SaaS Technology. A Medium for Treasury Change. By: Peter Seward, Vice President, Product Strategy, Reval. March 2012 CONTENT.

Transcription

1 SaaS Technology A Medium for Treasury Change By: Peter Seward, Vice President, Product Strategy, Reval March 2012 CONTENT Executive Summary From Shared Data to Shared Services Shared Treasury Data Shared Treasury Services The Future Enabled

2 Executive summary About the author When Canadian visionary Marshall McLuhan coined the phrase, The medium is the message, in the 1960s, he didn t know about Software-as-a-Service (SaaS) technology at least as it is understood today. He didn t have to. Rather, he understood that a medium itself can have a transformative effect on human association and action. The light bulb, for example, transformed human activity because it no longer restricted activity to daylight hours. The automobile spawned suburbia, highways and the extension of time and space between work and home life. In the world of treasury and risk management, SaaS is a medium that has the transformative power to break down barriers and change the way groups across and beyond the enterprise share information and create intelligence. Taking a closer look at medium, we can explore how the shared nature of SaaS technology, while not new, is enabling an evolution that will take the management of treasury in directions not yet thought of. From Shared Data to Shared Services The conventional view of SaaS as a convenience is well understood, as it is in the example of online banking. It is even appreciated for its enablement of sharing public data for the benefit of all users, as with online newspapers. What is less understood, however, is where SaaS is headed, and what is driving the direction of change. The SaaS world is hosted. Partially shared, partially private and fully secure. Decentralized and subscribed to - no longer is it necessary to buy servers, make backups, check security, and endure painful roll outs and upgrade cycles. Your access is anywhere, anytime on a single version, which is regularly upgraded and in compliance with the latest regulatory changes. Your treasury organization is no longer bound to IT strictures, other than a tick in a RFP box, leaving you free to fully exploit the opportunities inherent in the SaaS medium. Peter Seward is responsible for the strategic direction of the Reval SaaS/Web-based platform and Reval Center valuation and hedge accounting service. He has also written the Reval modules for IAS 39, IFRS 7 and FAS 161. In addition, Mr. Seward leads Reval s Risk Management Taskforce, advising internally and externally on critical risk management issues. His 15 years of experience in financial services software spans Asia Pacific, Europe and North America. Prior to Reval, he was a sales engineer at Principia Partners, an implementation consultant and custom development project manager for Integrity Treasury Systems in both Sydney and Chicago, and a manager of treasury systems at Rabobank Australia in Sydney. He holds a Bachelor of Science in Mathematics and Economics from the University of Western Australia. The author can be reached at: Peter.Seward@Reval.com 2012 Reval.com, Inc. All Rights Reserved 2

3 Consider, then, how the consumption of information by users across the treasury spectrum from positioning cash, processing payments, monitoring credit lines and making intercompany loans to generating valuations, performing advanced risk management and posting accounting entries is driving an evolution from shared data to shared services. This evolution toward shared services means more work is automated and provided by your SaaS partner, saving you time and money. Shared Treasury Data Over the past decade, SaaS technology made it easy for a provider to leverage common, public data, for the benefit of all users. In the treasury world, some of this data includes: Market Data You need market data, though it may vary from your neighbor. SaaS providers sourcing and publishing your market data enable independence (a plus with auditors), wide coverage and validation of data accuracy. FX and interest rates are used throughout treasury, from translating cash amounts to functional currency, valuing FX transactions, creating journal entries, and performing stress tests. The 30 minutes you spend per day sourcing, checking and publishing market data could result in three weeks annual savings and a lot fewer headaches with this centralized task. Market Conventions - You all need to define and maintain everyday data, such as currencies, holiday calendars, day count conventions, country codes, bank statement formats, and payment message formats. While this task is the same for everyone, it takes time and effort to install and keep up with market standards. The recent Royal Wedding holiday is an example. Vendors supplying this data will have reduced your effort and guaranteed that market standards would be followed. With thousands of eyes on this data daily, you would rest assured that a vendor of a true, multi-tenant SaaS would know of mistakes or errors very quickly. As SaaS platforms continue to add more functionality, the leveraged value of centrally provided market data increases. About the author (continued) ABOUT REVAL Reval is a leading, global Software-as-a-Service (SaaS) provider of comprehensive and integrated Treasury and Risk Management (TRM) solutions. Our cloud-based software and related offerings enable enterprises to better manage cash, liquidity and financial risk, and includes specialized capabilities to account for and report on complex financial instruments and hedging activities. The scope and timeliness of the data and analytics we provide allow chief financial officers, treasurers and finance managers to operate more confidently in an increasingly complex and volatile global business environment. Using Reval, companies can optimize treasury and risk management activities across the enterprise for greater operational efficiency, security, control and compliance. Founded in 1999, Reval is headquartered in New York with regional centers across North America, EMEA and Asia Pacific. For more information, please visit or contact info@reval.com Reval.com, Inc. All Rights Reserved 3

