The annual Treasury Management Systems (TMS) Survey, conducted in March/April 2011, polled more than 400 corporate level respondents. The respondents were geographically spread and western European-based readers accounted for half of the total survey respondents. North American readers represented 28% of the responses, while respondents from Asia-Pacific made up 12% of the responses.
Almost two-thirds (63%) of survey respondents indicate that their organisations use a TMS. Slightly more than half (55%) of organisations use a system built by a third party provided service, while 8% use a system built in-house.
The most popular system in use is SunGard AvantGard: 29% of the survey respondents have this system in place. SAP and IT2 were the next most popular, used by 12% and 11% respectively. A total of 18% of respondents used one of four systems offered by Wall Street Systems: City Financials (7%); Treasura (5%); Wallstreet Suite (4%); and Trema (2%) (see Figure 1).
The use of TMS is more prevalent among larger companies. A majority of organisations with annual revenue of more than US$500m use a TMS. The largest – those with annual revenue of more than US$10bn – are the most likely to use such systems (85%).
The majority (55%) of companies’ TMS are located in-house, whereas 44% is delivered as a software-as-a-service (SaaS). SaaS delivery is most prevalent in Asia-Pacific where it makes up 61% of TMS installations. It is most common with medium-sized corporates, i.e. those with revenues from US$500m-$1bn.
Seven out of 10 survey respondents indicate that their organisations’ TMS have been running for three or more years, with 26% reporting that their companies have been using the specific TMS for more than eight years. A small percentage – 10% – of organisations is still implementing their TMS. Companies based in the Asia-Pacific region are most likely to have had a TMS for more than eight years. Those in the Middle East/Africa are the newest users of TMS: 20% of organisations based in this region are still implementing their TMS.
Perhaps not surprisingly, large organisations have been using TMS longer than have smaller ones. Forty-one percent of companies with annual revenue of more than US$10bn have used a TMS for more than eight years; only 4% are still implementing such a system. Half of small organisations – those with annual revenue of less than US$10m – have had their TMS in place for less than one year.
Slightly more than 40% of survey respondents indicate that their companies link their TMS to one to four treasury centres/hubs, while just less than 40% indicate that their organisations have a standalone system. Around one fifth of organisations link their treasury management systems to five or more treasury centres/hubs. The number of hubs linked to the main TMS is a good proxy of a company’s maturity in the use of the system to manage its global treasury operations (see Figure 2).
Companies based in western Europe and North America are the most likely to link their TMS to one to four treasury centres/hubs. Organisations located in the Middle East/Africa are the most likely to link to more centres. The use of 12 or more treasury centres/hubs is small (a total of 9%), but more likely among companies in western European (12%) and the Middle East/Africa (10%). Company size appears to have no bearing on whether or not an organisation’s TMS is linked to additional treasury centres/hubs.
A significant share of organisations record foreign exchange (FX), commercial paper, loans and deposits in their TMS. The recording of more complex instruments in a company’s TMS is less frequent (only 6%). Organisations located in the Asia-Pacific region are more likely than those in other regions to record more sophisticated instruments, such as complex derivatives, in their TMS (see Figure 3).
As with the linkages to additional treasury centres/hubs, a company’s size does not seem to influence the recording of financial instruments. The instruments most often recorded in an organisation’s TMS are FX, commercial paper, loans, and deposits. At least one third of organisations – regardless of size – record these instruments in their TMS.
The majority (60%) of respondents’ TMS interfaces with an enterprise resource planning system (ERP). SAP is the most popular ERP system: 61% of the survey respondents’ have this system in place. Oracle was second most popular, with 21% of respondents using this system.
Nearly a third (30%) of survey respondents report that their organisations’ TMS/ERP interface is completely automated. Four out of 10 indicate that minimal manual intervention is required, and almost a quarter (24%) report that their TMS/ERP interface involves some manual intervention. Only 6% of organisations’ ERP interface with their TMS requires significant (or total) manual intervention (see Figure 4).
Companies also have the choice to interface their TMS to SWIFT. Again, such interface can require little, no, or a significant amount of manual intervention. The majority of organisations (60%) do not interface their TMS with SWIFT. One fifth (21%) do so and the interface is completely automated.
The majority of survey respondents indicate that their organisations’ TMS does not interface with a risk management system. Of those that do have such an interface, the largest share is located in the Middle East/Africa region and the smallest share is located in North America.
Ease of Use and Effectiveness
Only a very small percentage of survey respondents (9%) report that their organisations’ TMS is difficult (or very difficult) to use for daily functions. For the majority of companies, using their treasury management systems for daily functions is very easy, easy or at least satisfactory (see Figure 5).
The majority of survey respondents indicate that their organisations’ TMS are very easy, easy or satisfactory in terms of making changes to reports and workflows. But nearly a third reports some difficulty with this function. Most organisations are satisfied with their TMS in transaction capture, business intelligence, forecasting, risk management and reporting; indeed, only 2% of survey respondents indicate that the effectiveness of their TMS at transaction capture was either “poor” or “very poor”.
Companies located in the Middle East/Africa are the most satisfied with the effectiveness of their TMS at transaction capture, business intelligence, forecasting, risk management and reporting functions. Smaller companies are less demanding from their TMS. The levels of satisfaction compared to larger organisations show that the latter have higher expectations from the system used.
The majority of survey respondents indicate that their organisations’ TMS is most effective at cash, debt and investment management functions. TMS is least effective at derivatives processing, but only by 23% of respondents. Organisations based in western Europe, Asia-Pacific and North America rank their TMS as most effective at cash management.
For most organisations, their TMS have proven at least “satisfactory” in process control and compliance, improved decision-making, and in staff reductions or increased efficiency. Eighty-three percent of organisations located in this region rank their TMS as “very good” or “good” in improving decision-making. Eighty-six percent of North American organisations indicate their TMS contributed positively to improved decision making and staff reductions/improved efficiency.
Almost any management tool can be improved upon, and this is true of an organisation’s TMS as well. Adding other functionalities to a system – for example electronic bank account management (eBAM), trading, commodity hedging – can enhance a company’s efficiency and financial performance. Regardless of region and company size, eBAM and cash flow forecasting rank the highest (see Figure 6).
For companies based in the Asia-Pacific region, risk management ranked first, followed by eBAM and cash flow forecasting, whereas for those in western Europe and North American cash flow forecasting ranked first, followed by eBAM and risk management.
Internal efficiency and external service go hand in hand in any modern treasury management strategy. The need for smaller companies to excel in customer service is witnessed by the 54% of respondents both voting for eBAM and cash flow forecasting.
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