The Art of Leapfrogging - Treasury Technology Market Study

TREASURY TECHNOLOGY

THE ART OF LEAPFROGGING IN ASIA

Contents

Treasury Technology

Key Takeaways

Satisfaction with Treasury Management

Holy Grail: Cash Forecasting

Spreadsheet Madness

Introduction

Conclusion

SunGard’s Perspective

About This Report

Leapfrogging: A Practical Approach

Solid Interest in the Cloud

A Leap Forward

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©2015 Questex Asia Ltd. All rights reserved. All information in this report is verified to the best of the publisher’s ability. However Questex Asia Ltd does not accept responsibility for any loss arising from reliance on it.

Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Questex Asia Ltd.

CFO INNOVATION INSIGHT SURVEY TREASURY TECHNOLOGY © 2015 QUESTEX ASIA LTD

2

INTRODUCTION

One objective of this research is to find out whether businesses in Asia are leapfrogging in terms of treasury technology. Three years ago, CFO Innovation surveyed 191 CFOs, treasurers and other senior finance executives and found that the majority were using spreadsheets (62%) and an internally developed treasury management system (51%). 1

In this study, we surveyed 155 finance professionals in Singapore, Hong Kong, Philippines, China, Malaysia and other markets in Asia. The majority – 67% of respondents – still utilize spreadsheets. But only 32% now use an internally developed TMS.

Does this mean that the treasury function in Asia has leapfrogged? Asked this question, four out of ten respondents say their company is in the process of doing so (35%), or has already leapfrogged and adopted state-of-the-art TMS (5%), which includes on-premise and in-the-cloud treasury and banking solutions.

The 60% who say their company has no plans to leapfrog at this time have not done so because their company believes the scale and complexity of operations does not yet require an upgrade. Interestingly, 54% of them say they are satisfied with overall treasury management in their company – compared with 75% of the admittedly small sample that has already leapfrogged.

Only 43% of those in the process of leapfrogging are satisfied overall with their company’s current treasury operations, not surprising since dissatisfaction with their treasury processes is presumably one reason why they are leapfrogging. Their main area of discontent is cash forecasting (44% dissatisfied).

These are some of the findings of CFO Innovation’s 2015 treasury survey, which is sponsored by SunGard. Entitled Treasury Technology: The Art of Leapfrogging in Asia, this report detects a practical streak among Asian companies in their approach to adopting treasury technology. They will adopt or upgrade to the latest technology only when they see the need to do so.

“Our set-up is quiet simple and my plan is to continue the same structure at the moment,” explains one respondent. “However, with more plans for diversification, I foresee a much more structured treasury operation and introduction of current technology to address risk, liquidity, and cash management.”

“There was very little need until now for a robust electronic TMS solution,” says another CFO, whose company is among the 35% that is in the process of adopting state-of-the-art treasury systems and structures.

This study did find that companies with a vendor-provided TMS appear to be more satisfied on overall treasury management (average score of 3.61 on a 1-5 scale), compared with those that use an internally developed TMS (a lower rating of 3.5), e-banking portal (3.45), and spreadsheets (3.39).

Time will tell whether the results the leapfrogging companies hope to gain – among them improved cash forecasting (82%) and better handling of multi-currency accounts (55%) – will indeed come to pass.

In the meantime, we hope the insights in this study will help CFOs and treasurers, and their technology and banking partners, find their way forward.

In business, ‘leapfrogging’ is often given a positive spin. A company that has leapfrogged is said to have jumped over competitors and taken a leading position. It has shed its stodgy and inefficient ways by implementing state-of-the-art technologies and processes without going through the traditional route – like developing countries at the turn of the century that by-passed fixed-line telephony to go straight to mobile phones.

1 The Effective Treasury: Processes and Structures That Work Best in Asia, January 2012. Fieldwork for this study was conducted 4-28 August 2011.

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


3

A substantial proportion of respondents say they are in the process of leapfrogging. More than a third of the executives surveyed say so (35%), with another 5% indicating that they have completed the adoption of state-of-the-art treasury solutions and structures.

The main driver for leapfrogging is the need to improve cash forecasting (82%). The majority also cite as reasons the need to handle multi-currency accounts (55%) and the enterprise’s rapid geographical expansion (53%).

