Treasury Today Country Profiles in association with Citi

Should treasuries build their own software?

With all the treasury technology available today, there are still occasions when treasurers may feel that the specific tool they require is not available. Some proactive treasurers have addressed this gap by developing the tools they need themselves.

Addressing technology gaps

There’s nothing so frustrating for a treasury as seeing the need for a new software application and discovering that it hasn’t been built yet. There is much available from third-party providers, but occasionally treasurers may want something very specific, or something that can be adapted to a particular ERP system. So why not just ask your IT department to build a piece of custom software that will do just what you want it to?

“Because, at the end of the day, that is liable to be an expensive and inefficient option,” warns Douglas McKibben, an analyst with Gartner Group in New York. “The growth of ERP systems with treasury applications integrated means that there is a wealth of available solutions to choose from. There are a small number of providers left that can keep pace with the technology development led by the larger companies like SunGard or Wall Street. It makes more sense to buy a ready-made product from these vendors, and then to tweak it to your needs than to try to achieve the same level with something designed in-house.”

“These in-house applications are designed to solve in-house problems.”

In fact, an increasing number of banks are offering software solutions through their portals that may provide a ready-made or adaptable solution for the problems treasurers may try to solve.

In the end, though, neither of these options is likely to prove more useful than finding an application made by a professional third-party that meets your needs. “You may be able to make an efficient application in-house, but you are not likely to achieve the levels of performance that software from third-party vendors can offer,” McKibben adds.

Do it yourself

Despite these challenges, a number of treasuries have chosen to develop software for themselves. Often, these are for very specific applications, or the software may need to be integrated into a proprietary platform. These in-house applications are designed to solve in-house problems.

Approaches to bank administration

One such example is the bank administration tool to run with eBAM, which was developed by General Electric at its Connecticut headquarters. GE’s treasury began developing the software two years ago, to replace an in-house system that was almost a decade old, explains Deputy Treasurer Dennis Sweeney.

Sweeney says that his group looked at all the available third-party software, but wasn’t satisfied with any of it: “Yes, we could have enhanced something that was already available, but we found that it would have been almost as challenging and expensive as building our own.”

Sweeney points out that the software was needed to fulfill a large number of specific functions.

“Our bank account management service is a centralised one, supporting all our businesses worldwide,” Sweeney says. “The end user community is a global set of web-enabled business users who need a new bank account or to make changes to existing accounts. As they request such service, treasury wants to ensure the best end-user experience possible. Using our application, they can log on, provide detailed information about the request including but not limited to currency, banking partner, country, specific legal entity for which they wish to open the account, and this initiates a workflow into a centralised treasury function. Once fully actioned, a new bank account is set up, modified and/or deleted with such changes shared across other treasury systems.”

The software is also linked to the foreign exchange management processes. GE doesn’t have a single worldwide ERP system, but the software feeds into the various systems that the company uses around the world.

Why didn’t GE work with a multibank banking portal? “This would be too difficult to link up with our in-house systems,” Sweeney says. “We have a complex and specific process for bank administration. It interfaces with systems outside of treasury (eg legal entity database, accounting general ledger) and various transaction/reporting systems within treasury. By designing our own software, we are able to align with it from the start.” Also, the treasury team wants complete visibility and control of the accounts management process. “It would have taken a lot of adaptation for a product under license to provide the results we need. Now, we get exactly what we want,” Sweeney adds.

There is also a unique set of requirements for accounts service tools, and the tool designed in-house by GE can be used across the board, rather than having different software for different regions or different banking systems.


For similar reasons, five years ago the treasury at Microsoft decided to produce its own software that administers global bank accounts. At that time, the Microsoft treasury was still handling all these functions with spreadsheets. “We had reached the conclusion that we needed a good deal more than spreadsheets could provide,” says Microsoft Senior Banking Manager Nancy Wells.

This application houses all the relevant details about the bank accounts, signers and SWIFT. “Called BAAT [Bank Account Administration Tool], the software permits the centralisation of all the bank account processing at our headquarters in Redmond, WA (where Microsoft’s global treasury is administered). For example, our subsidiaries are able to request bank guarantees and get them approved. These requests are made internally, then routed for approvals via email. Once approved, the information comes to my team and my team co-ordinates it with our other treasury functions. Essentially, the application permits us to do everything in one place, with real-time visibility.” The software is not linked to the company’s ERP system, however.

Couldn’t the treasury team at Microsoft buy software that would perform the same functions? “When we looked at the marketplace five years ago, there wasn’t anything available that would do everything we needed,” says Wells. “It made more sense for us to build it internally.”

Wells isn’t interested in replacing BAAT with more powerful software developed outside the company. “With all the options available today, we might consider an external package, but I think we would ultimately make the same decision to build it ourselves.”

