Treasury Practice

Question Answered: What does your IT department need to know about treasury?

Published: Nov 2019

IT technician putting together or fixing a computer

This issue’s question

“How can a corporate’s treasury and IT teams work together to ensure the smooth running of treasury operations?”

Anita Bubna, Senior Director, Treasury, Flex

Anita Bubna

Senior Director, Treasury
Flex

Large organisations often have specialised functions. To give an example, a financial planning and analysis (FP&A) team may not know that the accounting and treasury team are all looking to analyse and measure similar data. As a result, each team may launch a separate project to get a nuanced view of the same data, all with similar objectives. This leads to a competition for the same scarce resources, as they both try to prove that their project is far more important than that of the other.

But the IT team is in a unique place to bring all the teams together and facilitate conversations, such as coming up with a digital/analytics strategy for finance as a whole. Why is this?

Well, the IT team can be a neutral party in all the discussions. Some companies are able to form a centre of excellence reporting to the chief financial officer (CFO) for the same purpose. Unfortunately, in the absence of an owner for any end-to-end processes, inefficiencies will continue to go unnoticed.

As such, treasury needs certain metrics to understand and compare past performance with current and future behaviour. After all, every business spends a lot of time and resources in the hope that it will yield business insights that will drive efficiencies. However, if the data quality is not reliable, all the data stored will not be of much use – especially master data.

But here lies the main question: who owns data governance? The business team? The IT team? Or should it be a centralised or decentralised process?

Because the IT team is naturally connected to several different functions in finance, it can play a crucial role in bringing the relevant stakeholders to the table to help define the data governance framework.

As treasurers, we understand that IT often struggles when it comes to prioritising resources, as their main goal is to optimise existing systems for the organisation as a whole. We understand that balancing the short-term and long-term view is a hard task, but it is ultimately critical. In today’s economic climate, unfortunately the pressures on IT are only going to increase.

For most treasurers, we intuitively know where the inefficiencies lie and we are just as motivated as the IT team to find a solution. But sometimes IT does not have access to all the data needed to make a business case or determine return on investment (ROI). Gathering up this data can indeed be quite a time-consuming task.

The solution is to have someone in the organisation who has access to cross-functional team data and can develop a business case using a standard methodology that will make it easy for IT to come up with an objective way to prioritise projects.

When all is said and done you can’t build a house without a plan. Foundations must be laid and such a large project must be broken up into smaller ones that can be tackled in the right and logical order. But when treasury and IT work together as one, anything is possible.

Sean Privilege, Partner & Senior Manager, Treasury & Corporate Finance, John Lewis

Sean Privilege

Partner & Senior Manager, Treasury & Corporate Finance
John Lewis

Treasury is a business-critical function that, at its core, manages a company’s liquidity and financial risks. Requests for IT support must therefore be prioritised and resolved as quickly as possible to avoid the negative consequences that may arise from a system disruption, such as a failure to effectively fund business operations.

The IT support required to ensure the smooth running of treasury operations can be categorised as follows:

  • Operational support. The treasury management system (TMS) generates cash forecasts, records and matches market trades, releases high value payments and could easily be described as the beating heart of any treasury – the health of this system is therefore critical. To effectively maintain this system it’s necessary to have competent staff that can provide effective support in line with mutually agreed service terms.

    A number of ancillary systems are often required to both feed and receive data via the TMS so it is important that IT understands how our systems interact and the significance that any service disruption might have on the function.

  • Change programmes. The objective of most treasuries is to achieve straight through processing (STP) such as reducing manual interventions so data and transactions can flow unencumbered through the workstream. Few teams begin with a perfect solution, so achieving a high level of process automation is usually an iterative process that evolves through continuous improvements made over a number of years.

    Automating the flow of data, such as bank statements, financial market information and trades, are fundamental objectives when seeking to achieve STP. Support from IT is therefore essential to establish, and occasionally maintain, the multitude of interfaces that facilitate the flow of information between the business and various external stakeholders.

    If a business makes the brave choice to implement a new TMS, it is important that IT is involved at inception to ensure that any solution can be properly supported by existing architecture and that in-house support teams can provide first line support should issues arise both during and post implementation.

    If IT stakeholders understand the system well enough to develop reports and make simple configuration changes, then the requirement, and cost, associated with ongoing vendor support can be reduced.

  • Business continuity. It is critically important that treasury has a robust, and frequently tested, continuity plan to ensure that any disruption associated with an unexpected location or system outage can be mitigated. To effectively manage daily operations, treasury requires hardware that facilitates agile working and fast and efficient support should any system accessibility issues arise.

    In the past, the provision of a work area recovery facility (WARF) was advisable to ensure that business critical functions, such as treasury, could be maintained during major disruption events. However, with the proliferation of cloud-based SaaS solutions and the welcome drift toward flexible working arrangements, the need for maintaining off-site contingency space has diminished.

Overall, it is important for a treasury team to spend time with its IT partners to ensure that there is a clear understanding between the teams of support requirements and why it is so crucially important that the maintenance of treasury infrastructure is prioritised.

Christiane Candeloro, Assistant Treasurer, Operations, AstraZeneca

Christiane Candeloro

Assistant Treasurer, Operations
AstraZeneca

Over the past few years, one of the common themes we have experienced in the execution of our strategy across treasury, is that we can often spend significant time and effort trying to bridge the gap between our requirements and knowledge, and that of our IT functions.

Part of the problem is that the products we use in treasury are naturally very specific to our own needs, such as the TMS, dealing portals and rate feeds. As such, these are not widely known about, or indeed even understood outside a very small circle of experts. If your IT department looks to manage and support an application like a TMS in the same generic way that might work for a globally-deployed application, you will naturally run into difficulties.

Over the years, here at AstraZeneca we have worked hard alongside our long-term external technology partner, Covarius, to ensure that our IT teams fully understand what it is that treasury actually does. We wanted to make it 100% clear that our small treasury team has a responsibility to manage all of AstraZeneca’s financial assets – many of which are highly liquid – on a real-time basis.

We were very keen to stress that any system issues or outages would potentially incur significant financial or reputational risk very quickly. After all, nothing focusses the mind of your IT department more than these two risks, so we were adamant that our treasury applications were included in the small suite of applications that are deemed to be ‘Board Level Critical’.

But here at AstraZeneca, our treasury operations continue to invest in our internal relationships, and our proactive approach includes treasury team members visiting our support teams and shared service centres across the globe. This ensures that the importance of treasury and our systems and applications to the financial wellbeing of the company, are clearly understood.

Above all else, communication is key; as is involving IT in the design of our constantly-evolving technology roadmap in order to get support and ‘buy-in’ for our requirements. However, at the same time we have to ensure that our treasury strategy is included in and aligned to the wider longer-term group IT strategies, as that will be a critical factor in the ongoing success of our use of technology.

Having focussed historically on both educating and partnering with our IT department, we now feel we are in a far better place going forwards with regards to the maintenance of our systems, and the ability to continue on our technology journey into the future.

I believe that our relationships with IT, and their understanding of our business will become even more important over the next few years as we start to see newer technologies such as artificial intelligence (AI), machine learning and blockchain coming into the mainstream. As ever, we’ll be looking to the support of IT to ensure we can continue to be early adopters of these technologies as and when they become available.

Close partnership between treasury and IT is key to success.

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