Beyond RFPs: A Smarter Approach to Treasury Procurement

Ali Curi: Hi everyone and welcome to Treasury ConversatION, I’m Ali Curi.

On today’s episode, we’re discussing one of the most critical and often underestimated steps in treasury management, selecting the right technology. TMS review and selection is increasingly complex, and the process involved can make a significant difference for organizations. From defining objectives and assembling the right team, the path to a new TMS or treasury platform is rarely straightforward. To unpack these challenges and share their perspectives, ION’s, Chris Jackson is joined by Susan Hillman and Bob Novaria from TAG, the Treasury Alliance Group. They’ll discuss where procurement fits in, the pitfalls they’ve seen organizations face, and how treasurers can ensure technology decisions support the firm’s long-term goals.

Let’s get started. Hi Chris. Hi Susan and Bob.

Chris Jackson: Hi, Ali.

Susan Hillman: Hi.

Bob Novaria: How you doing?

Ali Curi: Chris, let’s start with you. Please tell us a little bit about yourself and your role at ION.

Chris Jackson: Thanks, Ali. Yeah, I’ve been at ION three and a half years now. I’m one of the North American sales directors, and before that my background is largely corporate banking.

I spent 12 years in UK Corporate Banks specializing in cash management payments and liquidity, and I spent five and a half years at Bloomberg as well, focusing largely on treasury risk management before I joined ION.

Ali Curi: And Susan, same question. Please tell us a little bit about yourself and your role at TAG.

Susan Hillman: I am one of the founding partners of Treasury Alliance Group and [we’ve] been in business for over 22 years. We focus on anything to do with treasury, primarily liquidity, risk management, payments, treasury technology. Prior to that, I had another consulting firm that focused totally on international treasury management.

And my very first job was with a large regional bank.

Ali Curi: And Bob, tell us a little bit about your background and your role at TAG.

Bob Novaria: I’m currently a partner with Treasury Alliance Group for the last decade or so. Prior to that, I had many years in the corporate world where I had finance and treasury positions, like controller and finance manager and director of credit and treasury for Amaco Corporation and BPPLC. At TAG, I do consulting and training work, and I’m also chairing and moderating treasury conferences for EuroFinance and the Economist.

Ali Curi: Chris, I’ll turn it over to you.

Chris Jackson: Thanks Ali, much appreciated.

Susan, obviously, we’re talking about TMS selection and procurement’s role in that process today, but is there a wider context that we should consider first? How should an organization approach a project and who should comprise the core team in a TMS review and selection process?

Susan Hillman: Good question, Chris, but the answer is relatively complex because treasury technology or TMS selection is a very large project and it impacts not just treasury, but other areas of the organization.

So as a first step, if Treasury has initiated this project, is to really understand what the organization’s needs are and how things fit together in order to develop a project approach and a team that is going to be involved in this technology selection. And that can include, IT, accounting, other areas. It should be done in stages.

In other words, it’s not going to be a big bang. You have to evaluate the current organization itself, what’s being used, et cetera. And then once you have determined that there is a need, understand what a TMS is or what treasury technology is required, then present that to management to get approval.

And if it’s necessary at that point, then perhaps procurement will be involved and we can touch on that later. But it’s complex, it takes a lot of focus and developing a treasury team at the outset is essential.

Chris Jackson: I think that’s a very good point, Susan, so thank you. I think in the interest of time, we’ll focus solely on procurement today.

But I agree. I think there is a wider context that people should consider and that’s, probably a topic for another podcast, I think. Bob, where does procurement fit in at this point and how should their input be leveraged? Should they be taking a lead role or should that lie somewhere else?

Bob Novaria: I think that’s a good question as well. And as Susan had said we are recommending that a broad multifunctional team be put up. Put together. And particularly because of the breadth of focus that she mentioned. When you think about it from a treasury perspective, we’re impacting banking and cash positioning, and cash forecasting, debt payments, receipts, risk management, hedging, the business connectivity, et cetera.

