Are the 30 words in the Press Release released last week, “Reval, a global provider of cloud-based solutions for treasury and risk management, announced that it has entered into a definitive agreement to be acquired by ION Investment Group.” a seismic shock to the treasury management system industry or just an inevitable development and consolidation?
ION Group have been gobbling up the EMS providers for years: Wall Street systems and City Financials in 2010, IT/2 in 2013, Financial Software Systems later in 2013, and now Reval in 2016, making them by far the biggest provider of TMS systems and services to the corporate market. Now they really overshadow FIs(SunGard). But does it really matter?
Benefits for ION
It is no surprise that Andrea Pignataro, ION's CEO and Founder, said, "The acquisition of Reval substantially increases our footprint in treasury cloud services and enriches our product portfolio with leading functionality in risk and hedge accounting. We will also be able to leverage Reval's strong sales, marketing and customer success teams across the product portfolio under Jiro's leadership." This shows the drivers in the TMS market:
- footprint, i.e. number of customers using your systems and global coverage
- the richness and depth of the product portfolio, particularly in risk and hedge accounting
- size and quality of sales team
- consultative client support
- customer service teams.
One TMS expert commented tersely: “I guess they get hedge accounting and 500+ clients.” But it is more than that because they are not just getting Reval’s SaaS driven systems, but also Reval’s sales, consulting and support teams.
The acquisition of Reval gives them another solution to offer corporate treasury departments. ION can now offer ION can now offer IT/2, Financial Software Systems, City Financials, Wall Street Suite and the SaaS based Reval solution for corporate treasury departments to choose from. AND Reval also covers SMEs, see. But will corporate treasury departments understand and buy this new combination?
How will corporate treasury departments react?
For corporates TMS’s are all about the total solution – the functionality, system reliability, ease of use, customer service and strategic consulting support - and understanding what the supplier is offering. For ION the first problem is going to be making sense of their product range, e.g. which system to offer to which client. At the moment some corporates are saying: I was expecting to be offered IT/2 and instead I was offered the City Financials solution. It will get even worse because Reval products overlap both of these solutions. ION will have to make it very clear what is the differences and the merits of each solution.
Also, ION have a reputation for having very tight cost controls including minimising User Groups. This unfortunate because in iTreasurer Enrico Camerinelli of the Aite Group, is quoted as saying that “they have found that, corporate treasurers expect treasury systems vendors not only to build and sell software, but also to generate thought leadership, share knowledge, and disseminate information across the community of treasurers.”
Users of the current ION systems wil be concerned about:
- product development: what will happen to the current development plans for their system
- customer service support and how it will change
- the long-term commitment to their product and whether in the longer term they will have to move to other systems
- and many other issues.
ION have a major job to integrate Reval into their current product range, but given previous experience with ION takeovers, after a few months, things will settle down and normal service will be resumed.
Impact on other TMS providers
Views on how this will affect other TMS providers varies, Camerinelli believes the ION-Reval deal “further consolidates the (already asphyxiated) TMS market.” However, CTMfile is not so sure because all TMS providers, apart from one or two, are reporting moderate to significant growth – part of which may that the market for TMS is bigger systems than predicted as thye find new niches. Furthermore, the previous takeovers by ION and the entry of Bloomberg into the TMS market did not have much impact.
CTMfile take: One thing is clear, there is an expanding market for quality TMS solutions that combine easy to use functionality with good consultancy support and excellent customer service. The future is bright for quality providers.
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