What is software as a service, aka SaaS? As with any other industry jargon the term is often applied to a variety of different scenarios, often erroneously. In particular, it is important to distinguish between a SaaS solution and a system that is accessed via a web browser. SaaS solutions refer to a treasury management system (TMS) that is hosted by the vendor or another third party, with users accessing the application via a web browser using their user ID and password.
There is no software located on the company’s own platforms, so no dedicated hardware or IT resources are required. Instead, the TMS is hosted in a common environment with a shared database (although access is only permitted to the company’s own data). Upgrades and corrections are provided automatically, as opposed to being scheduled between the vendor and customer.
Installed and Hosted Solutions
However, SaaS are not the only treasury solutions that can be accessed by a web browser as opposed to requiring specific software or drivers on the user’s PC (which may also be a mobile device in some cases). A TMS may be installed on the company’s own IT infrastructure, but still be easily accessible to users, for example via a browser.
Alternatively, hosted or application service provider (ASP) solutions are those hosted and managed by the vendor or a third party. Again these may be accessible through a web browser. Like a SaaS solution, hosted solutions are managed by the vendor, reducing the amount of IT resource that treasury requires. In contrast, however, the system is often hosted on a dedicated platform, with the customer controlling the timing of major events such as upgrades.
Is SaaS Right for Me?
SaaS solutions undoubtedly bring a variety of benefits for customers of certain profiles. There is no need to dedicate IT resources to implementing and maintaining a treasury solution; similarly, interfaces to external systems such as electronic banking systems are managed by the vendor. Many companies are attracted to this model, and it is an ideal solution for delivering functionality across multiple systems. For example, an electronic bank account management (eBAM) or bank fee analysis solutions can be delivered via SaaS solutions, in addition to cash management, debt management, investment management and other functions.
While SaaS treasury solutions bring obvious advantages, treasurers need to consider their functional requirements carefully before determining whether this is the right approach for the business. By using a shared treasury environment, there is less flexibility in workflows, instrument definition, reporting and key performance indicators (KPIs) than an installed or dedicated solution can provide, and no ability to add custom processes. Similarly, it may not be straightforward to integrate a SaaS treasury solution with in-house systems such as a payments factory.
Where treasury’s requirements are relatively straightforward, these issues may be insignificant. If there are more bespoke functional, reporting or integration requirements, the loss of flexibility resulting from a shared environment may mean that either a hosted solution, or solution installed on your own technology infrastructure is more appropriate. A hosted solution, for example, still avoids the need for dedicated IT resources, but treasurers benefit from greater flexibility and sophistication in functionality, reporting, processes and instrument definition. For those looking to implement capabilities such as SWIFT 3SKey for personal digital signatures, this will typically be better supported through an installed or hosted solution.
Another criterion for deciding whether a SaaS solution is right for the business is the way in which the solution will be maintained over time. With a SaaS solution, upgrades are performed across the whole customer base at once, so individual customers have no discretion over the timing of upgrades. Again, in those cases where treasury’s requirements are relatively modest and user testing of new upgrades can be completed quickly, this probably presents few issues and may be considered an advantage.
Where the treasury department is larger and/or more diverse or complex, it can be inconvenient to have the timing of upgrades imposed on the business. For example, it may not be feasible to perform extensive user testing during busy periods, such as staff holidays or major events such as mergers or acquisitions, and changes to functionality may be undesirable during these key business events.
The Wider Enterprise
There are also factors beyond treasury that may influence the decision over SaaS. Some companies’ IT security policies dictate that SaaS solutions are not permitted, requiring that treasurers hold sensitive systems and data in-house or in a dedicated hosted environment.
The growth of the ‘big data’ concept will also increasingly be a factor. As the amount of data with which every organisation is bombarded continues to grow, the idea of ‘big data’ is to manage the volume, velocity, variety and veracity of data in a structured and meaningful way. This is likely to have a major impact on the way that many companies approach their business applications and databases including in treasury. As treasurers do not have their own database when accessing a SaaS treasury solution, it is far more difficult to accommodate a ‘big data’ approach.
Innovation for Greater Choice
Treasury management solutions have developed enormously over recent years in response to new technology opportunities and treasurers’ functional responsibilities. SaaS deployment is one manifestation of this evolution and offers considerable opportunities to many treasurers for whom a TMS has appeared an unrealistic option in the past.
It is only one innovation among many that are taking place, however, so treasurers need to consider their IT, functional, reporting, integration and security needs carefully before deciding whether SaaS is right for them. Choosing the right deployment model can be an important factor in ensuring that treasury achieves the balance of convenience and accessibility with functionality and information.
When Mark Cuban declared that "Data is the new gold" he highlighted why information is possibly the most valuable asset a business has. APIs are the unsung heroes that make it possible to extract that value.
How treasury stands to benefit from blockchain: Ripple’s goal to revolutionise cross-border transactions
Imagine a world where cross-border transactions can occur in real-time, at a few cents per transaction, to and from any bank, in any ... read more
Europe’s opening banking regulation is finally here. After months of preparation across the continent, the Revised Payment Services Directive comes into effect on January 13.
A 'digital treasury ecosystem', where the CFO or treasurer makes real-time financial decisions on their tablets, is not far beyond the reach of currently available technology. In such an ecosystem, there is no direct reliance on banking partners or the company’s broader organisation - just an executive and an interactive dashboard powered by interconnected digital technologies, writes Eric Cohen, PwC.