One of the many requirements of the treasurer is the need to review technology applied within the treasury department regularly and to commission subsequent upgrades and/or replacement of that technology as necessary.  Although that is naturally an ongoing requirement, there have recently been a number of articles published in the treasury press, both online and in print, devoted to the various problems and options associated with the selection of new treasury technology, whether for the first-time purchase of a treasury management system (TMS) or the replacement of old and outdated technology or systems no longer suitable for a treasury that has expanded its role through business development or corporate acquisition.

In their 2019 Global Treasury Benchmarking Survey, PwC state: “Digital Treasury is an ecosystem of technologies that treasurers should seize” and the survey concludes “executives believe there is no sustainable future without embracing the digital agenda.”

Of particular interest are two articles recently published on CTMfile that review reports:

• Deloitte (Advantage evolution: Treasury Technology Market Intelligence 2019)
• Aite Group (Digital Treasurer’s Handbook for Treasury Technology Selection) respectively and which address the routes to take on such a project.  

Both reports are clearly well researched and present sound methodology and graphic representations of the process, market and options available describing their recommended routes to take and warning of the hurdles to cross.

Which best route to follow?

But which is the best route to follow?  Both routes move you through the selection project logically towards the final choice of supplier while the Deloitte report touches on the implementation time scales of the respective products.  And with a careful study we can see that both routes indeed share the same basic principles that any best-practice selection project should follow. 

The key to completing a successful TMS selection is to ensure that you have considered and agreed the most suitable process to follow that will ensure your requirements are met and that can be managed by the resource you have available.  If you send out six RFPs to six suppliers you will in return receive back six fully completed and detailed RFPs that needs to be examined and compared line by line.  If you do it that takes time; if your consultant does it that costs money.  So the process should be thorough but manageable.

In relation to the Deloitte report, CTMfile asks if this is the “end of the RfP in TMS selection”.   The answer is that it probably is not but that the emphasis of the RfP has switched from the traditional functionality-based questions (although still necessary – it is surprising how often “new” functionality turns up) to an interrogation surrounding issues specific to your own organisation and treasury operation, studying the defined processes you aim to follow and the options each supplier offers by way of solution. 

The questions

The questions should not simply ask if it can be done but also how it can be done.  The method of working should match the perceived requirement of the client and should lead to an opportunity to discuss alternative approaches.  A common pitfall is where treasury processes end up being tailored to fit the restrictions of the system; whereas the system should have the flexibility to meet the needs of the client.

Both reports address the importance of the client/supplier relationship throughout the implementation project and beyond.  Many projects have hit quicksand through a lack of understanding by the supplier of the client’s true needs, timescales and ambitions and the client’s lack of understanding of the supplier’s methods of operation and resourcing.  In the worst cases, as the project slips further behind each party is tempted to think of the other as the enemy, at which point the project is probably doomed to failure or at the very best an unsatisfactory implementation.  The key is to expand the project to ensure that at the outset treasury grasps the opportunity to review its current method of operation and the procedures and processes it employs to deliver “transformational changes in their treasury processes”.  This new vision should then be communicated fully to the suppliers and detailed discussions held with the preferred supplier to ensure they understand and share that vision and that a detailed project plan laying out the road map to its completion is drawn up with both teams aware of their own deliverables and responsibilities.  The client/supplier relationship has to be one of a partnership for the project to be successful and produce maximum value at the outset and over time as treasury and the business continue to evolve. 

Recommended selection process

The selection project then should take the form of a series of predefined steps built into a project plan with the following as a recommended route:

1. Review and requirements definition

• Review the treasury operation as it stands and where it aims to be and complete a requirements definition that goes beyond basic functionality and reporting requirements.  
• Include a gap analysis highlighting the difference between what treasury has and what treasury wants. 
• Make sure all key personnel are involved, inside and outside treasury.  
• Ensure that all stakeholders and sponsors agree on the completed document and that initial budget is agreed in principle.  

2. Request for Proposal

• Ensure all aspects of the requirements definition are addressed
• Ensure questions are framed to demand fully explained responses
• Distribute to selected suppliers – possibly just the final shortlist.
• The criteria for selection should reach beyond fundamental functionality as already discussed above and the reports reviewed provide useful guidance in that respect.

3. Review the TMS marketplace.

• It is important that all options are considered to ensure no opportunities are missed.  
• Submit RFIs where appropriate.

4. Selection process

• Viewing and comparing the systems and the process employed for this is the main plank of the project.  The reports under discussion provide sound guidance and input from specialist consultants or other experienced sources can prove valuable.
• Agree upon a preferred supplier after completion of a carefully managed and structured series of system demonstrations and workshops incorporating open discussion and exchange of ideas.
• Reference sites:  Prior to final selection it is essential to take up references of existing users of the system, particularly addressing implementation and ongoing service and support.

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CTMfile take: There is considerable overlap between these three methodologies for evaluating TMS solutions, There is no ‘right’ answer, corporate treasury departments have to choose which approach they are comfortable with.