You might expect Microsoft to seek to commercialise the software – after all, that is what the company does – but Wells says that there are no plans to do this.

Holistic view of risks

Another in-house-built treasury software package that Microsoft has no plans to commercialise is called the 360 Degree Exposure Report. This application was built as the credit quality of companies and banks plunged in the second half of 2008. “Microsoft treasury realised that it had different people tracking credit risks and monitoring ratings for different types of risk, but the work was done in separate siloes,” explains Shruti Kulkarni, Senior Quantitative Risk Manager for financial risk management at Microsoft. The capital markets team watched the portfolio and other receivables; the compliance team kept an eye on counterparty risks in derivatives, and the cash management team watched bank credit ratings.”

What the treasury needed was something that would pull these various risks together into a holistic view. If a large bank risked going under, and if it had Microsoft cash, that affected any number of risks in the counterparty derivatives, and other departments. With the ‘360 Degree’ application, the treasurer has a single view of all these risks in real-time. The software displays a bubble chart that shows total exposure, using financial health ratings from

The bubbles are of different sizes and colours indicating different types of risk, but with the total easily legible at the centre.

Kulkarni says that building the software cost very little, because they were able to use modules that were internal to Microsoft, mostly ones related to Excel spreadsheets. “We could have worked with third-party products, but it would have taken longer, and we had a tight timeline,” Kulkarni adds.

Chart 1: Illustration version of weekly 360 degree exposure report
Chart 1: Illustration version of weekly 360 degree exposure report

*For illustrative purposes only and are not intended to represent actual exposures

From domestic to global

Of course, most companies do not have the software construction resources available to Microsoft. Nonetheless, some treasury teams have a specific motive to build software in-house, although they know that the cost will be higher.

That was the case for the treasury at Nuovo Pignone, General Electric Oil & Gas. Ten years ago, a tool was needed for multicurrency foreign exchange management. “There was no existing tool at the time to satisfy our requirements,” says Florence-based treasurer Giacomo Baldi.

“We work in a dollar-driven industry, and we needed to track a basket of other currencies at the same time. The purpose was to do this but maintaining our hedging in terms of US GAAP accounting rules. At the time, we were using spreadsheets to keep track of currency accounts and hedging, and this plainly had to be replaced by something more. We started with an Axis-based application and then adapted it to our Oracle-based ERP system – our entire TMS is integrated into Oracle.”

Baldi explains that when his team first built the software, it was done in an ‘Italy-centric’ manner. “We started implementation as an Italian business, working with the PITCO 2000-based module that we then worked with. We are still using essentially the same software. Meanwhile our business has moved from Italy to global, and from $2 billion per year to $9 billion per year.

“Wherever possible, around the world, we’ve implemented Oracle and made use of the same in-house software, despite the fact that the TMS used in other countries can be quite different.”

Like Sweeney, Baldi works with GE’s proprietary cash management system Webcash, and that software will eventually be used with the in-house application throughout the world. In 2008, Baldi’s team added functionality to handle embedded derivatives to the in-house software.

“Today, we could find a similar application made by a third-party provider,” Baldi says. “But we’ve tweaked this one so substantially over the years that it is easier for us to stick with it.”

Worth the effort?

It is clear that, despite the cost and the challenges, it can be worthwhile, in very specific circumstances, for treasuries to design their own in-house software. However, the result required must be somewhat unusual for them to make the effort. “It’s a question of core competency,” concludes McKibben. “Most companies are not in the software business, certainly not in the treasury software business. They have a general-ledger type ERP system, with Netweaver used to bring in other functions. The company can create its own ERP system, of which the treasury software is a part.”

With this model in mind, the times when treasuries should choose to build their own software must be very few.

Going commercial

For those that do take the plunge, once they have produced an application that works, treasurers might well start to consider the commercial opportunities. However, none of the tools discussed in this article are being sold to others, perhaps because in order to do this successfully it would be necessary for the treasurer to move into an entirely different role.

“In the early days of TMS development (late 1980s/early 1990s) some forward thinking corporate treasurers saw the need for a form of technology beyond basic spreadsheets,” comments Ken Lillie of Lillie Associates. “The only proprietary solutions at that time were aimed at banks, so several of them wrote their own solutions and they subsequently rolled them out commercially, with varying degrees of success. The successful ones are still with us today.

“…if you develop your own software and then sell it commercially, you need to be able to support it and to continue to develop it…”

“However, if you develop your own software and then sell it commercially, you need to be able to support it and to continue to develop it. You have to make sure it meets all market needs for all clients and respond to issues quickly. It would be a business on its own and could not be combined with being a corporate treasurer – those early pioneers ended up forming their own software companies.”