Systems integration lack threatens corporate treasuries

A lack of systems integration and an over reliance on spreadsheets is exposing Australian corporate treasuries to risk.

Not only are they not integrated, most of the systems in use now need radical improvements to reporting and reconciliation processes.

According to the 2001 Treasury Technology Survey, more than 40 per cent of respondents said their systems could not produce exception reports when limits were breached, thereby reducing the ability to identify and manage financial risk.

Conducted jointly by Ernst & Young and the Finance and Treasury Association, which is an industry body for risk and financial management professionals, the survey covered more than 100 Australian companies as well as bank and treasury system vendors.

It found corporate treasurers are allocating fewer resources to system selection and implementation and have adopted a 'wait and see' approach to the Internet and Web-enabled products.

The time taken to implement systems has increased by 20 per cent since 1999 with implementation averaging six months; satisfaction with system unctionality has dropped, the survey respondents said.

Two-thirds of treasurers plan to invest less than $100,000 a year in treasury technology, while 15 per cent plan to invest up to $500,000 over the next two to three years.

Ernst & Young's financial risk management group partner, Ivan St Clair, said it is no surprise that the need for integrated systems is one of the main drivers for corporate treasurers to change or upgrade their systems.

"However, to find that fewer than a quarter of treasurers have fully integrated systems is surprising, considering the cost of an upgrade. Treasurers will agonise over spending $100,000 on a system but may be unperturbed at the impact a one cent movement in currency may have on their bottom line," St Clair said.

"Of all the risks managed by the treasurer those associated with an unintegrated environment are controllable and the cost to manage them is known."

Vendor enthusiasm for Internet-enabled technology is not matched by their corporate treasury clients, only 10 per cent of whom indicated they would upgrade to a Web-enabled version. More than half those surveyed placed no importance on the vendor's Internet strategy when selecting a system.

Finance and Treasury Association executive director, Marilyn Forde, said the perceived benefits of a treasury system interfaced with the Internet are outweighed by familiarity with current practices.

She said security concerns are impeding online trading and delaying system integration.

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