And so we actually believe that treasury is in the natural best position to be leading this effort. Given the multiplicity of organizations and entities that are being touched and the processes that treasury is involved in. And when you put together this team with the lead role being, held by treasury, I think it’s also important to recognize that this lead role is a full-time position, not a part-time position. And in many instances organizations are gonna have to take the pain and potentially, select their best employee or one of their best employees to be in the lead in these projects. All the others on teams can clearly be performing their function on a part-time basis.

Susan mentioned the other functions and the entities and business representatives that need to be a part of it. I think important to recognize that, treasury never really has the budgets to pull together a project of this size and magnitude. And clearly in many instances we’re asking the IT and controllership budgets in some sense to be carved out to facilitate this. And so we’re really creating, if you will, not only a multifunctional team, but one that needs to be very collaborative. But as Susan said and we clearly agree, there is a role for procurement and they’re often included in these teams.

In many instances with the government and publicly controlled entities, there are many things that procurement is explicitly mandated for them by the organization. And this might be things like setting internal guidelines for third

party vendor selection and product purchases. It could be ensuring a focus on security and contract negotiation, ensuring transparency and the like.

So clearly there are many instances where procurement plays a key role. But let me step back and say, what is the key outcome that we’re looking for from these teams? And that’s defining the criteria for the review and selection efforts. And while procurement can certainly specify the overarching internal guidelines we have to be careful to not have them lose sight of some of the specifics that are gonna give rise to a more successful project. And let me give you a few instances. How do we begin to capture insights into and ideas from the vendors about how to best leverage their TMS product? How do you, create time for extended interaction with vendors on processes and related details?

How do you begin to incorporate and give an insight into the kind of demos that you’re asking vendors to deliver that gives some sense of how the products will fit. At the end of the day, we certainly want the flexibility to be able to find a solution that is the best fit, and we always caution folks that sales presentations from IT vendors and technology vendors, aren’t always enough information to make a wise choice. Let me add one other caution particularly in the contract negotiation and pricing sphere. TMS, as Susan said, it’s a very complex project. Implementing it is complex. And pricing it is also very difficult. And cannot be done accurately until the scope and implementation plans are put in place and fully defined. And as a result, the pricing piece is best done, in the back end of the process. And I think it’s important to set expectations accordingly. Hand back to you, Chris.

Chris Jackson: Thanks Bob. Yeah, I think you raised some important points there. Particularly what you say around vendors. We see a lot of situations where clients will try and launch an RFP and run it very quickly and it becomes problematic. ‘Cause if you’re not engaging the vendor and helping them to understand what you are really trying to achieve and share some of their best practice, it often becomes problematic because you will get very generic responses back from everybody, which doesn’t really allow you to wanna achieve your goals or to differentiate between the potential vendors that you’re looking at. So I think you raised some really interesting points there. Which, again, probably something to unpack on a different day in, in a bit more detail. Susan I’m interested, based on what Bob said, what are some of the different situations where you feel procurement should be involved?

Susan Hillman: The question of procurement, it really depends on the organization. In many or most, I should say, governmental, quasi-governmental organizations, including municipalities, et cetera, and very large corporations,

it’s mandated, it’s corporate policy that procurement should be involved in any large purchase. So in that case, as we said earlier, involve the, the procurement people. A designated person from the, from procurement to be involved at the start of the project. And so they understand what it is that is, is involved. So that’s pretty important. Now, we’ve also worked with companies that they either don’t have a procurement function, it’s not mandated unless it’s over a certain price. And to be honest with you, if it’s not mandated, there really is no reason to involve procurement until it gets down to perhaps final contract negotiations terms; what subscription prices are, the legal issues, et cetera, then they can be useful.

So you don’t have to include them if it’s not something that’s critical because many procurement organizations, so this isn’t just a criticism, but they’re brought in because somebody has to find vendors for the cafeteria service, for paving the parking lot, those types of very specific things that require bids and analysis.

But treasury isn’t that kind of animal, and so they’re not needed all the time.

Chris Jackson: Perfect, thank you. I think you, you make some good points there and it leads me very nicely onto my next question, and I think probably I’ll ask both of you this. What pitfalls and issues have you encountered when working with clients through a TMS selection and procurement project?

