Putting Treasury in the Cloud

In the past, the decision by treasury departments to look to various functionally light Cloud solutions on the market was a logical one. Where Treasury teams were considered less strategic, outsourcing certain IT or software functions like cash management or hedge accounting made financial, practical and tactical sense.

What's more, corporate treasury departments are typically quite heterogeneous, historically  having multiple systems in place – one for cash management, others for risk, credit, debt, investment management, FX and collateral. Outsourcing these on an individual basis was pretty straightforward.

But the role of the Treasurer has evolved rapidly, and the commoditized, low-cost point solutions that were previously so attractive do not provide the springboard to shape how the business operates and are no longer fit for purpose.

In contrast, a true enterprise-level Cloud solution gives a corporation greater visibility into all their exposures across all asset classes. This is invaluable for proactively managing risk, and provides a single holistic view of all data needed to make decisions in real time. It enables treasury officers and risk managers to present information to management and the board on demand.

Forward-thinking and innovative treasury departments have already started their migration to integrated and holistic treasury management solutions – covering all core treasury, cash, FX, and commodity price risk. Since the pressures on the IT department to reduce costs is increasing, the TCO benefits of an enterprise solution over multiple point solutions and integrations is very attractive.

As all these operational benefits – and more – are now available with the simplicity and power of the Cloud, and the cost benefits are clear, the transition to comprehensive Cloud promises to be a rapid one.

Why a Watershed?

Bigger, better, faster – all good things. But that doesn't show why Cloud can mean a qualitative, not just quantitative shift for Treasurers – why it's a watershed moment.

The reason is that Cloud allows companies to develop business operations and carve out competitive advantage without being constrained by prohibitively long lead times caused by insufficient processing power, or the costs and bureaucracy required to scale up their hardware, infrastructure and support capabilities.

Treasurers can shift their focus towards value add activity such as the annual capital allocation process, earnings, cash flow and capital at risk. Too many boards are making decisions on inaccurate data because the supporting technology isn't able to provide the full picture. We're talking about optimizing the organization's balance sheet. That means better management of credit risk – and therefore – critically – better access to capital.

That's where things get interesting. Suddenly this catapults the role of the Treasurer from risk manager, to business change enabler, providing critical information to the board. It moves the mind-set (and investment motives) beyond just compliance, cost, and technology. With better access to capital, the board has greater freedom to make corporate decisions regarding M&A activity, regional expansion or product diversification. Rather than being reactive, it gives companies the best possible chance to be proactive. For ambitious companies with expansion in their sights, this is a must. And the Treasurer that opens this door is truly aligning themselves to the needs of the CFO.

That's a big difference, and only one of many. In years to come, when we look back at the Treasurer's evolution to become a core strategic part of the business, fully comprehensive Cloud will surely be remembered as a defining moment, and OpenLink Cloud will be remembered as the platform that helped made that happen.

Scott Rompala
Head of Cloud Solutions
OpenLink