FX managers for the most part like their systems. But there’s always that one thing that creates a headache.
Leo Tolstoy famously posited that “All happy families are alike; each unhappy family is unhappy in its own way.” That line from “Anna Karenina” can definitely be applied to treasury practitioners and their systems.
- In a discussion at a recent NeuGroup meeting jokingly dubbed the systems “misery montage,” three FX managers members shared their biggest pain points, most of which derive from the fact that the FX function depends on several different systems vendors to manage the workflow end-to-end, and they don’t always “talk to each other” all that smoothly.
Must-do automation projects and bot opportunities. First up, a member with a specialist risk and hedge accounting system lamented the lack of an automated way to exchange data between that system and SAP, particularly end-of-month valuations, currently done on Excel, and said that it’s a “huge project to map entity names and trading, hedge accounting, EMIR and Dodd-Frank reporting from that module to SAP in the way that accounting wants it.”
- A second big pain point is the lack of automation in daily cash management, which relies too heavily on reporting instead. For aggregating balance sheet exposure data, another member suggested using a bot.
Map out pros and cons and ID alternatives. The second member shared a detailed table of workflow tasks and the pros and cons of the system used for those tasks at the time — including cost, reliability, service levels and internal IT needs — as well as possible alternative vendors for those processes, a handy way to analyze the situation.
- One of his pain points was netting for settlements. He also called out various areas where the hedge accounting system was buggy, for example in trade valuation and the journal entry process, not to mention that the vendor provided “poor customer service” on top of a “lengthy implementation.” Still, the pain may not have risen to merit the cost and time of switching to one of the alternatives.
Vendor-client process fit? The final member to present showed her systems setup, which overall she was happy with. However, one link in the chain was problematic. The hedge accounting vendor was rather “inflexible” about wanting all the company’s exposures “in their tool and then they want to tell you what your trade should be,” the member said. “But we have our own exposure tool and it’s not our process [to outsource hedge decisions].”
One of the breakout huddles at the meeting also tackled systems and automation; some of the takeaways included:
- How do you quantify the business benefits of robotic process automation, especially if you have to fight for IT resources to complete automation projects? And, as one member pointed out, automation does not equal head count reduction, so it’s hard to prove.
- A straightforward systems implementation can be complicated enough, but companies faced with a steady stream of acquisitions — like many in the group — are always catching up.
- M&A in the systems vendor space complicates things further, especially the customer service issues that have arisen from consolidation and dislocation in that industry.
- Some keys to implementation success:
- Thorough testing. Test every currency pair, every type of transaction, every counterpart with a penny-value transaction. “We found so many issues that way,” said a member with a huge systems transformation underway.
- Resourcing. Work to get buy-in for the project as business-critical at the highest level possible in the organization. That increases the chances of an adequate budget and it will attract the best people to the project.