On the other hand, the majority (60%) who say their company is not leapfrogging cite as reason the judgment that the company’s scale of operations does not yet require an upgrade in their current treasury structures and processes (62%).

Regardless of whether they are leapfrogging or not, a bare majority of respondents (51%) are satisfied with overall treasury management in their company. But 9% are dissatisfied, with another 40% saying they are neutral – indicating a judgment that treasury management is adequate, but could be improved.

Drilling down into specific aspects of treasury management, the level of satisfaction is highest for cash visibility (60% satisfied). The highest level of dissatisfaction is for cash forecasting (33% dissatisfied).

Companies in the process of leapfrogging tend to be less satisfied with overall treasury management than those who have no plans to leapfrog at this time. Of the first group, only 43% are satisfied, compared with 54% of those with no plans to leapfrog in the second group.

Specifically, those who are leapfrogging are dissatisfied with cash forecasting (44% vs. only 26% of those who have no plans), cash visibility (24% vs. 12%), and treasury risk management (22% vs. 12%).

At 5% of the total respondents, the sample of companies that have fully adopted state-of-the-art technology and structures is too small to draw firm conclusions. But as a general indication of trends, 75% of them are satisfied with their company’s overall treasury management, 88% with cash visibility, and 75% with cash pooling.

Spreadsheets continue to be a key tool in treasury management for companies in Asia. When asked how their company currently manages treasury processes, 67% of the executives surveyed pointed to spreadsheets. When CFO Innovation asked the same question in 2011 in its first treasury survey, 62% gave the same answer.

Interestingly, 44% of respondents say their company also relies on e-banking portals for treasury management. Online banking was not included in the survey choices three years ago because we regarded usage as negligible, given that few banks were offering the service to corporates at that time.

Only 32% of respondents now say they use an internally developed treasury management system, down from 51% in 2011. And only 17% say their company has an on-premise TMS provided by a vendor, from 36% in 2011.

It seems that CFOs and treasurers are tending to rely more on spreadsheets and online banking for treasury management, rather than on an internally developed TMS or one provided by a technology vendor.

KEY TAKEAWAYSCFO Innovation surveyed 155 CFOs, finance directors, treasurers and controllers across Asia. The key findings include the following:

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


4

However, vendor-provided TMS is actually associated with the highest level of satisfaction than all other systems. On a scale of 1 to 5, with 5 denoting “very satisfied,” respondents whose company has a vendor-provided TMS give an average rating of 3.61 on overall treasury management.

Those who use an internally developed TMS give a lower average rating of 3.5. Those that use an e-banking portal give a grade of 3.45, while those that use spreadsheets give a rating of 3.39.

Satisfaction with treasury management emanates from many factors, of course, not just the system used. Also, companies typically utilize spreadsheets together with online banking, TMS and other tools, so the source of satisfaction or dissatisfaction may be difficult to narrow down to just one element.

Still, there seems to be a correlation between level of satisfaction and the use of TMS, e-banking portals and spreadsheets. CFOs and treasurers should perhaps take a second look at vendor-provided treasury management solutions, rather than relying more and more on spreadsheets and online banking portals.

That said, respondents say their company is looking at cloud and on-premise solutions going forward. Four out of ten (40%) consider cloud computing as the most important technology platform to consider when next they review their TMS. Another 20% point to client/server (on premise) as the preferred platform.

In 2011, 45% of respondents said they would consider the cloud as technology platform for TMS. That intention has yet to be translated to reality. Today, only 3% of the companies surveyed have their TMS on the cloud, while 17% have an on-premise solution. It seems intentions, so far, are not translating into adoption.

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


5

Has your company leapfrogged to the latest treasury systems and structures?

N = 155 respondents

A Leap Forward

More than a third (35%) of the CFOs, treasurers and other senior executives surveyed say their com-pany is in the process of leapfrogging. Another 5% say their company has completed the journey in implementing the latest treasury management systems and structures.

There are suggestions that companies in Asia are able to adopt state-of-the-art treasury systems and structures faster than their counterparts in the West, which are hampered by legacy systems. Respondents were therefore asked whether such leapfrogging is indeed happening in their company.

