But who can know for sure? Even senior sales executives at vendors are sometimes clueless about whether their company is really in play.

Unfortunately for the market, the probability is that there is more turmoil ahead from consolidation. Given that market growth is "way too slow" for the current number of vendors to make money, it's hard to imagine a different scenario, concludes Jeanne Capachin, research director of Financial Insights, an IDC company based in Framingham, Mass. The total treasury technology market is estimated by IDC to be around $800 million, with annual growth around 9.5%. However, the total size and growth rate are skewed by sales of financial risk management technology to the financial services sector.

WHO WANTS IN?

Yet, it is unclear just who the buyers will be, aside from an obviously invested party like SunGard. "You have to wonder why anyone [new] would want to get into this market," Capachin asks rhetorically. "Thomson's acquisition of Selkirk made sense, and SunGard is always looking to buy up competitors. But the case for other buyers coming in isn't compelling."

Oracle Corp. may be another exception. Not a newcomer to the treasury space, the other major ERP vendor might be interested in beefing up its treasury technology through very selective buying, Capachin adds. Of course, a potential paucity of buyers never stopped people from putting themselves on the block, especially when the ones out there may be choice. She suggests that, based on current market share, profit margins and ownership, logical acquisition candidates would include Gateway, Richmond Software and even XRT.

As the market currently exists, SunGard's treasury unit–recently renamed SunGard AvantGard–continues to control the largest market share by far. In fact, thanks to a series of acquisitions over the past several years, SunGard owns five of the top 10 systems. Although private equity owners are not known for their willingness to invest in expansion with no guaranteed return, SunGard AvantGard President Ken Dummitt insists that the recent LBO is good news for his division, which can now think beyond meeting quarterly numbers. "They're long-term investors [and] have no plans to spin off any part of the business," Dummitt says. "We all submitted operating budgets, which were approved. They even asked us, 'If you had more money, where would you spend it?'"

SunGard has some of the strongest products in the space, including Resource IQ and Quantum. Although there has been speculation that the company will retire weaker product lines, Dummitt vehemently denies there is any need, given its investment in its umbrella AvantGard technology. "Our clients have made a big investment in a system–five times the cost of the software when all the implementation and integration is considered," he says. "We continue to invest in new technology, but everything we build can be deployed across our five treasury systems." The new Integrity acquisition "simply extends our franchise in Europe and Asia Pacific and gives us a product just below our high-end Quantum system that will appeal to the middle market," he adds.

SunGard is the clear market leader, with $148 million in 2004 revenue. In the workstation space, it is followed by Trema ($43 million), Oracle ($35 million), SAP ($27 million), XRT ($25 million) and Thomson ($20 million), according to a recent IDC report prepared by Albert Pang, research director. SunGard's numbers reflect sales of Panorama, a risk management application, as well as its AvantGard workstations.

In recent years, SunGard has sold mostly to Fortune 500 companies. Here it competes with Wall Street Systems Inc. and Trema Group–two sophisticated treasury workstation providers. Wall Street Systems concentrates on the financial services market and Fortune 50; Trema is biggest in Europe, but has recently made noises about becoming more aggressive in North America. It boasts a short but impressive list of large sophisticated U.S. customers, including General Electric Co., Lucent Technologies Inc. and General Motors Acceptance Corp. "These are exciting times," says Thomas Bergqvist, Trema's chief marketing officer. "The space is a bit crowded, and prices are being pushed down to unhealthy levels from a vendor's standpoint. I think we'll see more consolidation, and we expect to be a part of it." Bergqvist claims that Trema is currently eyeing the fragmented asset management space for possible expansion.

It's counter-intuitive that prices would drop as supply dwindles, but in treasury tech, one wild card has dramatically affected vendors in recent years: the relatively low prices that ERP vendors charge for treasury modules. "We never lose to an ERP vendor on functionality. We never lose on connectivity or integration. We only lose because they make it less expensive for corporations that don't want to invest real money in treasury systems," says SunGard's Dummitt.

