1) Cost reduction

2) Risk mitigation (especially in this era of fraud and cybercrime)

3) Agility to leverage new technology to accelerate business value

For these reasons and more, the trend is 100 percent toward the cloud for treasury applications. Treasury Management Systems (TMS), trading portals, market data providers, and best-of-breed analysis tools are all in the cloud. Ninety percent of organizations selecting treasury technology today require that vendors deliver software in the cloud, according to industry estimates. Of the remaining 10 percent, the vast majority are willing to consider installed deployments but are certainly not requiring an internally managed technology.

In fact, for those treasury teams who may have been on the fence or were thinking that they were taking a risk by going cloud, the CIO's team is more than happy to set the record straight. To align with organizational information security policies, your CIO needs treasury to be in the cloud.

This is not to say that any cloud provider will do. IT has a very long checklist of minimum acceptable standards, and these requirements are equally important, if not more so, than treasury's business requirements. Not all clouds are built the same; different vendors will have made varying choices around how they offer software as a service in treasury. And not every solution will pass IT's (very extensive) sniff test.

Presuming that treasury is aligned with IT in making a cloud technology choice that supports your organization's information security policy, there are a number of advantages that treasury can expect to receive by going with the cloud.

No Internal IT Support Required

This is an obvious advantage. Cloud providers manage the installation, deployment, and ongoing technology support. All treasury requires is a browser to access a true cloud application. And any browser will do – the one on your laptop, the browser on your tablet, even the browser on your phone will work if your eyes are good (and if they're not, there's an app for your treasury software too).

In addition, the vendor will manage the entire upgrade and testing process so your upgraded software will work the same after an upgrade as it did before, albeit with new and exciting features.

Even the software implementation doesn't need IT resources. In most cases, ERPs and other internal systems are also in the cloud which means that APIs can be pre-built connecting the systems cloud-to-cloud. For those in-house systems that aren't in the cloud, a small amount of time may be needed to provide file specifications so the cloud system can deliver files as well as import them in. But even then, the effort is a fraction of the time and resources required by old school software implementation projects.

More New Features

There are two reasons why a cloud treasury system will offer more new features and functions:

1) Cloud providers benefit from economies of scale, meaning that more resources can be diverted to product development. For established vendors, one could expect 20-25 percent of revenues to be earmarked for the technology, meaning that successful cloud providers can afford to hire more developers to make the software do more interesting things. If you happen to select a more mature treasury offering, these developers aren't playing catch up to the competition but rather investing in the existing modules to make them better and/or building innovative new features that take treasury software to the next level.

2) The technology used to develop cloud applications is newer – and the young millennials writing code with these new technologies are innovating like crazy, pushing the boundaries to constantly do more. The net result: the software evolves with new features and ideas at a quicker pace than we've ever seen.

Preventing Fraud and Cybercrime

This year is worse for attempted and successful fraud and cybercrime than 2016, which was worse than 2015, and so on. Treasury must stay several steps ahead (or at least not steps behind) and technology is the answer. Cloud software offers better application security (i.e. relying on more than a user ID and password to access your systems), as well as better data security (such as removing sensitive treasury data off premise and offering high level encryption of data at all times, even at rest).

But protecting against fraud is more than simply putting up walls to protect the system and data from unauthorized users. Fraud prevention is also about implementing controls and standardizing workflows to eliminate exceptions from being exploited. Payments and bank accounts are obvious targets and criminals are not only trying to hack these functions, but are keenly interested in other data that helps profile how treasury operations are conducted at each organization.

Cloud treasury systems standardize these workflows by ensuring that treasury controls match treasury policies no matter who performs these functions, where they are located, or what type of activity (e.g. domestic wire vs. SEPA instant payment). This consistency is not possible outside of the cloud, due to the decentralized nature of today's global treasuries. It is critical that the treasury technology bend around treasury's requirements, rather than treasury's policies having to adapt to the limitation of the treasury system(s) being utilized.

Business Continuity

Organizations invest millions per year in business continuity planning (BCP). Treasury's BCP is different than other parts of the organization, however, because treasury cannot be down for multiple hours, never mind a day or two. The organization doesn't grind to a halt if HR is offline for the better part of a day. We in treasury don't have that luxury (although wouldn't it be nice sometimes if we did!).

Business continuity for treasury is a serious matter as CFOs and treasurers are responsible for ensuring treasury still runs during many hypothetical scenarios such as when company offices are disabled by a cyberattack, can't be accessed due to weather, or lose key services like power or internet access. Treasurers also have to plan for more treasury specific issues such as bank portals being unavailable or the entire treasury team winning Powerball (and consequently flying to Fiji that same day).

The cloud offers a lifeline in business continuity planning for many reasons:

• Data centers for cloud TMS reside in different locations than company offices, meaning the cloud treasury system continues to operate

• The same treasury workflows can be run anywhere in the world by authorized users

• The treasury system can be accessed via mobile device and/or low-speed web connection

• Additional security can be implemented for access outside of company offices

In short, treasury can be done anywhere at any time using the cloud. Further, a cloud treasury system ensures that processes and controls are consistent, whether in normal operations or in a disaster recovery scenario. This offers a further protection against fraud and cybercrime, as hackers are known to push companies to move to backup mode if the security isn't as strong across the board.

While the advantages of the cloud don't stop there, this offers a glimpse into the reasons why CIOs want treasury in the cloud and why CFOs and treasurers will immediately benefit from moving from internal support, to a managed service by a cloud provider.

I personally have not met a treasurer who doesn't see value in:

• Reduced costs to acquire and implement a cloud treasury system

• Ease of access to treasury software (including mobile)

• Leveraging hundreds of new features every year in their treasury software

• Simplified and improved business continuity

• Alignment with their organization's information security policies and cloud strategy

With the cloud, treasurers receive all these benefits and more while better protecting the security of the treasury operation, which helps the CFO and CIO sleep better at night.

Bob Stark
Vice President of Strategy
Kyriba