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward

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6

N = 91 respondents whose company is not adopting state-of-the-art treasury management systems and structures. Totals do not add up to 100% because multiple responses are allowed.

Why is your company not leapfrogging?

However, the majority (65%) say their company has no plans to leapfrog at this time. The main reason cited is the judgment that the scale of company operations does not yet require leap-frogging (62%).

Much fewer are those concerned with the asso-ciated expense, lack of change management ex-pertise, and concerns about integrating the new solution with existing systems.

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward

Sponsored by




7

N = 62 respondents. Totals do not add up to 100% because multiple responses are allowed.

Why is your company leapfrogging?

For their part, respondents who say their company is in the process of leapfrogging or has already leapfrogged cite the need to improve cash fore-casting as the main reason for the shift (82%).

Other reasons include the desire to improve han-dling of multi-currency accounts (55%) and to keep up with the company’s rapid geographical expansion (53%).

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward

Sponsored by




8

Which companies are leapfrogging?

N = 50 respondents (Asian MNCs); 54 respondents (non-Asian MNCs); 51 respondents (local enterprises). Totals may not add up to 100% because of rounding

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward

Who are these companies that are adopting state-of-the-art treasury systems? Four out of ten of those in the process of leapfrogging (42%) are Asian multinationals, meaning Asia-headquar-tered companies with operations and subsidiaries in more than one country. A third (35%) are local enterprises that operate in only one market.

In contrast, only 28% of non-Asian MNCs – meaning those headquartered outside the region – are in the process of leapfrogging. Most of them (69%) say they have no plans to leapfrog at this time.

This trend of Asian MNCs and local companies be-ing more open to leapfrogging than the regional units of Western and other non-Asian multina-tionals may be due to legacy systems. Non-Asian MNCs may have invested heavily in older treasury management systems, something that now holds them back from adopting newer solutions such as those based in the cloud or TMS integrated with risk management.

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9

How satisfied are you with the various aspects of your company’s treasury management?

A bare majority of the executives surveyed (51%) are happy enough with their company’s overall treasury management. Only 9% express outright dissatisfaction. But 40% are neutral – a less than ringing endorsement.

While they see treasury management in their company as adequate and fit enough for the pur-pose, a significant proportion of respondents still think there is room for improvement.

This is clearly the case with cash forecasting. A third of respondents (33%) are dissatisfied with this particular aspect of treasury management, while 22% are neutral. Two other areas that can stand improvement are foreign exchange (18% dissatisfied, 20% neutral) and treasury risk man-agement (16% dissatisfied, 32% neutral).

Respondents express satisfaction with cash vis-ibility (60%). This may be associated with bank partnerships – 74% of companies that use an end-to-end banking platform and 68% of those that utilize an e-banking portal and are satis-fied on cash visibility. In contrast, a lower 54% of spreadsheet users are satisfied, with 20% dis-satisfied.

It is also interesting to note that 18% of the companies surveyed do not have a cash pooling arrangement. They are mainly local enterprises, which account for 30% of the total respondents. The 13% each of companies that do not under-take treasury risk management and cross-border funds transfers are also predominantly local or-ganizations.

Does leapfrogging result in satisfaction with treasury management? It is difficult to tell since only 5% of the total respondents say they have completed implementation of state-of-the-art treasury systems and structures.

N = 152 respondents. Ratings on a 1-5 scale, with 1 as very dissatisfied and 5 as very satisfied. Totals may not add up 100% because of rounding.


Respondents were asked to rate their level of satisfaction with overall treasury management at their company and in the specific areas of cash forecasting, foreign exchange, cash pooling, cash visibility, treasury risk management and cross-border transfers.

The ratings were on a scale of 1 to 5, with 1 denoting very dissatisfied and 5 denoting very satisfied.

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward

Sponsored by




10

How satisfied are you with your company’s overall treasury management?

Still, as an indication of a potential trend, 75% of those that said their company has leapfrogged are satisfied with overall treasury management. This compares with 54% for those with no plans to follow suit, and 43% for those in the process of leapfrogging.

The relatively low level of satisfaction expressed by those still leapfrogging should not be a surprise. These companies evidently hope to see improvements, the reason why they embarked on the journey in the first place, but they have yet to see the results.

