Today "there is much greater emphasis on liquidity forecasting and scenario planning," says Deloitte & Touche LLP U.S. treasury leader Niklas Bergentoft. He reports that treasury functions' focus on working capital improvements has intensified during the recession, and delivering those improvements requires sophisticated analytical capabilities. Fortunately, the current generation of treasury management systems incorporate artificial intelligence, machine learning, and real-time data analysis.

For treasury management system initiatives, remote implementation is the most obvious shift over the past several months. Though this change was driven by Covid in most cases, the remote approach actually offers a number of benefits. For example, the total cost of the project might come in lower than expected because external systems implementers and consultants will no longer rack up any travel expenses.

Moreover, with virtual implementations, the time that consultants spend with internal project management teams can be spread over several weeks or months, rather than packed into intense week-long sprints that may require a slew of follow-up communications. This can result in more focused and productive collaboration sessions, and it can reduce the severity of disruption that the project imposes on the workloads of treasury teams, their IT colleagues, and other stakeholders, Song emphasizes.

The use of video meetings has surged during the pandemic, in treasury software deployments as elsewhere, but Grant Thornton LLP financial management manager Chuck Kreuter notes that most treasury management system vendors were already using virtual meetings prior to Covid-19, to coordinate with customers and third-party implementers. Those experiences gave them a head start on the Zoom era while increasing the odds that clear and consistent communications would be a routine component of the remote implementations they're now conducting.

Project Teams: A Larger Room and New Roles

In addition to altering the approach to project management, the Covid environment is changing the roles of those assigned to the project team. At the highest level, the implementation should consist of participants from a range of impacted corporate functions, who separate into a project-specific business team and a technology team, notes Ernst & Young LLP managing director Jayesh Vira.

The treasury function leader typically heads up the business side of the initiative, while an IT executive or manager (depending on the size of the company) leads the technology side of the effort. "The participants from the group treasury functions," Vira says, "would primarily be responsible for providing business requirements and performing user acceptance testing." Those on the technology side are typically responsible for providing functional and technical requirements, integrating the solution with other areas of the enterprise IT infrastructure, and designing and testing systems.

However, data management should not be relegated to IT professionals only. Kreuter asserts that treasury management systems now demonstrate the same technological sophistication as enterprise resource planning (ERP) and customer relationship management (CRM) systems. These advancements smooth integrations between systems, but also foist additional data governance requirements on the managers responsible for those connecting systems.

Finance and accounting managers "must take a more active role to ensure data integrity is maintained and accurately mapped between systems," while helping to define the organization's future-state treasury processes, Kreuter adds.

Kreuter also points to the broader deployment of cloud-based platforms and applications for managing niche areas of treasury, along with advances in data analytics, as increasing the importance of data considerations in treasury management system implementations. Sankar Krishnan, an executive vice president at Capgemini and head of the firm's banking and capital markets group, agrees. He observes that Covid-19 has helped stimulate the rapid deployment of digital applications and contactless payments, while increasing the number of items awaiting processing and attention in CRM systems. All of that data, along with data from legacy finance and accounting systems, must be automatically fed into treasury systems.

"Legacy systems can have a limited data-export functionality," Kreuter explains. This means that "implementing a new treasury management system requires significant resources and manual effort to accurately map and transfer between the local and cloud databases." This elevates the importance of resource capacity planning—carefully managing the current and future availability of key project team members—when managing the implementation's data-migration work.

Typically, a treasury management system project team consists of representatives of these corporate functions:

1. Treasury

EY's Vira organizes the treasury team's project responsibilities into three buckets:

• Front office responsibilities comprise order management, pre-trade analytics, trade capture, and position management.
• Middle office responsibilities include valuation, risk analytics, profit-and-loss reporting, limit monitoring, market risk management, and counterparty risk management.
• Back office responsibilities consist of cash forecasting, cash and working capital management, settlement, trade matching, confirmations, collateral management, accounting, and regulatory reporting.

Project leaders should assign participating treasury staff to one of these groups, then assign relevant implementation responsibilities to each team.

2. IT

The involvement of the IT function in treasury management system implementations has been deepening, BELLIN's Song observes, as "companies invest more into system integration to gain further efficiencies for accounts receivable [A/R], accounts payable [A/P], and accounting." All three areas of the finance function "benefit tremendously in having real-time information from a treasury management system," he says. Recent treasury management system advancements also include improved cybersecurity and more convenient scalability—two more components of the initiative that IT staff need to monitor carefully.

Song notes that IT's role in implementations has expanded from purely technical-execution responsibilities to also include project management and governance tasks. IT staff are responsible for guiding how the treasury management system integrates into the company's overall IT architecture. At the same time, they retain responsibility for technical tasks such as the provision of user access rights and controls.

"The relationship between treasury and IT has become more important as more companies strive to implement fully integrated systems," Song adds. "Treasury and IT should have a good relationship, to facilitate clear communications about the purpose, timeline, and technical details of the integration."

