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TMS: Channel for Innovation

by Helen Sanders, Editor

Every year, we feature a cover story in TMI on the subject of treasury management technology and every year it becomes more difficult. In some years, speaking frankly, there has not been much that is new to say. This is by no means the case this year. One of the challenges this year is to distinguish between what technology is used for (i.e. the functionality it provides) and how it is deployed, particularly the use of cloud-based solutions. The growth of cloud-based computing is a positive development in treasury, in that we are seeing significant innovation that is facilitating treasurers’ expanding role; however, it is important not to get lost in the hyperbole surrounding ‘the cloud’ and focus instead on what each treasury needs to fulfil its strategic and operational role in a secure and efficient way.

Managed and SaaS-based solutions

So what is cloud-based computing (in a treasury context) and why has it become such a talking point? Essentially, cloud computing refers to web-based applications (in this case treasury management systems or TMS) that are hosted on a remote server, with storage, management and processing of data typically undertaken by a specialist third party. Cloud computing is not synonymous with web access: a system could be hosted within the organisation, but users can access the system via the internet or an intranet.

There are two types of cloud-based TMS. The first is a hosted or managed solution, which may also be referred to as an ASP (application service provider) solution. This is hosted and managed by the vendor or a third party, but treasury has its own dedicated technical environment and database. The system and interfaces to other internal and external systems are typically configured according to the needs of the individual treasury, with full control over the timing of upgrades and other system changes. Managed solutions reduce the amount of IT resource that is required compared to hosting and maintaining the hardware and software in-house, therefore making it more feasible for treasuries that require sophisticated systems but that wish to avoid the need for significant IT costs and resourcing.