Time to Dream Big on TMSs
Cloud-based treasury systems can offer a flexible, scalable, and affordable option for treasurers to drive digitalisation of the function irrespective of businesses size. To take advantage of this innovation, being able to differentiate the various offerings is crucial.
Perhaps the biggest democratisation of treasury technology has been driven by cloud services. Treasurers no longer have to work for one of the biggest multinationals in order to gain access to a TMS, as cloud-based options have risen up to dethrone their monolithic on-premise machine predecessors.
Cloud solutions essentially take the operational complexity of running a TMS away from the treasury team, putting that aspect in the hands of the provider instead. Mark Tirschwell, Group Chief Information Officer, ION Group, comments: “There’s a reason that we have thousands of customers using our cloud-based solutions across the globe. Treasurers can make their payments and manage their cash via the system, alongside other essential tasks, and leave the running of the system itself to us. This enables treasurers to focus on what they need to do to drive their business forward.”
Staying secure
Of course, the argument in favour of a cloud TMS is a little more nuanced. A natural concern around cloud computing, for those new to the concept, is the security angle. The thought of private financial data being stored physically outside of the organisation can be a troublesome notion for some companies, which is why it is a critical focus for most vendors.
“Security was the first thing that we talked about when we re-architected our solution and built it into the cloud,” reveals Tirschwell. “Making sure that our customers’ data is secure and protected is our primary mission. We have state-of-the-art software that we install on every single server that manages this in real time with a 24/7 security operations centre.”
For small- and mid-sized organisations, in particular, this level of security is likely far more comprehensive than could be achieved internally, from both a data security and storage perspective.
“We work with our partners, Amazon and Microsoft, to leverage what they do, then overlay our own tools to augment the level of security,” continues Tirschwell. “This also means customer data is located where it needs to be, from a regulatory perspective. If it needs to stay in the EU, it stays in the EU. If it needs to be in the US, Asia Pacific, or anywhere else in the world, we have access to – and can use – all of the data centres that Microsoft and Amazon provide.”
Flying solo or together?
When investigating the suitability of a cloud solution, it’s also important to understand the difference between single-tenant or multi-tenant models, with the version that treasurers choose to implement dependent on the scale and complexity of their operations. Multi-tenant solutions offer a shared infrastructure for many users, while single-tenant options provide bespoke software solutions on closed infrastructure that is used only by that organisation.
Determining which style of cloud offering is best for a specific treasury function is an important early distinction to make when assessing cloud TMS options. Tirschwell explains ION’s approach to cover both scenarios: “On the treasury side, we have some solutions that are designed as true multi-tenant solutions, such as Reval and Treasura,” he says. “Those solutions are fantastic and are appropriate for a certain type of customer and what they want to achieve. For example, global multinationals use Reval’s scalable cash and risk capabilities to manage the financials of their growing businesses.”
Then there are the more complex products that operate on a single-tenant basis. “The way that larger corporates integrate single-tenant solutions, such as the Wall Street Suite, into their back-end systems and with other providers really lends itself towards us delivering a solution that has more customised elements,” Tirschwell adds. “Deploying those in a single-tenant fashion is what makes most sense for those products and those customers.”
In addition, multinational corporations tend to have bespoke security requirements. For example, they may have a need to look at the security logs of the cloud solution provider. While hard to achieve with a multi-tenant solution, it is far simpler with the single-tenant option.
Considering costs and sidestepping pitfalls
When treasurers put together a business case for investment in treasury technology, costs and ROI are critical elements that senior management will be scrutinising. Often, cloud solutions can be an attractive option in this regard, thanks to options such as ‘pay per play’ and the lack of an exorbitant upfront set-up cost. This can vary depending on the provider, however, so treasurers need to examine the potential expense of any cloud solution they are evaluating to avoid any nasty surprises down the line.
“The total cost of ownership of a cloud solution can be measured in a variety of ways and for some customers that are sophisticated enough to understand what their internal costs are, our solution will most certainly be less expensive than doing it themselves,” Tirschwell comments. “Cost considerations must include all the elements that go into operating and managing a solution, not just infrastructure but software and people’s time. If treasurers measure all of the pieces that fit into those aspects of their business, a cloud solution like ours will inevitably come out cheaper.”
In addition to benefits such as value and price performance, cloud providers can offer specific features around efficiency and reducing operational complexity that a corporate building its own solution would be hard pressed to replicate.
“We have tools that – at the click of a button – enable customers to move environments and copy databases around very expeditiously,” notes Tirschwell. “Certain products also have features that permit the user to scale on demand, something treasurers who even have their own solution in Azure or the Amazon cloud wouldn’t be able to do.”