N = 54 respondents (in the process of leapfrogging); 8 respondents (already leapfrogged); 90 respondents (no plan to leapfrog). Totals may not add up to 100% because of rounding

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward

Sponsored by




11

How satisfied are you with your company’s overall treasury management?

N = 50 respondents (internally developed TMS), 30 respondents (vendor-provided TMS), 68 respondents (e-banking portal), 103 respondents (spreadsheets). Ratings ranged from 1 (very dissatisfied) to 5 (very satisfied)

The tools and systems used for treasury management appear to be correlated with the respondents’ level of satisfaction.

On overall treasury management, vendor-provided TMS garners the highest level of satisfaction, at 3.61 points on average – that is closer to 4, which equates to a rating of “satisfied.” The second highest rating goes to internally developed TMS, at 3.5 points, followed by e-banking portal at 3.45.

Spreadsheets score the lowest level of satisfaction at 3.39.

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward

Sponsored by




12

Factors associated with cash forecasting satisfaction

There appears to be a correlation between dis-satisfaction with cash forecasting and the size of the treasury team. A third of respondents (33%) in companies where the treasury team is staffed by fewer than ten people are dissatisfied with cash forecasting, compared with just 25% of respon-dents in companies where the treasury team has ten or more members.

That said, a bare majority in each group (51%) are satisfied with cash forecasting in their company. The type of treasury process and platform also seems to be linked to cash forecasting satisfac-tion. Some 56% of companies that use an end-to-end solution from a banking partner are satisfied with the treasury team’s cash forecasting.

Half of those with a specialist treasury manage-ment system are also satisfied, although 39% are not. Satisfaction may be a function of the quality of the TMS, which can be internally developed or an on-premise or cloud-based solution provided by a technology vendor.

The same dichotomy is apparent in the use of online banking. Forty-five percent of those that use an e-banking portal are satisfied, but 34% are not. Satisfaction may depend on the quality, timeliness and cash forecasting functionalities of the particular bank the company is working with.

Satisfaction (38%) and dissatisfaction (37%) with cash forecasting are almost equal among those that use spreadsheets in treasury management. This may be due not to the tool itself, but to the varying levels of expertise of treasury teams in us-ing spreadsheets for cash forecasting.

Finally, the structure of the treasury function may be linked to success in cash forecasting. The ma-jority of respondents in companies with a global treasury center (51%) and country-level treasury unit (54%) express satisfaction with cash fore-casting.

However, 58% of respondents in companies where each subsidiary has a treasury unit express dissatisfaction. When it comes to cash forecast-ing, it seems that a country-level approach is the most effective. At 22%, the level of dissatisfaction with this structure is the lowest among the four types.

N = 38-112 respondents (treasury team); 43-100 respondents (treasury process); 31-67 respondents (treasury structure)


Because cash forecasting is the one aspect of treasury management that garners higher levels of dissatisfaction, the responses were cross-tabbed to find the factors associated with cash forecasting success (and failure).

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


13

How do you manage your treasury processes?

Spreadsheet usage continues to spread. Nearly seven out of ten (67%) of the executives surveyed say their company uses spreadsheets for treasury management. This is a slightly larger proportion than in the 2011 survey (62%).

In contrast, there is a diminution across the board for all other treasury management tools and sys-tems. Only 32% of the executives surveyed say their company uses an internally developed TMS, for example, compared with 51% three years ago. Usage of vendor-provided on-premise TMS has also fallen, to 17% from 36% in the 2011 survey.

What’s been happening? It seems that more companies are opting to use spreadsheets and an e-banking portal (44%) for treasury and cash management, rather than a treasury management system developed in-house or provided by a tech-nology vendor. The spreadsheet/banking portal combo also appears to be replacing the use of end-to-end solutions provided by a banking part-ner (38% from 47% in 2011).

The use of e-banking portals was not even asked in the 2011 survey, because it was seen as an emerging platform that few companies were uti-lizing, along with cloud-based TMS solutions. It seems companies have now overcome concerns about security and other issues with corporate online banking (but not with cloud-based TMS).

N = 155 respondents (2015 survey); 191 respondents (2011 survey). e-Banking portal and vendor-provided cloud solution were not among the choices in 2011. Totals do not add up to 100% because multiple responses are allowed.

