The future effect of e‐business on treasury and risk management systems and treasury management in South Africa

Abstract

‘Internet’ and ‘e‐business’ are words that have become part of today's business world. Invariably we hear of the effect thereof on the way we used to do things, due to the shift in paradigm from command and control to a more open globalised, multi‐polar world. Traditional ways of doing business are fast becoming redundant, as they are not able to cater for the needs of a business in cyberspace. New technology has helped create new risks and more volatility in the financial environment due to the ease with which information is spread. To benefit from the many new developments that allow more efficient marketing, improved productivity, lower costs, better service, and better access to financial resources, a rethink or re‐engineering of the way we used to do things will be necessary. Doing business in cyberspace means getting involved in an environment where all rules have not yet emerged and where breach of security is a very real threat. E‐business has important implications for South Africa as an emerging economy, as it creates the possibility for better access to various financial resources and eventual increased economic activity. This will affect all sectors in the economy and may lead to generally improved business infrastructure for the country as whole and for individual businesses, local authorities and government treasury departments. This is especially important for South Africa as a developing country as it may lead to a stronger economy, which, in turn, will make an important contribution to more rapid alleviation of poverty and more rapid reform in the long run.

1 INTRODUCTION

We often pay a great deal of attention to developmental issues such as land reform, education and the establishment and financing of major projects. While no one can dispute the importance of these issues for the long‐term development of an emerging economy, we must not lose sight of other important developmental issues that are in the ‘background’. These may make important contributions to the development of the country over the medium to long term, eventually contributing to more rapid alleviation of poverty and a faster pace of reform.

The Internet is one such issue, and has brought about many new implications for the business infrastructure of the country and the way we do business. It is fast becoming a feature of normal business (Forster, 2000). More importantly, the way in which the Internet links many different entities in a vast network creates a pool of information that is accessible from any location in the world. The computer screen is a small window into this pool of information, allowing us to interact with other participants in cyberspace.

The most important aspect of the Internet is that it facilitates the flow of business information, called e‐business, between businesses and consumers, allowing business‐to‐business and business‐to‐consumer interaction.

One of the possibilities created by the Internet is that of trading online, called e‐commerce. This opens up a new world by allowing trade with global markets from any location. The ease with which we change things in this environment may cause us to be indifferent to the parties with which we do business – as long as we are able to verify their secure identities. Specifically, the Internet allows greater control over resources and creates the possibility, especially in the case of government treasuries, to intervene more easily in the event of market failures (Macmillan, 2000:51). There is greater access to information on the economic activities that affect the living standards of the population (Dilnutt, 2002:79).

The modern corporate treasury environment in a company, a bank, local authority or government department will also be affected materially by the Internet. How treasuries will be affected in the future is important for South Africa. If we do not keep up with developments, the cost of catching up (which may be substantial) will place further unnecessary strain on the economy and will cause growth potential to be lost. E‐business is seen as one of the most important enablers of business, and South African companies already appear to be about 18 months to two years behind their counterparts in the United States (Gordon, 2000:10).

Generally, treasurers in South Africa have not yet fully exploited the business advantages of new technologies (Duffield, 2001:18). These must be seen as opportunities for the country to establish business practices that will accelerate business and development. As a developing country, we need to take note of important changes in the global environment and make a concerted effort to ensure the development of business practices that are in line with the rest of the world. Apart from making the country more accessible for investment purposes, greater technological advancement will give investors in developed countries a more positive view of South Africa. This will, of course, lower the risk associated with investing in the country.

The main objectives of this research were threefold:

1.	To determine the anticipated impact of the Internet and web‐based technologies on corporate treasuries in South Africa
2.	To determine the commitment and anticipated timing of development of e‐business systems by corporate treasuries
3.	To determine which components of treasury systems will have to be converted to a web‐based environment

The secondary objectives of the research were:

1.	To give a theoretical overview of the development and purpose of information systems in recent years
2.	To determine and describe the possible benefits of e‐business for treasury and risk management and treasury systems in South Africa.

