ViewPoint -- October 2001 Treasury Automation & Management – Retaining the luster through the downturn. Businesses are slashing investments and reducing technology spending in response to the current economic downturn, yet one area retains its luster: Treasury Automation & Management (TAM). Chief information officers cited infrastructure applications as the IT spending areas least likely to be cut, according to a Morgan Stanley survey earlier this year – and treasury automation is considered a core infrastructure application. This recent fascination with electronic treasury solutions including ePayments is understandable -- innovative payment software has dramatically improved data-collection and receivables/payables management capabilities and promises customized trading party interactions at a lower cost. The interest is part of a broader shift from a technology-focused strategy to an infrastructure-centric one. But with millions of dollars invested in IT systems that deliver “financial supply chain automation solutions" -- as one vendor advertises -- organizations are starting to assess the realistic impact of these much-hyped products. Faced with systems that sometimes do not provide robust functions, let alone provide the right answers, treasury managers are increasingly asking themselves if it’s worth it. The problem originated when companies looking to leverage the power of new technologies rushed to investigate new software without designing a comprehensive TAM strategy beforehand. Even today, TAM remains, for the most part, a treasury initiative and has suffered from a lack of comprehensive commitment across multiple functions within an organization (e.g., the integration of TAM processes with procurement, logistics and even eCommerce). Experience with companies in multiple industries has allowed our firm to define five key success factors for achieving TAM excellence. Like every other aspect of business, TAM must relate to back-to-business basics. Tomorrow's leaders will be the companies that excel in acting on these business fundamentals. Define a Treasury Automation Vision Best-practice companies are now focusing on demystifying what they want to achieve through TAM and on making the case for the system. They benchmark the performance of their competitors and evaluate the opportunity to leap-frog them through excellence in TAM. Buy-in from senior management is equally critical for the integration of customer data management into broader business priorities and is the best way to ensure that necessary metrics are in place to track and quantify effectiveness. Only through integration can TAM initiatives move from an isolated, treasury-driven exercise to a company-wide transformation to efficient processing. Not All Processes Need Fixing Most companies now lack enough information to know what costs can be eliminated with the correct automation solutions. They are struggling to distill useful business insights from existing studies that can be communicated to all parts of the organization. Best-practice companies understand where their most inefficient processes are and focus their technology strategies on them. This simple measure enables TAM initiatives to yield substantial returns. Leaders in the field, including one pharmaceutical giant, assess the cost of matching PO’s with invoices and making payment to develop the business case for ePayments automation. Evaluate the Workflow of Accounting Operations Although companies commit to a growing number of improvement teams, few are able to extract the correct information, because they are administered without a full understanding of process flows throughout the Procure to Pay cycle -- from the identification of need to the purchase of products and services. Most user groups focus on isolated events and fail to generate truly useful information. In contrast, TAM leaders focus on understanding each business units' own processes. They integrate all department experience data points: from surveys to supplier feedback. They also conduct focus groups with valued suppliers to evaluate customers' "biggest pains" and understand how they can help alleviate their complaints. Develop an Integrated Process Redesign In the 1990s, massive enterprise resource planning implementation triggered the redesign of business processes. Today, leading companies do the reverse -- they use strategic goals to create IT systems that work to support company-wide interests. TAM leaders leverage the insights generated by enlightened managers to initiate a process transformation drive that often includes new functionality to best serve the needs of the business and financial operation. TAM leaders involve the business organization, deciding on the trade-off between process efficiency and cost, on the one hand, and vendor needs, on the other, while mapping these new functionalities to each point of staff member interaction. TAM leaders then analyze the interdependency between processes to ensure a seamless system-to-system handoff – with minimal need for people based processing. One Electronics Supplier analyzed the customer experience across B2B interactions and redesigned its core processes at all 15 customer-interaction points accordingly -- from order placement, to invoicing, receivables management and remittance processing. Design Your Treasury Strategy The specifications for IT architecture should always come last, since the IT architecture should provide the underlying support to best your customers (Internal and External) needs. Evaluation of a company's current treasury architecture and of the data-flow needs generated by the business's transformation will determine the requirements for new treasury management and ePayments investments. Spending time on the four earlier steps will ensure quality results on the back end and provide clear direction for the organization. TAM presents a unique opportunity to truly leverage the power of the Web and to generate sustainable competitive advantages. However, companies should prioritize business fundamentals and take the time to strategically define and implement TAM. Otherwise, the TAM hype will create more victims. -Henry Ijams Managing Partner Sign-up for today for ePayment Industry News, Analysis and Insights with PayStream ALERTS