Spreadsheet Madness

CFO Innovation conducted its first treasury survey in 2011. The question on the use of spreadsheets and other processes and platforms was repeated in this survey to track changes, if any, over three years.

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


14

How treasury processes are managed, by type of company

N = 50 respondents (Asian MNC); 54 respondents (Non-Asian MNC); 51 respondents (local enterprise). Totals do not add up to 100% because multiple responses are allowed.

At 59%, the use of spreadsheets in treasury man-agement is relatively lower in local companies (that is, enterprises that operate only in one mar-ket) compared with Asian MNCs (Asia-headquar-tered companies with operations and subsidiaries in more than one market) and non-Asian MNCs (US- and other non-Asia headquartered compa-nies with operations and subsidiaries in more than one market).

Compared to MNCs, local enterprises are more likely to utilize an internally developed TMS and less likely to use an end-to-end solution provided by a banking partner. They are also less likely to subscribe to a Bloomberg or Reuters terminal.

The irony is that, as the average ratings on sat-isfaction with overall treasury management indi-cate, the use of spreadsheets is actually associat-ed with the lowest level of satisfaction compared with vendor-provided and internally developed TMS and e-banking portal.

Similar trend lines are evident on cash forecast-ing, cash visibility, cross-border transfers, treasury risk management and foreign exchange – the use of spreadsheets is consistently associated with lower levels of satisfaction compared with the use of vendor-provided TMS.

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


15

How satisfied are you with the various aspects of treasury management?

N = 50 respondents who use internally developed TMS, 30 respondents who use vendor-provided TMS, 68 respondents who use an e-banking portal, 103 respondents who use spreadsheets. Ratings ranged from 1 (very dissatisfied) to 5 (very satisfied)

Those who use spreadsheets rate satisfaction with cash visibility and risk management lower than users of vendor-provided and internally de-veloped TMS and e-banking. On the other hand, cash visibility and risk management are the areas where vendor-provided TMS excels.

The use of e-banking portals is also associated with low satisfaction levels on risk management and on foreign exchange, an area that users of vendor-provided TMS give the highest satisfaction rating.

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


16


When you next review your TMS, which would be the most important technology platform?

N = 60 respondents. N/A and No Comment answers were stripped out. Total does not add up to 100% because multiple responses are allowed.

The same question was asked in the 2011 survey, when a higher proportion, 45%, said the cloud would be the most important technology plat-form. In the current survey, more respondents also ticked off ‘no preference’ (31% vs. 24%).

Note that cloud-based TMS usage is negligible in this survey – despite the 45% who expressed in-terest in this technology platform three years ago. It seems that ‘being interested’ cannot really be equated with ‘going to implement’ as far as TMS platforms are concerned.

At 3%, the sample of cloud-based TMS users is too small to allow observations to be drawn. That may change going forward. Asked which would be the most important technology platform when their company reviews the way it conducts treasury management, 40% of the executives surveyed pointed to cloud computing.

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


17

What major technology investments are you looking to make in the next two years?

N = 151 respondents (2015 survey); 178 respondents (2011 survey). Totals may not add up to 100% because of rounding

Indeed, when asked what major technology investments their company is planning to make in the next two years, only 30% pointed to TMS implementation or upgrade. More companies will focus on ERP installation/upgrade and improving risk management tools and processes.

The priorities today remain basically unchanged from three years ago.

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


18

What changes are you planning to improve treasury management?

N = 150 respondents. Total does not add up to 100% because multiple answers are allowed.

The status of technology as lower down the list of priorities is confirmed when respondents were asked what changes they plan to make to improve treasury management in their company.

Only a third of the executives surveyed (34%) say they will acquire new technology. The overwhelm-ing plan of attack will focus on improvement of internal processes (83%), followed by training for staff (55%).

Interestingly, beefing up the number of treasury staff is way down the list at 13%. It seems the preferred approach is to maximize the capabilities of what the company already has, both in terms of processes and people.

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


19

Leapfrogging: A practical approach

What will you change if you can do over treasury management implementation?

N = 137 respondents. N/A and No Comment answers were stripped out. Total does not add up to 100% because multiple responses are allowed.

An open-ended question was posed to the re-spondents, asking them to imagine that they had the chance to implement structures, processes and systems all over again. What would they do differently? The individual free-form answers were grouped under general categories.