I’d be interested to get your feedback on best practice and where people make common errors.

Susan Hillman: Oh, how much time do we have? Okay, the first thing, and we alluded to this earlier, is not enough time devoted to it. It is a, you need to do it in stages and companies, and as you said Chris, they just rush into it, it’s something, issue an RFP, you wait for the responses. And also you’re not having the situation where the involvement of the key people is the same throughout the project manager.

The next big pitfall I would say is, and this has become an issue with us, is this issuing an RFP, and you talked about this, Chris, we think that the classic RFP bunch of questions that you can get generic answers to, as you said, and then a scoring methodology that oftentimes, is perhaps led by procurement, is really not a good idea. Because there’s probably going to be a handful of technology vendors that will fit your needs, and you should evaluate that ahead of time and have time to sit down and talk to them, give them an idea of what your needs are.

That is critical, and if you don’t do that. You really risk not having the results that you’re going to be looking for. So don’t do a classic RFP, don’t do this scoring thing; giving scores to think… don’t have lots and lots of questions that are just meaningless. In fact, sometimes when we do work with companies have done RFPs, we can answer all, we can answer the questions for the vendors ’cause we know what the answers are because they’re so standard. Oh, do you do this? Yes, we do this. No one’s going to say they don’t. It’s conversation. It’s developing a relationship ahead of time because selecting this vendor, it’s gonna be a long-term relationship, so you need to be comfortable with them going forward.

You need to have them have an understanding of that, and then getting into implementation, really, I think a lot of companies do not have an appreciation for the implementation process, either the cost, the time, and the dedication. You need somebody who’s a project… who’s going to be working very closely with the vendor, and do they use internal implementation experts or do they use specialized and focused external implementation experts. And that’s fine because they may know the product very well. But I’ve been in situations where the vendor was selected and the implementation consultants were brought in and they knew absolutely nothing about treasury.

It was very frustrating. And subsequently it took, I think, over two years for the implementation, for very basic stuff, nothing complicated, to take place. Those are the major pitfalls that I see.

Chris Jackson: Thanks Susan. I think you made some very useful points there. And I guess, Bob, same question to you too, around pitfalls that you’ve seen and things that people should avoid.

Bob Novaria: Thank you, happy to add. As I mentioned earlier, the implementation process is so important to the overall success of the project, and in many instances we find that people might underestimate the importance of it and the importance of how to resource it.

And and so in this case, I think if you went out and did internet searches, you’d find many projects that go unfinished because this process hasn’t been sorted out and resourced the way it needed to happen. And as a result, we encourage vendors to create a detailed plan for how to manage the implementation process.

You can ask questions about whether they’re gonna deliver in-house resources or whether they’re gonna be using third party contractors to help you. What resources are gonna be added and, to support the expertise and training that has

to happen? Is it full-time or is it part-time? What kind of project management process do they impose or would they suggest? What obligations are they looking for from the clients and the resources they need to bring into the bear?

And the conversation and dialogue around this before it happens is so important. And so to me anyway, I think enough said, the key success factor: be confident that this process is gonna work well. And in many instances, it plays back to what Susan said in the very beginning, which is, the work you do before you start the project, what’s the scope and what are we trying to accomplish and are we gonna be able to see our way through to delivering the full value of the project?

The other thing we’ve found in many instances is that the projects are made more complex because you need to collaborate across many organizations and in many instances, many silos that have been put in place. This makes it very difficult to understand some of the process interdependencies that exist across the many processes that treasury needs to manage in order to do its job.

We have to be real careful in this space that you certainly don’t want to add value in one organization only to find out that you’re bringing problems or creating disincentives for other parts of the organizations and in their processes to do their jobs. The managing it from a enterprise-wide perspective to make sure you’re maximizing and optimizing value is crucial.

And one of the things we would suggest is that the interdependency topic needs to be part of the testing processes and the customized demos that are created need to actually bring those as some of the transactions that you’d like to test. At the same time, it does bring forward, I think, another aspect of being treasurer, you wear many hats, one of which is an educator.

