How high are IT costs in Treasury - both in absolute terms and in comparison with other companies - and how can they be reduced? Nowadays only a few Treasurers can give a comprehensive answer to these simple and at once complex issues. The more Treasury is involved in the entire system landscape of a company and interfaces exist between departments and companies, the more difficult it is to directly allocate and control individual cost pools.
It is relatively easy to determine the license and maintenance costs of applications solely used in Treasury. However, can directly controllable cost types even be identified in a mix comprising overhead allocations and cost transfers for PCs, printers, networks, processing centers and ERP systems? And how does one deal with opportunity costs which arise as a result of inefficient system use in Treasury, if for example interfaces between Treasury and Accounting do not function in an optimal way or reporting involves a high degree of manual effort?
In the majority of cases, costs are also the determining factor for Treasury in deciding for or against specific projects. A transparent overview of existing costs is thus always the basis for savings forecasts, even if the path to this objective is often fraught with difficulty.
What, however, can Treasury ultimately do to scale back IT costs? Treasury is merely at the end of the IT chain and is unable to influence decisions concerning the strategic framework of IT operations such as the selection of an outsourcing partner or hardware equipment. The answer, instead, lies in the framework which Treasury defines for the alignment of IT and the associated operating costs:
However, savings and corresponding cost effects are only one side of the coin. What, if any, are the benefits? In the light of increasing expenses in the form of financial and personnel resources allocated to the implementation of changes or enhancements of Treasury system landscapes, Treasury must increasingly determine whether the introduction of a new Treasury management system or the establishment of an in-house bank with corresponding technological infrastructure (e.g. SWIFT-based bank communication) has sufficient income and profit potential.
The difficulty the Treasurer has in answering this question stems from the fact that the use of technology does not automatically lead to cost savings in its environment; the indirect effects of IT also need to be examined:
Having regard to these factors, priorities and decisions concerning IT investments in and for Treasury can inevitably then be taken based on a point of view that goes beyond the implementation of mandatory regulatory requirements or a simple analysis of costs and potential income. As part of the ongoing struggle over restrictive and tight IT budgets, Treasury promotes its own interests by identifying potential innovations and gathers valid arguments in support of its plans.
Author: Michael Baum, Senior Manager, firstname.lastname@example.org
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