Top of Mind Posting from Prof Klein

Anita Hawser, Open Access, Global Finance, June 2007: 21,6 page 37

"On demand software services are making increasingly sophisticated treasury management systems available to a much wider range of companies..."

This article describes options available to corporate treasurers for managing the regulatory reporting required for Sarbanes-Oxley and Basel II. What surprised me was the extreme prevalence of spreadsheets across all businesses, large and small, to perform a wide variety of reporting including cash forecasting. According to this article, over 60% of international corporate treasurers using spreadsheets. Why? Because it appears to be cost effective, that is, until something goes wrong. The upfront investment associated with a Treasury Management System (TMS) has been estimated at almost $200K for six users. A PC-based spreadsheet with some file back and recovery costs virutally nothing, unless you consider the cost to maintain the macros and format of the spreadsheets.

TMS software has been available to companies for decades and yet its implementation is not wide spread, especially in small to middle market firms. The upfront cost is clearly one significant hurdle. What I also find interesting is that early instances of application server provider (ASP) solutions were viewed as watered down versions of the licensed TMS solutions. Today, many vendors offer the identical platform to ASP customers as the licensed version. The good news, it should be easier, faster and less expensive to deploy for most firms.

This article does not fully account for the implications of implementing a major process change. Imagine the employee who measures their value by the spreadsheets they control. Using a TMS is likely to eliminate these holders of sacred data. And, somehow companies must battle the "not invented here syndrome" which serves to get companies to look at their uniqueness and areas of similarity. Many companies, especially large ones, are reluctant to see that they have the same business requirement and ultimately process. Information security and privacy must also be considered. That said, small to mid-size corporate treasurers must spend so much time on compliance related issues that ignoring the ASP delivery model for TMS solutions should be considered. Open Access serves to open the eyes of corporate treasurers to alternative ways to support the compliance reporting for its treasury operation.