The common consensus, however, is that achieving such an integrated architecture comes at a large cost and one that the majority of organisations are not able to invest in. SLG Treasury’s Bateman contests this perception and argues that an ERP treasury module project may actually be a cheaper alternative overall. “If a company has already invested in an ERP then installing the treasury module is likely to be a cheaper option overall. This is because these types of systems are almost always architected to integrate seamlessly and haven’t in recent years been layered with the latest open interfacing technologies like Enterprise Web Services.” For Bateman, the cost of integration post-2008 is an excessively underestimated concept within most TMS rollouts and often accounts for large over-expenditure, future rework and is something that can potentially be avoided by leveraging an ERP treasury module crafted on standardised business and integration processes.
Cost aside, treasurers have often been cautious of using an ERP treasury module, because – historically at least – it has not offered such a rich variety of functionality in comparison to a TMS. An ERP, by its very nature, is vastly different to a specialised TMS system vendor package because an ERP is designed to fit complex organisational requirements – and the treasury module is only one minor element in the broader scheme of the architecture.
However, in recent years there has been a significant push by the ERP vendors to ‘beef up’ their treasury offerings. “The argument that the functionality in ERP treasury modules is outdated is ten years old now and there has been lots of investment in the treasury space,” says Mnich. “We now provide an end-to-end solution that covers the four key areas of – payments and banking, cash and liquidity management, debt and investment and FX management – and we are increasingly seeing more corporates adopt this.”
But then, a vendor will always back their own product. So what do end-users think?
“If a treasurer has the simple choice between a TMS vs ERP solution, I would say the majority would pick a TMS,” says Marshall. “A number of factors feed into this, but primarily it is the outdated stigma that exists surrounding the ERP’s functionality, cost, ownership and complexity of implementation. However, if for instance the business case for implementing the treasury module of the in-house ERP system is being driven by the wider IT strategy, or even driven downwards from CFO/CEO level, then the proposition becomes a hard one to argue against.”
Best of enemies
What then is the best solution for both the business and the corporate treasury? “In a perfect world the most optimal solution for the overall business is for all departments to be on the same platform. This would mean an ERP system that was seamlessly connected with the ERP treasury module allowing all cash flows to flow straight through giving complete visibility over cash and transactions,” says Marshall. But heavy investment is needed to achieve this. Also, large corporates often have different ERP instances within the same company, thus adding another layer of complexity when trying to reach a perfect solution.
For corporate treasury to be happy with the ERP solution, it will ultimately need to be satisfied with the level of functionality that is offered by the ERP treasury module, something that Salmon Software’s Byrne believes currently isn’t the case. “ERP systems in my opinion don’t have anything like the range of tools, functionality and coverage that a TMS has,” he says. “So depending on what the treasury activity is you would be unlikely to find it satisfied in an ERP system. Integration is therefore the key as this allows you to have best of breed systems that process a logical flow of data and satisfy all parties. Both a TMS and an ERP are strong in their own arenas and they should work together.”