if done thoroughly, should eliminate project creep, reduce inefficient use of time by senior personnel and minimise direct and indirect costs of the project.
As the commercial aspects of SaaS applications continue to become more affordable and less of a hurdle, Rochford believe the most common bottleneck on whether to implement a new TMS is down to time (the most precious resource of all) and available in-house capacity to manage the project, resulting in frustrations with legacy systems and much procrastination. The following recommendations will reduce the project duration and overrun time that will be inevitable if not planned correctly.
Build a bulletproof business case from the outset to stop push backs from the Board and subsequent re-submissions. Focus on these key points:
- Be able to sell the value that this new technology can bring to the whole organisation, not just the treasury team
- Clearly articulate the benefits with supporting data that quantifies the ROI by referencing market leaders or competitors
- Address the current pain points for the organisation, this could be around financial market risk or cash and liquidity, and how a new TMS can lead to improved decision making and ultimately profitability
- If you anticipate push back due to other areas of the business not appreciating the ROI then be proactive. This could entail having a seat at a team meeting of another department and explaining why the new system will benefit their team or the organisation as a whole
Assistance on how to write a compelling business case can come from peers in the industry, treasury consultants and even TMS providers.
Once approval has been obtained, it is crucial that you clearly define the project scope. Creating a mini project team of relevant stakeholders is critical to ensuring buy-in. It is important that the most senior person from each department is selected as they can they influence and drive their respective teams as the project kicks-off. Like with any form of change, there could be resistance from some departments and if you sense anyone is not aligned to the goal you have to act fast to get everyone pulling in the same direction! These elements would form part of the scoping phase:
- Map out the current system and processes (‘As Is’) and the limitations and bottlenecks for the organisation
- What is the desired outcome after implementation, the ‘To Be’ position going to look like? Define what you want and what the impact and benefits will be
- Generate two lists, one which details the functionality that is non-negotiable ‘must haves’ and another list of ‘nice to haves’
- Assemble the project team and get buy-in, as outlined above
Running an effective RFP process is the next important piece in the jig-saw. Done the wrong way, the RFP process can, for some companies, take longer than it takes some companies to implement a new system from start to finish! An effective RFP process is less about what to do, but more about what not to do:
- Research the systems on the market and cross-check their functionality to the project scope list of non-negotiables
- Will the system need to be customised for your organisation’s needs, or can it be ‘off the shelf’ (SaaS)?
- Invite 2 or 3 vendors into the RFP, too many participants will lead to wasted time and a multitude of presentations and demonstrations if the net is cast too wide
- Before the interview process, ensure vendors have legitimate data inside the demo system to comprehensively demonstrate all the aspects of the system. Having sat through many demos this is rarely the case!
This is the area when hiring an experienced treasury advisor can add significant value to the process. Rochford can speed up the selection process with industry intel on over 50 TMS providers so that project scope can be assessed against the available functionality of each TMS on the market using a TMS Selection Matrix. Suitable candidates are quickly identified and approached. Furthermore, having an independent expert in the room during the RFP evaluation workshop will also help in a more thoughtful and unbiased assessment of the treasury platform.
Once the decision has been made of which TMS to go with, the project management of the implementation is when the extra workload on the treasury team starts to bite. The extra workload that will ensue is somewhat unavoidable, however, that can be minimised by deploying these useful techniques:
- Design a project Road Map with key dates and milestones
- Document roles and responsibilities of stakeholders (this ensures accountability)
- The Project Manager is an important role as they need to drive the project forward, they must have the personal attributes and capacity to do this successfully
- Daily scrums can sometimes be overkill but projects meetings should be maintained regularly. Meetings should always have an agenda and action points taken and documented
This final recommendation (which is often overlooked) is the system optimisation and feedback loop. Treasury teams can get pre-occupied with ensuring BAU is achieved and that all records and starting balances are copied across from the old system, so that when testing and finally go-live check-points have been completed they revert back to normal. At this stage it is worth regrouping on the following points:
- What benefits did we expect from the new system, have these been achieved?
- Do the current treasury processes and policy need reviewing and updating? For example, the increased visibility brought about by the new system results in a hedging strategy not previously undertaken and the business is now able to quantify and measure the risks it is exposed to
- Does the new system now make hedge accounting a more attractive option due to ease of hedge effectiveness testing? Have we the in-house skill-set to do hedge accounting?
One last point to remember, technology (i.e. the platform) can only do so much and will not be the answer to everything! A Thought Leader in the industry once said to me, to have a world class treasury function you need all the 4Ps (Platform > People > Process > Policy)
Rochford have the expertise to be your trusted partner on all of the above!
Kevin Mitchell, ‘Partner – Advisory Services’ at Rochford, the leading treasury advisory house in Australia advising on in excess of AU$20 billion in financial market risk. To find out more, visit: http://rochford-group.com/ or connect with Kevin on LinkedIn or follow on Twitter.