Speaking at one of this week’s pre-conference INFINZ Treasury Masterclasses, Bruce Edhouse, Chief Operating Officer of treasury outsourcing company ETOS, focused on why TMS usage typically declines once the initial phase of the implementation is over — and what treasurers can do about it.
Implementing a TMS is often a long and expensive process. The idea that many businesses fail to move beyond phase one to achieve a broader, more sophisticated range of functionality can be discouraging but there are ways to beat it, according to Bruce. “The initial phase of a TMS implementation is demanding and it’s often followed by a tail-off in TMS usage,” said Bruce Edhouse. “I’ve observed a wide range of implementations across Australasia, Europe and the US and found that there are some common underlying reasons for this surge/swoop pattern.”
Riding the surge
The simplest reason for a decline in TMS usage after phase one is ‘implementation exhaustion’. “The initial phase is usually marked by enthusiasm and a focus on change,” said Bruce. “After three to four months of implementation, then one to two months running the old and new systems in parallel before ‘go live’ it turns into a six month process. People simply lose the appetite for phase two — and the business fails to access more sophisticated functionality which has the potential to make the treasury team’s job easier.
“Unfortunately, the less you use the broader TMS functionality, the more likely general perception is that the system is not that useful,” commented Bruce.
Getting the basics right at the beginning helps to streamline the implementation, conserving treasury resources so that there’s more left in the tank for phase two.
Choosing the right TMS always comes down to scoping: Bruce recommends isolating the top three functions you need and balancing the functionality benefit against available budget. There is a wide range of TMS’s available, from big, complex systems to smaller, lower cost options and some new, app-based, ‘plug and play’ systems. Bruce has seen this new model starting to gain traction in the US.
“The ‘pick-and-mix’ functionality offered by app-based systems is starting to gain traction with some international players,” said Bruce. “This type of system offers a great deal of flexibility, and you only pay for the bits you use. Add to these benefits, lower cost implementations and web-based learning and this model has the potential to be a real market disrupter.”
Keeping your TMS implementation on track
Whichever system you opt for, it’s important to future-proof the scope of functionality you require and create clear benchmarks to keep your implementation on track, so that your business can access wider benefits from their TMS.
“Make sure that you go back to your scoping goals regularly and benchmark progress against them,” advises Bruce. “If these goals become outdated, renew them to achieve your desired outcomes.”
After scoping, it’s important to schedule a robust workshop and demo stage. This is one of the most important phases, in which businesses should challenge vendors to prove their concept. “Provide real transactions and situations to work through – and pick difficult ones. Doing the hard work upfront is very worthwhile in the long term,” said Bruce.
During one RFP, the proof of concept was for all shortlisted vendors to score their own performance across a range of functionalities — asking each vendor to rate themselves out of five across 200 questions. “Unsurprisingly the shortlisted four vendors all rated themselves above 95%. Not a very rigorous way of testing that they could back up their sales pitch with real-time performance!”
And this focus should not just apply to vendors. Challenge your own department, advises Bruce. “Ask ‘why are we doing things in this particular way?’ Don’t put in a brand new system simply to continue doing things the same old way.”
Beating the swoop
Keeping the whole team engaged is vital to sustain the TMS implementation into phase two. Cross-team engagement also guards against Key Person Risk when staff leave. The risk of TMS knowledge being lost is magnified if your treasury team relies on a single person — or even worse, the IT department —throughout the implementation.
“The whole treasury team needs to actively participate. This may not be sustainable after phase one but once a single team member is responsible for keeping team knowledge current, make sure there’s a monthly feedback loop, to enable regular briefing on updates and new releases.”
Without this structure in place, treasury staff are likely to fall back into their old, comfortable processes and spreadsheets will start to creep back in — increasing the risk of human error and double-handling.
Incorporating the new system into all business processes at the outset also helps to avoid staff reverting to spreadsheets or off-system reporting. It’s worth the initial effort and will inject greater security and more automation into business processes.
“Ultimately you’ll get out of your TMS, what you put into it,” said Bruce. “A TMS implementation is a significant investment of time, resources and budget. Some businesses benefit from external help to get scoping right and obtain an outside view of how to improve their processes to capitalise on the change. This can make the implementation less onerous, more effective and help your team hang in there for phase two and beyond.”