The research was conducted by way of a theoretical survey of available literature on information systems and e‐business, as well as a survey questionnaire sent to all members of the Association of Corporate Treasurers of Southern Africa (ACTSA) via email. Although the emphasis in this research is on the business environment, many of the issues may, to a greater or lesser extent, apply to treasuries in other organisations. For this reason, the survey included only members of ACTSA in the population.

This study attempts to determine the importance of the Internet and web‐based environment as a delivery vehicle for e‐business from the (corporate) treasurer's point of view. The study is therefore about the Internet and no other networks. A Likert scale (of 1 to 10) was used to record the responses from respondents to questions about specific treasury systems and treasury management issues.

2 THE HISTORIC DEVELOPMENT, PURPOSE AND FUNCTION OF INFORMATION SYSTEMS

To develop an appropriate understanding of the effect of the Internet and of e‐business on corporate treasuries and risk management, we first need to have a general understanding of the purpose and functioning of information systems as such. Corporate treasury management may briefly be defined as the safekeeping and disbursement of negotiable value. Risk management in this context refers to the management of a company's exposure to financial risk, such as interest rate risk, currency risk, liquidity risk and capital risk.

When steering a company towards its short‐term and long‐term goals, management needs information about the state of the enterprise. This management information is used at different levels in the enterprise (Figure 1) – the operational level, tactical level and strategic level (Robson, 1997:85). Information at each of these levels differs in terms of accuracy, frequency and completeness:

Decision levels and planning horizons of management activities

At the operational level, information is detailed and accurate and relates only to internal transactions or accounting. This information is used for short‐term decision making. At the tactical level, information is more summarised and has to do with the allocation of resources. It is mainly internal information (although external information can be applied), and is used for short‐ to medium‐term decision making. At the strategic level information is summarised across the enterprise. It is composed of internal and external information and is used for long‐term planning and decision making.

Computers are especially suited to support management decision making at the different levels due to the speed with which usable information can be extracted from large databases. Computerised systems summarise, organise and store information in such a way that it has value for the management of the enterprise.

An information system may then be defined as a set of interrelated components that collect, retrieve, process, store and distribute information for the purpose of facilitating planning, control, coordination, analysis and decision making in organisations (Laudon & Laudon, 1998:5).

According to Robson (1997:86), an information system serves as:

1.	Instrumentation from which the general state of the enterprise can be read
2.	A gauge measuring the performance of the enterprise
3.	A framework within which corrective action can be taken

The management information system should therefore satisfy the need for information at each of the different management levels indicated in Figure 1. Generally, a very important prerequisite of an information system is that it should add value to the enterprise by, for instance, improving its competitive position and streamlining business and decision‐making processes. It should improve productivity, which should lead to reduced costs and improved earnings.

A number of different issues can be identified as common problems that inhibit the success of information systems. In the past, one such issue was that enterprises simply climbed on the technological bandwagon, spending money on computer systems because everybody was doing it. Very often unjustifiable amounts of funds were spent on computerisation, which did not add a commensurate value to the business. Currently, there is much more emphasis on getting a return on investment in information technology (IT). Fortunately, current technology can be more easily justified in terms of the value it adds to the business, as is discussed in the next section.

3 NEW DEVELOPMENTS IN INFORMATION TECHNOLOGY

In the past, systems were mostly fragmented – a major drawback that limited their efficiency and usefulness. Computers operated in isolation as closed systems, using mostly limited internal company information. In many cases, information could not be transferred from one computer to another, mainly due to compatibility problems; or, if it could, the process took a great deal of time and effort.

However, this has now changed due the dramatic advances in computers in recent years, which has made their application in enterprises far more efficient. This was mostly brought about by (Laudon & Laudon, 1998:12):

1.	The possibility of integrating systems
2.	Greater processing speeds
3.	More sophisticated software
4.	Improved accessibility
5.	Using computers as part of a larger communications network and therefore widening the technological foundations of information systems

The largest manmade network in existence is the Internet, linking individuals, busi‐nesses, governments, and scientific and educational organisations (Laudon & Laudon, 1998:12). The Internet creates an immensely valuable information pool from previously fragmented pockets of information with limited application value scattered all over the world. The user in the enterprise can access a vast amount of external information. However, the same software used to access the Internet also allows the user to access internal enterprise corporate data sources, and is therefore called the Intranet (Edwards & Finlay, 1997:361).