The nuts and bolts
As well as scrutinising the potential costs of a cloud-based system, treasurers would be advised to take the time to look ‘under the hood’ of any potential system provider. This includes examining the security of the system, and the measures in place for system resilience so that, if an incident should occur, the business can still operate.
Often, vendors are happy to go through comprehensive scoping exercises with corporates, transparently highlighting issues including what the cloud solution is going to look like, and what the service-level agreement (SLA) metrics are.
“The most important element is to make sure that whatever provider you’re going to go with, that you understand what they do, how they do it, how they secure it, how they back it up and how they’re going to recover in the event of something happening,” emphasises Tirschwell.
Critical questions for treasurers to cover include how their data would be secured, what type of encryption the vendor has, and whether this is end-to-end, whether backups are stored in a place where they can’t be attacked by ransomware, and whether those backups are immutable – meaning that data cannot be overwritten.
From the IT side, it is vital to understand how the connection between the corporate and the cloud will work. How do all the systems that treasury needs to interface with connect? What technologies will the treasurer need to use to do this and are they secure? Will the treasury team be using the internet? Do they need to use some other means of protecting the information as it flows back and forth between the various users? Beyond the initial connection and ongoing use, what is the vendor’s strategy to keep up to date with the latest developments in technology?
“Treasurers should look at how the provider is keeping up with technology changes,” underlines Tirschwell. “Are they going to move to a more cloud-native type of solution, where is the service based and can they scale on demand? We have a fantastic roadmap for how we’re going to take advantage of those technologies going into the future.”
Getting the right fit
The types of corporates using cloud-based treasury technologies run the gamut from multinationals with worldwide operations to far smaller national or regional entities. Tirschwell outlines that ION’s approach is consistent across all sizes of corporate client.
“The way we deliver the solutions is pretty much the same, whether the company is big or small,” he says. “The service for all corporate clients is also optimised to ensure that just because they are somewhere in Asia with very high latency when they connect, for example, that is mitigated through the technology behind the user interface. Everything that we do is consistent across all of our products, because that enables us to scale our business.”
Cloud providers with this level of consistency can operate with just one operations team to manage all the products and operations across the entire customer base. This requires consistency of standards as well as significant investment in automation.
“We’ve invested many hundreds of person-years into the automation that we’ve built into our cloud,” recalls Tirschwell. “That helps us run our operations centre, plan operations around the globe, and gives us and our clients that consistency.”
Be organised, understand interconnections
Another potential benefit of selecting cloud-based treasury technology is the possibility to easily migrate to a different cloud service if the needs of the treasury function outgrow the capabilities or service of its current provider. That level of flexibility is far more likely from a cloud platform than giant on-premises mainframe computers.
“Migration between cloud solutions is easier than between non-cloud options,” affirms Tirschwell. “It also makes it easier if switching to a provider that’s done it before and done so hundreds of times. We have a model on how we migrate a customer from wherever they are into the ION cloud. It’s a very structured approach to taking their system and putting it into our cloud.”
For cloud providers that have a good level of experience in migrating corporates to their platform, there are other efficiencies and cost savings of which treasurers might be able to take advantage.
“For some of our larger customers that use Oracle as their database, we offer the option for them to convert to our SQL server as they migrate into our cloud,” adds Tirschwell. “This move can help to generate large cost savings for them. This is an example of our process, methodology, and tools that we’ve built to deliver a smooth and beneficial migration.”
In addition to security and reliability, corporates transitioning to a new cloud solution must have a good overview of what the interconnections between the other critical systems they use will look like.
“Understand what the user experience is going to be like,” advises Tirschwell. “One treasurer might get rates or market information from Bloomberg and that’s all they need. Another might make payments to SWIFT all day long and get market information from Bloomberg and have connectivity to 15 different exchanges. Those are the essential elements to pay attention to, as it involves bringing in other providers. Be organised and have the right people allocated on both sides.”
Traditionally part of the scoping process at the beginning of a migration, it is critical to document every interface, identify who is responsible for what, where the data is coming from, and what the technology is going to be. Having these points fully understood from the start enables the project to flow smoothly because there are no unknowns.
Endless possibilities
While cloud-based solutions have been established in the treasury technology market for a number of years, that does not mean they have hit a plateau in terms of development. For Tirschwell, the flexibility of the cloud is what will keep it in demand.
“Looking ahead, cloud will be able to leverage newer technologies, meaning it will be possible to break up an application and run pieces in all sorts of different places,” he concludes. “These various segments will be able to talk to each other, meaning the resilience of the solution will increase even more because there won’t be any single points of failure anywhere. This could enable cloud solutions to scale almost infinitely in terms of what they do and how they do it.”
For treasurers using cloud-based systems, it seems that the possibilities are endless. To quote Tom Hardy from the 2010 film Inception, “You mustn’t be afraid to dream a little bigger, darling.”
