From Connectivity Hubs to Collaborative Infrastructure

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23 April 2009

The current economic climate forces corporate treasurers to be more tactical and have an even more direct control of cash operations that determine the value of corporate liquidity. From an organizational perspective, this calls Treasury departments to move to centralized structures, enabling a better response to efficiency demand and cost control. From a technology point of view, the drive is toward a centralized repository of data, to more effectively manage and consolidate credit exposures. The purpose of this brief article is to analyze how technology is evolving in the continuous pursuit of ensuring key priorities for Treasury: data consolidation; process optimization; and visibility. Indeed, an ecosystem of suppliers, buyers, banks, data providers, and trading partners can be properly integrated by a centralized platform that offers process optimization and workflows, together with connectivity and collaboration. I like to call such a platform a “Connectivity hub”. Financial supply chain transactions, going from accounts payable and accounts receivable processes, to EIPP (electronic invoice presentment and payment), to electronic invoice and settlement, are connected through gateways that link the internal (i.e., corporate) and external (i.e., trading partners; banks; service providers) financial flows.

An example of this is Sungard’s Avantgard Collaborative Financial Management, described as an “underlying connectivity platform [which] acts as an integration layer, allowing suppliers, buyers, banks, vendors, data providers and other external stakeholders to improve velocity of cash and improve response time. This infrastructure acts as a backbone for supply chain management & financing”. This, also, creates an infrastructure platform on which the corporate Treasury manager can plug additional players of choice. But, because of company size (e.g., multinational) or industry sector (e.g., commodity-driven), group treasurers are faced with the need to expand the basic front-, middle- and back-office treasury management system (TMS) functions with more advanced “best of breed” processes. An integrated set of best of breed solutions that support treasury transformation can be applied to the existing TMS in two ways: • Company-centric: Plug & play the applications through the gateways of a Connectivity hub • Process-centric: Embedded as integral components of a TMS Collaborative Infrastructure I like to call this second scenario a “Collaborative Infrastructure” because it moves from the concept of a platform that creates gateways to a set of solutions provided by a compound of trusted partners. Wikipedia defines an infrastructure as “the basic physical and organizational structures needed for the operation of a society or enterprise”. With corporate Treasury being the beneficiary, a “collaborative” infrastructure opens the platform to a network of catalyzed stakeholders (i.e., suppliers, buyers, banks, data providers, and trading partners). The portfolio of services available to the single company is immediately expanded to the entire set of connections, thanks to an extended network of associated entities that maximize their level of participation to the infrastructure, according to a dynamic of progressive collaboration.

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