The financial crisis highlighted the dangers for firms that neglect their technology base. How has the importance of technology evolved post-crisis?
The financial crisis has increased the already growing pressure on corporations for effective cash management. More than ever, treasurers seek greater visibility over cash and liquidity and are using technology to help solve their cost, compliance and control agenda. Companies operating across Asia-Pacific are being faced with decentralised structures, legacy back-end systems and lots of bespoke connections to banks which prevent effective cash and liquidity management. This highlights the need for effective technology in place to streamline systems and increase efficiency.
As we head into 2011, what technology trends are you noticing in Asia-Pacific?
The Asian corporate market has often been described as unsophisticated with regard to how they handle payments, due to a greater reliance on paper- and fax-based processes than their counterparts in North America and Europe. This is still true to an extent. Companies that are largely focused on a single domestic market often prefer fax- and paper-based payment initiation. But Asian companies expanding into new markets are finding it difficult to stick with the paper channels. Time delays in paper processing and payment authorisation between subsidiaries and head offices are leading to more appetite for electronic payments. This is particularly the case if they are investing in enterprise resource planning (ERP) systems.
They are also beginning to expect the same level of integration with their banks and online services as global multinationals operating in the region. The main demand from corporations is that their banks help them achieve greater understanding of cash flow across their operations, followed by a big picture view of balances and loans outstanding. For payments, particularly in the SME market, the most pressing requirement is for notification of incoming payments or receipt of payment by a counterparty via SMS and email alerts.
Some of the trends we are seeing include:
Centralisation of services: Financial institutions are now recognising the need to streamline services in the shift towards much more automated processes.
Evaluation of payment processes: We are seeing a re-assessment of payment & collection processes, payment systems and bank relationships, (i.e. to gain greater flexibility with these relationships and to reduce fees).
Increased use of ERP treasury management solutions: There is currently a shift from bespoke treasury management systems, which are excel-based, towards specialist treasury management solutions and ERP treasury management solutions. Asia-Pacific has been relatively slow to adopt treasury management solutions but is increasingly aware of the risk involved of maintaining bespoke (in-house) solutions.
Compliance: Increasing regulation means the need for compliant systems. For example, in Asia-Pacific we are seeing increased sanction list screening through sales and order cycles.
What are the benefits that technology can provide to organisations?
Technology, when harnessed correctly, is a business enabler. Once an organisation has, for example, centralised its finance operations in a shared service centre or adopted lean-six sigma process, then technology is key to driving the next percentile of cost improvements where outsourcing to a lower cost location is not feasible.
Automation and innovative technology translate into cost reduction, greater control and more optimal use of cash and liquidity. Cloud-based deployment decreases time to enter (and exit) new markets and reduces total cost of ownership.
What is Logica's strategy in Asia-Pacific for 2011 and will you be offering any new products or solutions for corporations?
Firstly, we need to support large European headquartered companies who are operating across Asia-Pacific (many of whom are our customers in Europe) to achieve payments centralisation, cost saving and visibility across geographies, and legacy back-end systems. We will also look to combine our expertise and heritage with new deployment possibilities, such as through the Logica Private Cloud, to enable companies to implement advanced payment and collection factories.