The most frequent response is that they will not change anything (16%), with another 10% saying the issue does not arise because the decision was made elsewhere (this would be mostly respon-dents in non-Asian multinationals).

As one respondent puts it: “It was fit for the pur-pose at the time it was put in place.” While the company has grown dramatically over the last few years, adds a treasurer, “it was not of a size and complexity that required a robust electronic TMS solution. There was very little need until now for such a system.”

It’s a practical and prudent approach. Why acquire an elephant gun when all you’re interested in is duck-hunting? “Our set-up is quite simple and my plan is to continue the same structure at the mo-ment,” explains another respondent.

However, her company is planning to expand in terms of products and markets. “With more plans for diversification, I foresee a much more struc-tured treasury operation and introduction of cur-rent technology to address risk, liquidity, and cash management,” says this treasurer.

But many other respondents do feel they could have done things differently. The focus of that do-over is mastering what exactly the TMS can and cannot do (12%), making sure the system will help with cash forecasting (11%), and taking steps to involve the company’s banking partners (9%).

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


20

“The TMS was [highly] customized and a lot of good features may have been compromised,” says one respondent. Another CFO has the op-posite observation: “We should have tailored the systems and structures to fit with the business model and the needs of the company, at the same time made it dynamic enough to adapt to chang-ing internal and external scenarios.”

Other comments include choosing “plug-and-play” TMS that integrates smoothly with the ERP, banking and other systems, a “more user-friendly’ solution and a TMS that can “reduce overall costs for payments,” “allows scenario-testing,” “drives cash planning,” and capable of “cross-border” transactions.

Forecasting is the one aspect of treasury man-agement that generates a substantial amount of should-have-done-this mentions. We should have made sure the implementation “improved the cash forecasting process, particularly on purchas-es and inventory,” says one respondent.

Forecasting was also mentioned in the context of cash flow, cash collection and disbursement, and integration with existing systems. The TMS “should have been integrated with the ERP and banking systems to help my forecasting become more accurate,” says one CFO.

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Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction

Conclusion


About This Report



A Leap Forward


21

Conclusion

The continued prevalence of spreadsheets in trea-sury management is a bit of a puzzle, in light of the low satisfaction rating that its users give it on overall treasury management and the specific aspects of cash forecasting, visibility and risk management.

Then again, the spreadsheet, for all its faults, is a familiar tool for most finance professionals, something that they have used from their school days. It is flexible and the basic software comes bundled with Microsoft Office, which makes it, in a sense, free. Companies buy the entire productiv-ity suite as a set, so they might as well make full use of the spreadsheet component.

But spreadsheets can be cumbersome when large volumes of data are involved, in addition to be-ing vulnerable to manual errors and deliberate attempts to massage the numbers. Spreadsheet files can also be difficult to share in real-time with a large number of users across the organization.

As it happens, these are the shortcomings that technology providers say their TMS solutions ad-dress. The touted advantages also includes user-friendly features such as pre-defined categories and formulas, anytime, anywhere accessibility, and in the case of cloud solutions, automatic soft-ware upgrades, real-time updates in response to new regulations, and pay-as-you-use capabilities.

And as we know from the findings of this report, users of vendor-provided TMS tend to be more satisfied with overall treasury management than users of spreadsheets, internally developed TMS (meaning a solution by the company’s own IT de-partment) and e-banking portals.

One intriguing notion is the idea that the rise in usage of online banking is somehow linked to the decrease in utilization of TMS solutions, both in-ternally developed and vendor-provided. Is it pos-sible that companies are trying out online bank-ing in place of a full-blown TMS?

Perhaps. Satisfaction levels of e-banking users are on par with those of vendor-provided TMS on cash forecasting, visibility and cross-border trans-fers. However, they diverge on risk management and foreign exchange, two areas where online-banking users express lower levels of satisfaction compared with TMS users.

At the end of the day, of course, the decision of how to structure and run the treasury function should be a pragmatic one. It should be a practi-cal response to the unique circumstances of every company. As one respondent puts it: “Our com-pany is too small for fancy technology; we just use Excel.” Or as another CFO says: “The size of our treasury means we could merge it with the nor-mal finance functions.”

