Despite their apparent benefits, the majority of treasury departments do not use treasury management systems. High costs relative to transaction volumes are often cited as core reasons for this – but those costs could be coming right down through use of cloud hosting systems, according to TMS provider Salmon Software’s CEO John Byrne.
First, it is important to understand what ‘the cloud’ actually is. “Treasurers access our new TGold system online through a web browser,” explains Byrne. “Our particular service is hosted on a third-party platform called Salesforce. We design the systems and make them available on this secure and reliable platform, accessible anywhere in the world.”
In a similar way to ASP models, accessing a TMS through the cloud eliminates the need for hardware purchase or software installation. By removing the need for the vendor to host the application directly, costs are cut further.
But TGold is trying other new approaches too. “So many treasuries still use spreadsheets because their transaction volumes are too low to justify implementing a TMS,” says Byrne. “That approach is very error prone – it is easy to carry out an FX trade backwards by inputting data into the wrong columns, for example, and once one figure is wrong it can carry through into further calculations.”
“But we saw that at the lower end of the market in particular fewer companies have specialised treasury systems. Companies – including large ones – with low transaction volumes cannot often justify spending tens or even hundreds of thousands of euros on a full TMS, and more on maintenance. We have taken the most commonly used modules – predominantly those related to money market funds, deposits, as well as FX swaps, and forwards – and made them available on a lower-cost secure cloud.”
TMS providers have been trying for years to gain greater market share. Treasurers often aspire to use a TMS and admire their additional functionality, but cannot always persuade the IT department to add an extra system to their workload instead of buying the treasury module of their ERP system. Implementation time can also be a worry – spending months writing RFPs, receiving responses, holding workshops and implementing the system whilst managing the treasury’s activities can be a strain. Cloud computing has potential to help in both these areas – with no installation required, time and resources are saved.
The biggest providers of TMSs, like Wall Street Systems, SunGard and IT2 are also moving into vendor hosting solutions and offering ranges of modules better adapted to smaller companies with correspondingly smaller budgets, but much of the market is still there for the taking – if their innovations at last manage to capture treasurers’ interest at a price they are prepared to pay.