Another stumbling block is the viability of newer technology providers. The dot-com meltdown took with it several treasury management software providers, leaving their clients high and dry. A number of application service providers (ASPs), which host software applications for companies, have also gone under, forcing clients to look for other solutions. Gary Darst, vice president of finance at Santa Clara, California-based semiconductor company Filtronic Solid State, led the charge toward Web-based treasury at his former company, Litton Electron Devices. He implemented an accounts receivable system from eTime Capital in the spring of 2000; nine months later, eTime was gone. "They went bust, but I'm still bullish on Web-based tools going forward," says Darst. He believes fundamental advantages still exist, even if upstart vendors haven't figured out how to come to market and stay there.
The impact of the Internet on external treasury activities like bank borrowing, stock and bond issuance, and derivatives trading has been far less than expected. For all the talk of the Internet enabling companies to access investors without Wall Street intermediaries, few companies have actually conducted online debt or equity auctions. The foreign exchange market would seem to be ideal for the Internet because it enables competing multiple quotes. But most corporate E-trading is occurring on individual bank Web sites rather than on third-party platforms like Currenex. Two bank consortia-owned sites launched in the middle of last year, FXall and Atriax, have been major disappointments so far.
One reason is that banks and investment dealers are in no hurry to lose the fees they earn from forex trading. Until they commit liquidity to multiprovider sites, potential E-buyers of foreign exchange will be wary. Second, while companies might like to shave a few basis points off plain-vanilla orders, when their needs are more elaborate they still want personal service. "When [forex] orders are big and complicated, companies want dealers working the order on the phones," says David Furlonger, a research director with Gartner.
Progress may accelerate as financial institutions become more wired. Seamless transaction ability — commonly called straight-through processing (STP) — is the Holy Grail of Web-based financial applications. It means full automation of transaction processing from order to invoice to collection and posting to the general ledger. It would free up staff from the mundane tasks of keying in and transferring data between different information systems. So far, however, STP has a limited presence. While dial-up or Web-based connections between banks and corporate networks have given some companies a taste of STP, its ultimate promise requires that all parties adopt the Web-based systems that make it possible. And widespread adoption seems years off at this point. "It's about evolution — not revolution," says EDS's O'Brien.
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