It also opens up many new possibilities, such as allowing access to new markets and creating electronic business opportunities. This is precisely the sort of opportunities that we should be pursuing in this country.

E‐business may be defined as the flow of (business) information across electronic networks (Allan, 2000:6). For the sake of this study, the Internet is taken as the network that gives stakeholders access to information via web‐ or browser‐based screens. This means that technology creates an environment into which information can flow from two sides – from the user or the person accessing the information via the Internet, and from the person or company placing the information on the Internet. This information on the Internet is usually called a web page and is developed in a web language called Hypertext Mark‐up Language (HTML). It allows viewing of pictures and text only, and does not allow interaction with users. The next‐generation language for use on the Internet is called Extensible Mark‐up Language (XML), which allows interaction between users, and enables complex computer systems to talk to each other (Els, 2001:57). With this language it is possible to transfer data between computers and other devices. XML allows text‐based data streams to become interactive conduits of information between humans and computers and, more importantly, among computers (Els, 2001:57).

Other important developments involving the Internet include accessing the Internet via cellphones through wireless application protocol (WAP) or bluetooth technology, and interactive television for doing business on the Internet.

When relying on data, it is important to consider certain characteristics such as security, cost of access and use, accuracy and timeliness. In this respect, the Internet is not without problems. In Table 1, Edwards & Finlay (1997:364) classify six possible data sources according to certain characteristics indicating the likelihood of experiencing problems with the data. The Internet is not rated highly. This is due to data sometimes being unavailable, data access problems occurring (download formats are incorrect; data transmission is interrupted due to line problems; input controls to ensure data integrity are limited), or major concerns about security. Although a manager may bookmark a website as being useful today, the next time he or she wants to use it, it has been changed, relocated or removed from the Internet.

Classification of problems with different data sources

		Likelihood of problems with:
Characteristic of data	Personal data	Corporate data	Commercial databases	Online databases	Databases on CD‐ROM	Internet/ World Wide Web
Security and privacy	Low	High	Negligible	Negligible	Negligible	Negligible
Volumes	Moderate	High	Moderate	High	Low	High
Formats	Low	High	Low	Moderate	Low	Moderate
Cost	Negligible	Negligible	High	High	High	Low
Integrity	High	Moderate	Low	Low	Low	High
Accuracy	Low	High	Low	Moderate	Moderate	High
Timeliness	High	Low	Moderate	Moderate	High	High
Source: Edwards & Finlay (1997:361).

It did not take long for businesses to realise the importance of the Internet from a business point of view and as a productivity tool used internally. Marketing, trading and business (electronic business, or e‐business) via the Internet soon became important, opening up many new possibilities for marketing, service delivery and trading.

It is often said that if businesses do not prepare themselves for e‐business, they will be left out in the cold and may eventually suffer financially and go under. But what are the real reasons for doing business on the Internet?

4 IMPLICATIONS OF THE TECHNOLOGICAL CHANGE FOR THE ENTERPRISE OR DEPARTMENT IN GENERAL

All these developments underline a very important issue from a business or operational point of view. We are seeing a paradigm shift from the old‐style command‐and‐control to an open environment that is oriented towards quality, innovation and service (Robson, 1997:273). People are better educated and willing to contribute to the overall well‐being of the enterprise, department or organisation.

Modern‐day information systems allow people to be empowered, enabling them to work together in groups – here the Intranet is a prime example of an empowerment tool. An information system allows easy, consistently formatted distribution of information, thereby empowering employees and increasing their productivity. Organisational structures are constantly becoming flatter (due to work groups and greater participation in management) and repetitive tasks are reduced as they are taken over by systems.

The implication is that businesses have to look at improving or re‐engineering old business processes to take advantage of the new, improved computer systems. Business process re‐engineering implies a radical rethink and redesign of existing computer systems (Robson, 1997:272). It is not always possible merely to adjust old systems, as the changes needed are usually too drastic, and existing hardware may be outdated.

