Magazine du Trésorier, April 2014

Treasury in cloud: unleashing the hidden treasure

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Globalization and changing economic conditions have brought some complexity in the traditional treasury management function. While managing their cash in a crisis environment, companies also have to deal with increasing capital market activities (M&A, foreign currency management, international business, increased need for working capital). These challenges are pushing innovation and one of the technology-driven solutions is ‘Cloud’, which addresses these challenges by bringing optimization through IT while cutting cost and freeing up management time for core business i.e. treasury management.

What is cloud? Is it beyond technology?

Cloud has grown much beyond the borders of technology definition; it is indeed an innovative concept that has changed the way IT is consumed by bringing benefits across people, process & technology. In simple terms, cloud computing works on a ‘sharing’ model where IT services and solutions are delivered in an extremely cost effective manner.  Remember how  electricity was produced privately in-house by companies in the past, until a cost effective model of electricity suppliers as a utility came into the picture. IT has been seeing the same trend and treasury functions are evolving with this change.

Cloud is an IT-enabled concept, however it is a management-driven approach. Treasury management functions can now look at replacing their manual tasks, with lower business value, with efficient web based software while using pay-as-you-grow services as compared to traditional and costly on-premise software applications.

How can it bring efficiency for treasury management?

Cost optimization

Many companies use homemade software as their main treasury management tool. The companies are willing to upgrade to a more sophisticated solution but are concerned  by the cost of such an investment. Cloud models such as Software as a Service (SaaS) have  limited costs; it doesn’t require an upfront capital expenditure on technology purchase. That means highly reduced fixed cost compared to traditional models. On the other hand, adopting Infrastructure as a Service (IaaS) reduces and keeps the cost of keeping the infrastructure running under control (which is one of the major IT spend category for most of the firms).

Adopting SaaS & IaaS not only impacts financial flows through reduced CapEX, it also brings scalability allowing treasury functions to reduce or scale their IT needs as per the business cycle of their industry. The result is highly optimized spending across IT and business functions.

Real time access to the information in a controlled environment

Nowadays every second counts;  due to its structure, cloud computing provides management with an instant real-time cash visibility of the organization and guarantee information completeness (security and reliability).

Nowadays, management can have access to company’s data to hand from wherever they want  on all mobile devices.

Treasury department will find a hybrid solution to keep the budget exposure on track: cashflows generated are automatically reflected in a consolidated report, which helps to determine the optimal allocation of funds.

Seamless integration across multiple platforms

Many professional service providers have been developing cloud driven business solutions. These include cloud enabled interfaces offering integration of multiple functions at various business layers. For instance, a direct and secured access to some of the financial systems can be consolidated into a single view or workflow with much less investments. Furthermore, automatic reconciliation between the G/L and the bank statement can be performed; reports and graphs can be automatically generated based on data and automatic calculations. On top of this, these views can be made platform and device independent with highly reduced efforts.

What are the key challenges of cloud computing for treasury management?

Security, confidentiality and impact on the company in case of breach

Public cloud allows more people to have access to the company data; therefore security risk is perceived to be more sensitive compared to private cloud. Characteristics of the cloud (access restriction, password complexity, data storage) have an impact on how companies will manage their security risk in the future. They are responsible for the level of confidentiality of the data they store in the cloud and for security setting implementation. However, governments and regulators have been taking strong steps to introduce effective regulations to maintain high security standards in those new solutions.

Complexity of the implementation

Some companies are facing complex integration of cloud computing with their existing systems. Cloud computing can be very complex to implement if the company is not ready for the change and if it doesn’t understand its key IT challenges. Two options can be considered: the company directly goes to the service vendor and implements the cloud computing system on its own through a precise project plan management, or the company could seek help from a professional consulting partner to embark upon a well-planned cloud journey.

Continuous flow of information required

Reports and analysis generated by the cloud computing systems rely on continuous flow of information and data. Furthermore, treasury solution requires linkage with external system to ensure completeness of the information used in the data reports (forex market for example), which assumes interoperability with the applications of the other cloud operators or users. If the flow is interrupted at some point, data and analysis become inaccurate, therefore  wrongly influencing the company in its decisions (risk exposure, price on the market, cashflow position and analysis, etc).

Cloud – a solution tailored to your needs

Cloud computing is an opportunity for treasury functions to leverage highly effective business solutions at low cost while adding more value to their businesses. Although it faces some initial challenges related mainly to the perception on security in a wide usage environment, more and more companies are adopting cloud based solutions for their treasury management. Regarding these challenges, there are existing solutions which mitigates these risks and reinforce the legitimacy of the cloud as the new corporate treasury hybrid system. The combination of flexibility, on-demand access to the data and cost reduction makes cloud a future solution for companies.


Pierre Burtin, Manager, Advisory Services – Finance and Risk, and Bharat Madan, Manager, Advisory Services – Cloud Strategy, EY Luxembourg

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