Looking Behind the Cloud: Understanding the Technology of Treasury
By Hugh Russell, Regional Sales Director, North America, BELLIN
How do you choose a treasury system? Understanding differing technologies is often outside of the scope of the treasurer so they turn to standardized RFPs which, for all their good intentions, are often clunky and outdated. I hope to shed some light on the technology surrounding treasury and how these affect your processes, security, and compliance, so you can make better decisions.
What is SaaS?
The current trend in treasury systems is Software as a Service (SaaS). Many of you have likely heard the term, but may not know the underlying differences between the various varieties of SaaS. I will do my best to explain these differences, as they can have far-reaching impact on the overall capabilities of the system you ultimately choose to implement.
SaaS stands for “Software as a Service.” But there isn’t just one type of “SaaS” application model. There are two main types, single-tenant and multi-tenant, and the argument about which is better has been a subject of debate online since conception.
|Single-Tenant System||Multi-Tenanted System|
|Unique application data per customer||All customers use the same application|
|Greater flexibility for customization||Less administration / resources required per customer|
|Ability to meet stricter security, legal, and audit requirements||Economies of scale can be passed on to the customer|
|Updates and patches can be scheduled with customer if desired||Updates and patches applied once for all customers|
|System performance not affected by other customers||Greater operational efficiency|
|Ability to run the system “in-house” if IT or regulatory requirements change|
|Greater ability to backup data|
You can see that a single tenant system makes sense in small volumes of highly specific clients, while the multi-tenant system makes sense in high volumes.
Cloud Environment: Rented vs. Vendor-designed Physical Environment
The next consideration goes beyond the application itself and looks at the architecture that lies beneath. Not all SaaS providers manage their own infrastructure, as it requires specialized knowledge and a significant investment to put in place. If a vendor rents their environment, the underlying physical infrastructure is managed and maintained by a third party. There are two major benefits to customers of vendors who have setup their own infrastructure:
- They can design it specifically for the application
If the application needs more computing power, memory or storage, the whole environment can be tailored to fit.
- Greater data redundancy
Most hosting providers don’t go to the extra step of ensuring all data is replicated in real-time to a geographically separate datacenter, but that is what’s required for a treasury platform that’s connecting to banks to execute hundreds or thousands of payments.
Such redundancy means each packet of data gets mirrored to an datacenter in a separate location in real time. This way, if something goes wrong, you won’t lose a byte.
Another consideration is where the datacenter is. If you’re a treasurer in Switzerland, you probably don’t want your data going into a system hosted all or in part in the US, and subject to the PATRIOT Act.
How will my TMS connect to other systems?
Do you want your treasury to be able to connect to your ERP systems? Trading platforms? Banks? This is all possible. To connect to ERP systems, most can use SFTP and have tools for transforming CSV files into whatever is needed. While there are no clear standards for connecting to trading platforms, tm5 provides direct connections to 360T, FXall, Bloomberg and more. Formats for connecting to commodity platforms include CSV, proprietary formats, platform-specific XML, and SFTP, FTP, proprietary transfer software, or manual file handling for transport. For bank connectivity, SFTP and ISO 20022 XML is quickly becoming the de facto standard. For multiple banks, SWIFT is your best option.