3. Finance & accounting

Deloitte's Bergentoft says that, in midsize to large companies, the finance function should be represented on the project team by experts from several groups, including:

• financial planning and analysis (FP&A), who can provide input regarding the creation and update of cash forecasts;
• A/R, who provide insights on daily account statement reviews and the clearing of open A/R items;
• A/P, who are involved in the initiation and approval of release of payments for banks, as well as the review of daily account statements and the clearing of open A/P items; and
• accounting, who share their knowledge of income and cash accounting, as well as accounting for accruals, payments, and valuations.

In addition, Bergentoft explains, collaboration among treasury teams and controllers, credit and collections groups, and FP&A "has become more common" during system implementations, "in order to establish integrated liquidity forecasts, improved working capital, and free cash flow."

4. Tax, legal, & compliance

On a growing number of treasury management system implementations, the project team is expanding to include members of the tax, legal, and compliance functions. This is especially true within global companies.

Some treasury management systems enable companies to establish cash pooling and netting structures, Grant Thornton's Kreuter notes, but utilizing those features requires up-to-date knowledge of international regulations and country-specific laws.

In-house banks and other sophisticated treasury structures also require input from the tax, legal, and compliance groups. In fact, in today's highly volatile regulatory and policymaking environment—exacerbated for some companies by participation in hastily crafted government relief measures—the legal and tax departments should oversee the design and implementation of any in-house banking and "on behalf of" functions that the organization uses.

Global tax rules also demand that corporate tax teams oversee activities within treasury and particular transactions flowing through the treasury management system. Tax rules and rates have been changing rapidly in recent years, thanks to the U.S. Tax Cuts and Jobs Act of 2017 (TCJA); an ongoing and multiyear overhaul of the European Union's value-added tax (VAT) regime; the U.S. Supreme Court's 2018 South Dakota v. Wayfair decision, which generated new sales taxes applicable to online transactions; and a surging worldwide move to implement new taxes on digital services.

Consultants who provide treasury management system implementation services report that some project teams now also include representatives from the cybersecurity function and business continuity management (BCM) groups.

Additionally, when any component of treasury technology is going to be managed by a new vendor in a software-as-a-service (SaaS) or similar arrangement, treasury professionals should expect their colleagues responsible for managing third-party risks, including cybersecurity, to assess the external vendor's relevant risk management capabilities prior to finalizing the agreement.

These assessments have become an integral component of enterprise risk management: Research from the Shared Assessments Program indicates that 74 percent of companies dealt with a cybersecurity breach or other risk management breakdown at a third-party service provider that caused the customer company operational problems. Fifty-five percent of these incidents resulted in a compliance violation.

All of the stakeholders on the project team are crucial to the success of the implementation, notes Capgemini's Krishnan. "They need to be completely aligned on the implementation's information-collection strategy, product information strategy, transaction initiation strategy, settlement, clearing, and post-settlement strategy."

Carefully Manage the Change

Adhering to accepted project management principles can help ensure that cross-functional collaboration is sustained throughout the implementation's duration. At the highest level, those principles include a clearly stated vision for the project, a well-defined execution strategy, and sufficient attention to change management.

BELLIN's Song emphasizes four actions that successful treasury management system implementations tend to have in common. Project leaders:

1. Communicate early and frequently.   
2. Carefully define and manage the project's scope, documenting any scope changes along the way.
3. Document all design decisions and agreed-upon workflows.
4. "Test, test, and re-test," including isolated testing of each individual system, end-to-end tests of larger treasury processes, and user acceptance tests.

Of course, problems inevitably arise in implementations as significant as a new treasury management system, regardless of how strictly the implementation team adheres to a fundamentally sound project plan. Unexpected crises may prevent project team members from fulfilling scheduled implementation tasks. Time-zone differences may stymie coordination among stakeholders around the world. International banking documentation may be difficult to access. Addressing the sudden appearance of new regulations may result in scope creep and cost overruns. Business requirements identified early in the planning process may become invalid due to dramatic economic or marketplace shifts.

These and many other common pitfalls make change management considerations essential to the success of any treasury management system implementation. "Ineffective change management can often deteriorate the value obtained from the project," Deloitte's Bergentoft asserts.

Krishnan agrees and emphasizes the value of two specific steps that can strengthen the efficacy of change management actions:

• Consider the lowest level of the corporate hierarchy. Ensure that the implementation plan meets the needs of every individual at that level, both within treasury and in related functions, and that the new solution will make their lives easier.
• Consider all risks across the enterprise well ahead of time, and future-proof for changes to regulation and technology.

Krishnan stresses that a sound change management approach requires knowledge across all functions and business groups whose work is affected by the new technology, along with an understanding of those impacts.

He adds that effective change management offers a lesson on human nature. Key to success in change management is the ability to identify "what people expect from the plan and how to balance any differences in understanding what the plan means at an individual level and group level."

To view the digital edition of this special report, click here.

Eric Krell's work has appeared previously in Treasury & Risk, as well as Consulting Magazine. He is based in Austin, TX.