That is starting to change. ERP systems have improved treasury functionality, says Henry Waszkowski, managing director of Treasury Performance Group Inc., and will take in banking information and map it to the general ledger in their standard financial systems. "You don't even need to add a treasury module," Waszkowski says, although he notes that they're still less robust in performing financial analysis and managing debt, equity and investments.

Selling to the nation's largest companies, however, is not the most promising part of the total treasury tech market. The action right now, or at least the greatest potential, seems to focus on the new market around the so-called ASP revolution–providing treasury technology via the Internet. With technology budgets tight and staffs stretched, companies that want lower front-end costs, less IT involvement and ready-made contingency backup are opting for ASP-hosted solutions. With these, midsize companies can get their hands on sophisticated software without having to buy and maintain it. "The middle market is opening up like crazy," reports Dan Carmody, another treasury technology consultant and president of Chicago-based TreaSolution Inc. "It brings a low-cost option at the very time that CFOs of smaller public companies are worrying about their Sarbanes-Oxley controls."

NOT CLEOPATRA'S ASP

Observers once suggested that ASP-hosting was the cheap technology workstation vendors were afraid to offer because their premium-paying customers would switch to it. That seems not to have happened. SunGard is probably the biggest player in the ASP-hosted space, and Dummitt asserts that rather than cannibalize existing business, ASP solutions have expanded SunGard's potential market. "It appeals to customers who make fewer technical demands, but it doesn't appeal to customers who want tight integration with their other systems," he says. "Besides, it's only a less profitable business if you price it that way, which we don't."

ASP-hosted workstations lack one important requirement of large corporations: privacy. "You have to share your information in a hosted environment," Carmody says. "With installed software, everything stays inside the company's firewalls. If a bank is hosting the technology, a large company doesn't want one bank to see what it is doing with other banks, so it's not likely to accept a hosted arrangement. Smaller companies with few banks are less sensitive about privacy."

However, the ASP revolution is running behind schedule. "Not even 100 companies in the U.S. are using the ASP option at this point," Jeffery notes. "It caught on in Europe, which generally leads the U.S. in treasury technology."

Another potential source of cheap treasury technology for smaller companies is coming from banks, which are signing deals with workstation vendors to host "white label" versions of their technology that the banks can offer to customers under a bank label. Take, for instance, the deal between Chicago-based LaSalle Bank and Thomson Financial.

There's a definite buzz in the market about the success LaSalle is having in signing up middle-market companies for its CashPro Web Workstation, which is the debt, investment, payments, cash position and cash forecasting modules of Thomson/Selkirk's Treasury Anywhere, white-labeled by the bank. Treasury staffs access these modules at the LaSalle Web site and pay a monthly subscription fee that the bank describes as low, although it declines to release the number. "We did on-site usability studies with customers in 2004 and found that they wanted better tools to manage liquidity," reports Milton Santiago, LaSalle's senior vice president for electronic banking products. "Over 99% of them were relying on spreadsheets. Some liked the idea [of treasury workstations] but couldn't justify the cost, which usually is upwards of $100,000 plus a 20% annual maintenance charge." Santiago expects LaSalle to sign up 300 to 500 subscribers by the end of this year.

ENLISTING NEW CONSUMERS

"There's no question that we're aggressively moving down-market and using banks as a foundation for that strategy," says James Suttie, founder and CEO of Selkirk and now executive vice president of Thomson Financial's corporate treasury services unit. "We have the technology. They have the customers. Together, we can market technology on a large scale at a price those bank customers will find very attractive."

Suttie also doesn't worry that bank deals will cannibalize its profitable direct sales of Treasura and Treasury Manager by letting banks peddle cheap Treasury Anywhere functionality. "The market segments itself nicely," he explains. "Most of the bank channel prospects can't afford to buy the Thomson products directly, and most of the customers and prospects for the Treasura and Treasury Manager products would not be satisfied with the low-end technology banks are reselling."

Even elite Wall Street Systems (WSS) is doing a little white-labeling, although it insists that it is not looking to down-market. "To move down-market, we'd have to shrink-wrap and sell off-the-shelf systems in some volume," notes Keith Bergman, WSS' solutions manager. "That would weaken our focus and degrade our service."