Sunshine in the Cloud – Sharing insights on treasury technology opportunities

Chaired by Helen Sanders, Editor

During this roundtable discussion published in association with FIS, two corporate treasurers, Masha Weijers, group treasurer of Futuris, supplier to the automotive industry headquartered in Australia, and Carolyn Maloney, group treasurer of US industrial cutting systems firm Hypertherm, discuss the benefits and experience of cloud-based SaaS (software as a service) solutions in their organisations. In addition, Laura Koekkoek, principal of treasury consulting group Zanders, discusses the wider industry implications.

First, please could you tell us a little about your treasury function and the technology you use to support it?

Masha Weijers, Futuris
Futuris would be categorised as a mid-market company, with a turnover of around $700m, so we have a small treasury team. We have a group treasury function in Melbourne, Australia, together with team members in five countries performing day-to-day treasury activities. Until last year, our treasury processes were highly manual, which created operational risk issues and was very resource-intensive. The business was also growing quickly, and our existing processes and resources were not scalable to the changing needs of the organisation. We were working with 10 banks, and it was difficult to manage these relationships without a treasury platform. 

We recognised that the opportunities for mid-market companies to acquire sophisticated treasury technology were changing, particularly with the growth of cloud-based SaaS solutions, which gave us the opportunity to improve our processes and controls. Once we had built our business case and gained CFO approval, we looked at various alternatives. In particular, we needed a scalable, cost-effective solution from a reputable vendor that would not require significant IT and treasury resources either to implement or manage the system over time, and ultimately chose FIS’ Integrity solution. The solution is SaaS-based, hosted in a cloud, and we were surprised at how cost-effective it was to implement, with significant functionality and integration advantages.

Carolyn Maloney, Hypertherm
Like Futuris, we have also started to use FIS’ Integrity SaaS solution over the past year, which we integrate with our ERP in order to streamline general ledger/journal entry processing. We will also be developing an interface with our cloud-based ERP in due course for data warehousing. With FIS’ help, we also produce a cash flow forecast using both Integrity and ERP data. We consolidated our bank relationships about five years ago, and we now have three global banking partners with whom we conduct most of our cash management activities, and we use their electronic banking portals, which are integrated with Integrity.

What were the factors that led to your decision to adopt cloud-based technology? Was it part of a broader organisation/IT mandate?

Carolyn Maloney, Hypertherm
As a company, we are moving towards cloud-based solutions in general, although it is not a mandatory requirement. Overall, we have found cloud-based solutions more cost-effective over time, as they are upgraded and maintained by the vendor for a fixed cost. There is some loss of flexibility, however, both in the timing of upgrades and the degree of customisation that is achievable.

Masha Weijers, Futuris
Although acquiring Integrity was a treasury-driven decision, we have a wider strategy across the business to adopt cloud-based solutions, as we recognise the cost benefit, reduced administrative and maintenance burden and scalability that they offer. In addition, many of our staff travel regularly, so ease of online access is an important requirement for many of our applications, including in treasury. 

Laura, how far do Futuris’ and Hypertherm’s experiences reflect a wider industry growth in treasurers’ recognition of the benefits of cloud-based technology?

Laura Koekkoek, Zanders
I think Carolyn and Masha’s experiences definitely reflect the increasing interest we are seeing in cloud-based SaaS solutions. One frequent question that comes up is the difference between the concept of the cloud and SaaS. This is an important distinction. Solutions described as ‘cloud-based’ may simply be hosted by a third party, either in a public (SaaS) or private cloud, but it does not necessarily imply any other services. SaaS solutions, on the other hand, offer not only cloud-based hosting, but also services such as integration, maintenance and upgrades, i.e., the ‘full service’ offering that we have been talking about today. We are definitely seeing these solutions gaining traction in the market as treasurers recognise the advantages of simplicity, scalability and security. 

Given the recent increase in cybersecurity risk, with several high profile security incidents, how is treasurers’ role in treasury technology security changing?