And so as you go through this process of implementing a TMS, you’re gonna have a lot of chance, lots of chances to be able to educate others about the role of treasury and the role of what a TMS is gonna bring to the table and get buy on the fact that it’s a win-win project for the organization. So Chris that kind of does my input.

Chris Jackson: Thanks, Bob. You raised some very interesting points there, and I agree. I think that the key part that comes through throughout this discussion is that TMS selections and the RFPs that support them are complex, complicated decisions that need to be made. And so trying to rush them and move too quickly through them without giving consideration to all of the parts of the business who need to be involved, and making sure that you’re actually

achieving what your end goal is, rather than just ticking a box to get through a predefined internal policy, is critical. And I think if people can bear that in mind at the outset, they’ll have much better outcomes in the long term rather than just trying to rush through a pre-canned, 1, 2, 3 process. So thank you both for that. I think in the interest of time I don’t have any further questions, so Ali, perhaps we’ll pass back to you.

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Ali Curi: Thank you, Chris. Now Bob and Susan, let’s close out with a quick overview or “What’s the one big thing” you would like listeners to take away from this episode? Susan, let’s start with you.

Susan Hillman: Preparation and background before you even get into the selection process.

For example many companies start this they have 500 bank accounts in 26 countries. And think that a TMS might help them connect with those banks on an easier basis. Do you need 500 banks? You need to review that first. What in the organization needs to be fixed? So it’s preparation and planning, which will add to the time, but you need to spend it upfront.

Ali Curi: Great, thank you. And Bob, same question.

Bob Novaria: One of my favorite speeches to my staff has always been that treasury’s a team sport and collaboration pays huge benefits. And so my caution to everybody is don’t spend too much time playing in the remote and virtual space. Don’t forget about the one-on-one relationships that need to be built, not only internally, but externally, particularly your banking partners and the sound relationships that exist play huge dividends in the implementation process, ’cause guess what, things will never go perfectly as intended. But the byproduct of all this is that your organization as well, can deal with day-to-day firefighting and crisis management in a way that’s actually more powerful than ever before.

So pay attention to the relationships that matter and collaborate as effectively as possible.

Ali Curi: Thank you for that. And Chris, why don’t you close us out. What is the one big thing you would like our audience to take away from this episode?

Chris Jackson: I’d expand on Bob’s answer to be honest, Ali. I think the people side of things is very often understated within a procurement process.

But I think the key point from my perspective is the vendor within that process as well. A lot of people see the vendor as the sales person who is just trying to get a deal done, and obviously there’s a, there is a degree to that. But if you don’t trust your vendor you shouldn’t be working with ’em in the first place. And building a relationship with them, that allows them to fully understand what it is that you need and can therefore position their solutions in such a way to demonstrate that they can meet that need and add further value, is gonna be critical. If you are making a decision around a vendor, as Susan said, you are making a decision for a long-term relationship. This isn’t something that you do once you have an ongoing contract with them, that ideally you want to keep renewing because the system that you have is great.

And if you don’t build that relationship with a vendor from the outset and you can’t trust them to share best practice with you, to give you their ideas based on other projects that they’ve seen, you won’t engage with them to give them the information that they need to really show you that their solution can or cannot do what you need.

You’re gonna run into long-term problems. And so I think really making sure that you engage the vendor as a partner and proving that they can live up to that task is a key point. And if a vendor cannot do that, you shouldn’t be working with them. But you have to give them the opportunity to show that they can, because you will learn an awful lot about the vendors that you’re working with during that process, and you’ll get a much better long-term outcome.

Ali Curi: Great, and thank you for that. And thank you for leading today’s conversation. Susan, Bob, thank you for joining us today and sharing your insights. I hope you visit us again soon.

Susan Hillman: Thank you, Ali.

Bob Novaria: Thank you, Ali. Good job, Chris.

Ali Curi: And that’s our episode for today. You can follow ION Treasury on X and on LinkedIn. Thank you for joining us.