If you don’t know where the taps go before the plumbing is done, you end up with expensive workarounds.
Jacques Stassen
Partner at CFGI
This fantastic analogy is one of my favourite quotes from a finance transformation panel session I hosted recently at the ACT Annual Conference in Liverpool. It conveys so much about the reality of finance transformation projects, particularly from a treasury perspective.
Often, there is a significant gap between the promise of transformation projects and the end result. While the vision is to implement a single source of truth and end-to-end automation, treasury teams frequently inherit upgraded technology platforms with many of the last-mile elements, such as bank connectivity, pushed to a distant phase two. Consequently, treasury workflows remain rife with manual workarounds despite the substantial investment.
Everything is easier with hindsight, but it’s even better to learn from those who have been through the process before embarking on a project. In the panel discussion, I spoke with Claire Stokes, Group Treasurer at ITV, and Jacques Stassen, Partner at accounting advisory firm CFGI, who shared their experiences from enterprise resource planning (ERP) software or treasury management system (TMS) upgrades and provided practical guidance on what treasurers need to know from day one.
Ensure treasury is involved from the outset and stays involved
Finance transformation offers a real opportunity to improve cash management and the flow of funds through an organisation, but to realise this opportunity, treasury teams must be involved in projects from the outset.
This doesn’t happen automatically. Finance and IT often lead transformation projects, and treasury teams, as a small subsection of the finance division, are brought in later. However, the treasury must make its voice heard early on to embed specific requirements, such as cash management structures, bank and system connectivity, and FX risk management into the project design.
If treasury isn’t there to advocate for its requirements or simply relies on submitting a list of what it needs, then it runs the risk of other teams making decisions on its behalf or having its requests deprioritised.
A senior treasury representative should also be involved throughout the project. In practical terms, this will mean backfilling their position so they have the bandwidth to focus on the project and ensure that treasury’s requirements are kept in scope.
While finding temporary cover isn’t always easy, backfilling can offer an opportunity for other treasury team members to step up. It also pays dividends by bringing deep knowledge of the new systems back to the team when the project representative returns to their role.
Finally, it’s also good practice to bring other members of the treasury team along on the journey. Invite them to product demos and workshops, and involve them in testing and providing feedback. It’s a good development opportunity, improves the end product, and lessens resistance to new systems by improving understanding.
Avoid the lift-and-shift trap and embrace the treasury dream
All too often, tight project timelines and hard go-live dates push companies into rushed ‘lift-and-shift’ migrations, where existing capabilities are replicated in the new system, squandering any opportunity for optimisation.
However, if approached strategically, finance transformation presents a rare opportunity to start with a blank sheet of paper and reflect on the role treasury wants to play in the organisation.
Panellists advised starting with an initial design phase and establishing a steering committee to define design principles and overarching aims, then reviewing and tracking back against those principles throughout the project.
Key considerations included thinking about what information is needed to make the right decisions quickly; identifying which processes can be simplified and automated; and determining how these changes can drive real value for the business.
From a process design perspective, the panel also highlighted the importance of working with the new ERP or TMS system to design workflows, rather than shoehorning old ways of working into the new technology. This is particularly important when moving from heavily customised on-premise solutions to cloud-based offerings, because the underlying logic of the systems differs substantially.
Often, implementation teams spend disproportionate amounts of time trying to recreate a small number of former processes, when they would have been better off accepting the new logic and designing workflows from that basis.
Embed cybersecurity and anti-fraud measures from the start
Digitising finance and treasury processes introduces new fraud and cybersecurity considerations. As data flows across more connections to more counterparties, it’s essential to think through what data passes through each connection, who has access to that connection, what the purpose of the connection is, and what the related mandates are.
This should all be part of the initial design governance and not treated as an afterthought. Projects that do not include these measures by design find that issues arise later down the line, which are much harder and more expensive to fix.
Cast a critical eye on the last-mile aspects of implementations
Just as in the plumbing-and-taps analogy referenced earlier, it’s essential to think through the final elements of the implementation. Often, last-mile aspects such as bank connectivity are pushed to phase two (and phase two doesn’t always happen) due to time and cost pressures, especially if treasury is not at the table to argue its case. This limits the value of the end deliverable.
From a connectivity perspective, panellists also advised starting talks with banks early in the project and not forgetting to check that bank mandates are up to date; it’s not unheard of for projects to be delayed due to lapsed mandates that need renewing.
Remember, the implementation approach matters just as much as the technology
The new ERP or TMS is only part of the equation. It’s equally important to choose a good implementation partner separate from the vendor. Most treasury professionals have limited experience with ERP or TMS transformations, whereas experts who have been through several implementations can provide useful guidance and support.
This is particularly valuable when selecting ERP or TMS platforms. Polished product demos differ from the highly configured end product, whereas implementation consultants can advise on the pros and cons of platforms and, where necessary, challenge vendors.
Additionally, specialist advisors can provide guidance on implementation approaches, helping to reduce project timelines and limiting the potential for mistakes. They will also assist treasury to work more effectively with other stakeholders, such as finance and IT, and help them build business cases for their requirements. This is particularly valuable where there are qualitative benefits to argue for, such as improved fraud prevention, that are trickier to tie to an immediate monetary benefit.
Finally, don’t skimp on testing. There is often legitimate time pressure on projects to ensure momentum. However, it is worth taking the time to test thoroughly to ensure the best possible end product.
Don’t forget to document the implementation and decision-making
More mundane aspects of implementations, such as documenting decision-making, are often overlooked. However, capturing how things are configured and why decisions were made is invaluable, particularly when people or circumstances change, as it provides a record of the original thinking. Establish a system for capturing information and add to the library as the project progresses.
Getting the most out of finance transformation projects
Done well, finance transformation projects can make a material difference to treasury operations, enabling treasury to take a more proactive and advisory role in the organisation. But to realise that opportunity, it’s imperative to get the right people on board, at the right time, adopt a fresh design mindset that embraces all aspects of finance transformation, and establish good working practices.