Masha Weijers, Futuris

I think treasurers have always been very aware of their security obligations, and we continue to be vigilant, particularly as we have experienced multiple attempted breaches and impersonation fraud attempts over the past year. When we conducted our treasury management system selection, we performed rigorous due diligence of potential vendors. FIS’ commitment and ability to maintain the treasury platform in line with industry best practices, as well as the ability to define and enforce rigorous workflow controls within Integrity, were key factors in our decision.

Laura Koekkoek, Zanders
I think it’s important to understand that cloud-based SaaS solutions contribute to, rather than detract from security. We are seeing a renewed focus on risk, particularly given that operational breaches can quickly translate into financial breaches. As a result, treasurers are investing in secure payments processes and solutions, bank connectivity and more automated processes. 

Given what we have discussed so far, what are your key criteria when selecting a technology/SaaS partner, and to what extent have these changed in recent years?

Masha Weijers, Futuris
For us, it was not only the solution cost, functionality and scalability that was important, but also the credibility of the vendor. FIS demonstrated significant expertise and long-term commitment to developing and maintaining high quality treasury solutions, and had both the development capability and investment capacity to maintain the solution in line with market and regulatory changes in the future.

Carolyn Maloney, Hypertherm
We have a list of key criteria for new technology applications, including: functionality and quality; integration; long-term vendor viability and credibility; ease of implementation; scalability in line with our five-ten year business plan; the potential to implement the solution on a modular basis; ease of use, and security. We involve IT and our security officer extensively in each selection process and conduct due diligence appropriate to the way that the system will be used. We also take references and make sure that we can build a good vendor relationship.

Laura Koekkoek, Zanders
Following on what both Carolyn and Masha have mentioned, in many respects, selection criteria have not changed, and future viability and credibility of the vendor, system functionality, security, pricing and legal terms continue to be selection criteria as they have always been. However, we have seen a change in priority. Two years ago, functionality and cost were the primary decision drivers; today, treasurers are far more aware of the importance of a stable vendor that has the ability to invest in new market, regulatory and security requirements.

Based on what we’ve discussed so far, and your wider experiences, how do cloud-based SaaS solutions facilitate best practices in treasury management, and is it an approach that suits all treasuries?

Laura Koekkoek, Zanders
At present, these solutions are typically preferred by mid-sized corporations who may not have considered implementing a TMS in the past. This is a very positive trend, as these organisations really benefit from the ability to automate and simplify treasury processes and controls quickly, and in line with industry best practices, without the need to dedicate significant business or IT resources. Very large, or highly complex treasury departments may need more flexibility and configurability than a standardised SaaS solution can offer. However, these larger, more complex businesses may benefit equally from private cloud-based hosting.

What are your treasury priorities for 2017, and how important is treasury technology within this list?

Masha Weijers, Futuris
One thing that quickly became clear during our treasury management solution implementation was that we had too many banks, so we lacked access to consistent services or information flows. Consequently, we are now rationalising these relationships, moving from transactional to more strategic bank partnerships with fewer banks. We are also using the new treasury management solution as an opportunity to refine and standardise our processes globally, and review our cash management and liquidity structures.

Carolyn Maloney, Hypertherm
We have a wide variety of initiatives that are at various stages, and technology plays a crucial role in many of them. One is to automate our order-to-cash process from the point of onboarding a customer through to collection, including the ability to define different pathways across our customer base. eCommerce is a key element of this, including setting up customer portals, online payments etc. Treasury has a major role to play in this project, looking at fund movements and support for card payments, and ensuring that we observe both straight-through processing and compliance objectives.

Global standardisation is also a key theme for the year ahead. Now that we have implemented Integrity in the United States, we are rolling this out to China, Singapore and Europe. As well as achieving consistent processes, controls and information flows, this will also contribute to improved cash flow forecasting, as will integration between Integrity and our ERP. As a business, we are committed to making data-driven decisions, in which our treasury technology infrastructure has a major role to play.