But as company operations increase in size, geo-graphical reach and complexity, the level of sat-isfaction with spreadsheets and online banking may deteriorate. That may be the time to “focus more on risk management of the treasury func-tion, supported by sound treasury management practices,” says one respondent.

The third of respondents in this study who say their company is in the process of leapfrogging presumably have reached this point.

For others, it is a good idea to learn about what is out there in terms of treasury technology, man-agement structures and best practice procedures. In that way, they will be prepared for the time their organizations will have become large and complicated enough to require them.

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Conclusion

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction


About This Report



A Leap Forward


22


With increasing pressure on treasuries everywhere to optimize strategic efficiency, the scale and complexity perceived to justify the adoption of automated processes becomes ever more important to dispel.

Evidence from this study taken from the many corporations across Asia Pacific who are apparently experiencing a low level of treasury management satisfaction, suggests that now is the time to overcome these misconceptions and master the art of leapfrogging.

Vendors are also feeling the pressure to adapt; we too must become more strategic and deliver higher customer value through an all-encompassing managed service that facilitates decision-making and allows treasurers and CFOs to focus on the business objectives at hand.

No longer simply a processing engine, we must deliver a completely integrated service. This should range from streamlining the bank connectivity for group cash positions to automating the capture of liquidity, to suggesting deal positions from a cash forecasting perspective and all subsequent variance analysis based on historical data - all of which must have the option of being generated without manual intervention, all of which must have the option of being vendor-managed to reduce total cost of ownership.

So what does it mean to leapfrog?

The operational risks and inefficiencies of using spreadsheets are clear and reflected here in the low level of satisfaction they yield in this report. The limitations and time lag associated with having to manually consolidate error-prone data to varying parties for a centralized view, coupled with the lack of transparency, auditability and control in order to substantiate data integrity, can no longer be adequate for those organizations striving for growth and increased shareholder value.

Similarly issues with the use and hidden cost of supporting e-banking portals, which often result in the duplication of effort, do not make sense where a bank-agnostic, automated, secure alternative can consolidate data into a single repository.

An interesting observation from this study is the apparent high level of satisfaction with cash visibility compared with the low level in cash forecasting. How can a strategic, results-driven treasury have one without the other?

High visibility of cash is somewhat negated if there is a lack of accurate cash forecasting and the efficient allocation of cash based on a short, medium and long term view.

In turn, accurate cash forecasting cannot take place without a holistic view of risk. Automated integration of risk requires a full historic and future view of cash positions available for custom-built risk analysis. Without this, regardless of size or sophistication, companies are missing half the story.

We know that adapting and embracing change facilitates growth. A recent treasury technology study we conducted in Australia & New Zealand revealed that 54% of respondents with an installed TMS cite a lack of internal IT support as their greatest challenge.

Of those, 78% would value the security and time to focus on strategic business objectives enabled by managed upgrades and outsourced exception handling.

So keep in mind that you don’t have to go it alone. Leapfrogging can be more than just the [processing] engine, it can be having a chauffeur and mechanic too…

Mike Kresse, EVP Growth Markets, SunGard’s AvantGard

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Conclusion

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction


About This Report



A Leap Forward


23

About this Report

Fieldwork for this online survey was conducted from 29 May to 31 July 2014. Cesar Bacani, Editor-in-Chief of CFO Innovation, devised the questionnaire, analyzed the results, and wrote the report. Dick Wong, Art Director at Questex Media Group, designed the report.

A total of 155 respondents from Singapore, Hong Kong, Philippines, China, Malaysia and other jurisdic-tions in Asia participated in this survey. They are CFOs, finance directors, treasurers, vice presidents of finance and other senior executives.

Respondents are personally based in the following markets . . .

. . . hold positions with the following titles . . .

Sponsored by



About This Report

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction




A Leap Forward

Conclusion


24

. . . employed by a company that is a . . .

. . . and work with a treasury office staffed by:

Sponsored by



About This Report

Contents

Treasury Technology

Key Takeaways



Spreadsheet Madness

Introduction




A Leap Forward

Conclusion

The Art of Leapfrogging - Treasury Technology Market Study

Documents

Transcript of The Art of Leapfrogging - Treasury Technology Market Study