Treasury 2.0: Making Treasury Management More Effective

Treasury 2.0 is a term closely related to the concept of Web 2.0, which itself is associated with internet applications that facilitate collaboration, information sharing and user-centric design on the web. Treasury 2.0 embraces these ideas and allows users to more easily discover mission-critical information and interact with each other through dialogues within a virtual community. Traditional treasury solutions only allow passive viewing and processing of content. However, the treasury world is more complex today and real-time interaction with subsidiaries, back office, management and banking partners is a necessity. The concept of Treasury 2.0 therefore includes sharing of information, business-related social networking, and processing and integration of treasury data, which can come from various internal and external sources, such as on-premise applications, software-as-a-service (SaaS) solutions and public websites.

New Forms of Information Discovery and Communication

With Facebook, Twitter, LinkedIn, XING and many other new information and communication tools in the private space, the ‘social messaging’ mode of interacting has become increasingly popular. There are many reasons for this popularity. First, the existing email and various messenger tools (IMs) have drawbacks. The communication formats were static and in silos. Furthermore you could not build networks that allowed users to interact and forge connections. Here the popular social media solutions stepped in.

Today, for looking outside their company walls for somebody with specific skills to help on a particular issue (for example a treasury problem), LinkedIn or XING are good platforms to find the required expertise by going to one of the many professional forums. Furthermore, you are able to communicate within these platforms directly (instead of writing an email). Another reason for the popularity in social messaging tools is the ease of navigating within these Web 2.0 solutions. Almost all solutions have smart search functions allowing users to find what they are looking for in a fast and efficient way. Last, but not least, the integration of social features into applications has further boosted the adoption and usage of Web 2.0 software.

From Private Use to Business

In the last few years, Web 2.0 tools made their way into organisations because of a pure business necessity, mainly on the customer-facing side of business (business-to-consumer (B2C)). In many cases, marketing departments of large corporations, particularly in the retail business, had to start monitoring the activity streams of popular social networks such as Facebook and Twitter in order to stay informed about their product and what their customers were saying. Furthermore, they needed to actively participate in these dialogues. These businesses wanted to know what customers think, get valuable input around campaigns or their product offerings, and they needed to be able to immediately react to negative comments concerning their organisation, activities or products. However, these new public tools are not appropriate when it comes to the treatment of company internal usage.

From Customer Communication to Internal Usage

But despite the trends in B2C social media adoption, most businesses are reluctant to use these new technologies widely for internal purposes. There are several reasons for this. Some companies put restrictions on the usage of these tools as they fear accidental information leaks or view it as a waste of their employees’ time. In fact, one might agree with this if the only corporate solutions available were the consumer-oriented ones such as Facebook or Twitter, where most of the communication is ad hoc and not related to business tasks. Furthermore, these Web 2.0 consumer solutions were not built with the requirements to run businesses, which require a higher degree of security, confidentiality and compliance. But let’s remember that email and the internet had the same reputation in the early days of business adoption. However, as soon as it became evident that these tools could be used as a business enabler rather than a time waster, the concerns of management evaporated and they turned their focus on how best to deploy them.

The same trend is happening right now with Web 2.0 applications. With the global adoption of Web 2.0 social tools in the private space, business users are increasingly looking to use the same kind of modern information and communication solutions at work that they are currently using in their private space. In fact, there is an entire generation of knowledge workers – the Y Generation – that rarely uses email. They simply do not understand why they should use such an out-dated communication tool in the workplace when today’s technology provides real-time, internet-based communication tools that are less cumbersome, informal and allow easier sharing of knowledge.

Subsequently, over the past few years several new software vendors have been popping up offering Web 2.0 solutions but with enterprise-like features and security: ‘Enterprise 2.0’. The creators of these innovative solutions are transferring the ideas from the private space while embracing relevant business features. But in the rush to get their product to market, these first generation Enterprise 2.0 companies made a mistake: they simply adopted the user format of the early social network solutions in the consumer space while adding ‘enterprise-lite’ features and security. They did not ask themselves: “What do businesses really need? How can these Web 2.0 social features help improve the business?”, and then build their product around these answers. The result: communication platforms that are not connected to the business, but imposed on top of them.

Relevant business communication is being lost in the endless activity streams, which are being flooded by non-value added conversations such as: “Where should we have lunch today?”, rather than talking about the latest sales forecast and how it’s going to affect the company’s cash position in the short term. But a solution is in sight. The second generation of Enterprise 2.0 vendors combine business information management and communication in a much smarter approach. They understand that once the mission-critical data of business systems, such as enterprise resource planning (ERP), payment solutions or treasury systems, are directly linked to the modern communication formats, employees will be much more focused on their work and will be able to make better decisions faster.

And in Treasury?

Treasury is an area where precise, relevant and urgent communication is required. And when you can link treasury information to innovative Web 2.0 type of communication formats, in ‘Treasury 2.0’, immediate return on investment (ROI) can be realised.

Improving the Information Flow

One of the largest airlines in the world works with Entarena, an Enterprise 2.0 vendor specialising in treasury and other corporate finance solutions. The airline uses over a dozen software solutions in the treasury department: from ERP to reporting tools, from liquidity planning solutions to trading software, from treasury workstations to fuel management solutions. One of its main problems is the ability to monitor and control banking fees and commissions that the airline pays its banking partners. Today, it is a manual, and therefore cumbersome, process to find out what is the total cost of doing business with each of their banking partners. Once a quarter, a treasury analyst will spend several days per bank researching and collecting relevant information from multiple IT systems in preparation for its bank negotiations around price, terms and conditions. With over 50 banking partners world-wide, this is a labour and cost-intensive process.

The airline has installed the Entarena service to allow treasury employees to customise dashboards around each bank to manage information from different systems on demand. These dashboards provide notifications about important events and allow filtering and following of mission-critical data points. Treasury employees can combine internal data from ERP, trading, treasury and banking systems as well as external data such as market news pertaining to their banks. Additionally, while in the dashboards they can communicate with co-workers directly in context of the data, either privately or shared with the team. While the dashboards allow employees to better leverage the data from existing IT systems, the communication features spread knowledge within the treasury department more effectively. The lightweight approach of the new technology aids development and deployment in existing treasury landscapes with a limited budget.

This solution is intended to speed up collection of the information by the analysts, as well as providing more accurate and timely information to the treasurer or their designee when negotiating with the bank’s new conditions on credit lines and fees. Furthermore, through mobile solutions, treasury employees are able to access this data when they are away from the office. The airline will be able to reduce bank-related costs and treasury employees will have more time for qualitative work.

Conclusion

Because Treasury 2.0 solutions add immediate business value, they will find a broad distribution across organisations over the next few years. The case mentioned in this article is only one example where it makes sense to think about new ways of doing business within treasury departments. Communication around liquidity forecasts, accounts receivable (A/R) or netting processes are a few more examples among many where these solutions can lead to improved cash positions and better treasury processes. With these new innovations, treasury will improve the bottom line of its company.

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