4 Shared Treasury Services Providers are increasingly aggregating data on your behalf, adding value to it and offering it as a service. As the car created the need for a highway, the highway gave rise to the rest stop and gas station. New mediums create new opportunities. Therefore, a progressive SaaS vendor will ask Why stop at providing common data? As your treasury team works through its day, each member performs a variety of activities that could be provided as services, further exploiting the SaaS medium and making life easier. For example: Bank Statements Early in the morning your cash management team needs to connect to banks to get statements in a timely manner. Your neighbors do too. SaaS now enables this service via the provider itself or via a service bureau. Correlations and Volatilities - Further processing public market data can add value by calculating correlations between asset classes and curves, historical volatilities and using this data as inputs into advanced risk management tools like Cash Flow-at-Risk, Earnings-at-Risk or Value-at-Risk measures. Payments By mid-morning, and in the afternoon, your payments team needs to make (treasury and/or AP/AR) payments from your treasury and risk management solution to one or many banks. Each bank may use a different payment format, e.g. MT 101, EDIFACT, ISO20022 or some custom format. Let the SaaS vendor provide these formats out of the box to you and then be responsible for maintaining and adding to them. Also let the host provide connection to a common service bureau or bank connection to send payment messages, track confirmations and acknowledgements. Sanction List and Payment Validation - It is a requirement to verify that payees are not on sanction lists, and it is also useful to check SWIFT BIC s, Fedwire/ABA codes prior to making payments. This data is available via public databases, but providing this data centrally and checking against it benefits all users. This value-added service will save time and also strengthen SOX controls. Trading Throughout the day your front office may use one of the many FX or money market online trading platforms to trade. You also need the trade data in your treasury system. You can now exploit the interconnected, shared aspect of the SaaS medium to trade directly from within your treasury and risk management solution and automatically book your trades, saving you from double keying data Reval.com, Inc. All Rights Reserved 4

5 Hedge Accounting - When designating hedges and at each month end, your accounting team needs to run regression of index values or derivative fair values and calculate statistical measures. A SaaS provider may leverage published market data to this, further adding value. While the SaaS treasury and risk management world is clearly evolving from shared data toward shared services, there are also other developments taking place. The Future Enabled The most subtle impacts of any new medium are the results of how users consume it. When television overtook radio, the eye became as important as the ear. Now the internet is engaging users in a variety of levels, and in a variety of ways we now read newspapers by reading text, watching embedded video, linking to related stories and clicking through galleries of still photos. Similarly, how might the SaaS medium be exploited to further engage treasury groups to share information and create intelligence? Perhaps they can access how-to videos within help functions and video chat with customer support desks or use mobile smart tools (tablets and smart phones) to perform specific treasury tasks remotely. While the future sometimes appears to have arrived, new and more unimagined innovations are always on the horizon. Treasury and risk management users and providers alike will continue to find new ways to exploit SaaS to make work smarter and easier. As McLuhan would surely agree, the SaaS medium really is the message Reval.com, Inc. All Rights Reserved 5