5 IMPLICATIONS OF E‐BUSINESS FOR TREASURIES

Although e‐business is still relatively new, it has many implications for the future strategy of businesses and where they want to be in five years' time. In general, e‐business will probably not change a company's core business, but will add important and valuable new dimensions to an existing and well‐established business model. Businesses need to remember that the Internet does not bring about immediate success and changes in client behaviour. The greatest benefits are to be seen in terms of tremendous cost saving (The Economist, 2001:10). Management therefore needs toevaluate the impact of the web‐based environment on its business and long‐term strategic position.

E‐business information is passed on to the environment for access by users and clients. Figure 2 illustrates how software may be used to facilitate the exchange of information between various operational systems and the web‐based browser environment. In principle, operational systems do not have to change much to adjust to the web‐based environment. User screens that were previously used only internally by treasury staff should now be redeveloped to run in the web‐based (XML) environment. This information is then accessible for use on the company's Intranet and the Internet.

Transfer of data between user and operational systems via the web environment

The information in the web‐based environment has to be interpreted so that it may be fed through to the operational environment for processing or storage purposes. Figure 2 highlights the important issue of security. Allowing users and clients access from any location outside the enterprise means that unwanted access is also possible. This is especially important where clients are allowed to transact online via the Internet.

Some of the more significant changes that affect treasury management and treasury management systems involve important new management issues that can be identified from literature available to the enterprise.

Baddeley (2000:16) argues that the impact of e‐business will be material, and will probably affect data flows and decision making the most. This statement agrees with what Thurston (2000) says about the integration of treasury systems where links are set up between:

1.	Any, yet disparate financial information systems within a corporation
2.	Corporate subsidiaries and business units
3.	Corporations, their suppliers, and customers in e‐marketplaces
4.	Banks and all the other players in the supply chain

In addition to integration, the extension of services for access by the clients across the globe, as well as spreading costs over a widening market, seems to be the next logical addition that the web‐based environment offers (The Economist, 2001:10). The integration and development of systems in a web‐based environment may have the following important benefits:

1.	Setting up various new web‐based e‐finance services means that clients can be web‐enabled for self‐service (Thurston, 2000).
2.	Web‐based e‐services lead to a reduction in overheads and increased productivity as resources can be reallocated to critical areas.
3.	E‐business gives rise to much more data (even for the medium‐sized business) that can form the basis of decision information through statistical analysis (Wood, 2000:13).
4.	Web‐based treasury management and financial services will lead to a broader and more global client base for e‐finance service providers (Thurston, 2000).
5.	There is a better integration of cash flow into back office operations (Thurston, 2000).
6.	There is better access to information via the Internet from any location, which improves efficiency and shortens the management cycle. Treasury managers also need many types of information, such as economic forecasts, sales and purchase forecasts, actual cash flow, data on corporate planning, and market rates for many types of financial transactions (Forster, 2000). These are supported in an unprecedented way by the Internet.
7.	Electronic billing (invoices) and payment will open up new marketing and communication channels with clients (Marjanovic, 1999).
8.	Browsers are more universally used, and development in this area tends to be cheaper than dedicated software for treasury management (Jones, 1999).
9.	Many web‐based development tools make use of object‐oriented programming techniques that facilitate updating and maintenance of code.
10.	Due to the lower cost of development and the use of browser‐based technology, smaller companies can also participate in electronic data interchange (Jones, 1999).
11.	As web‐based software resides in one location, less maintenance will be required to update or change software (Markovic, 1998).

Integration of systems and development in a web‐based environment leads to the following disadvantages:

1.	Setting up various links and expanding business through e‐business creates new problems, such as greater exposure to financial risk. This, again, emphasises the need for better risk management (Thurston, 2000). On the other hand, more efficient integration of treasury systems means that risk can be better managed at corporate level.
2.	Security becomes an issue, because integrated systems give greater access to much more data and thereby increase the operational risk.
3.	Lack of security tends to prevent some companies from moving their financial activities to the Internet (Wood, 1999:26).
4.	The speed and reliability of web‐based delivery channels may be suspect. The treasurer is dependent on the service that the Internet service provider (ISP) can offer.

It is therefore evident that better integrated, web‐based treasury management systems may hold many benefits. However, serious disadvantages are lack of speed and reliability. Even though all the benefits suggest an environment that will lead to significant business progress, few of these benefits will realise if the Internet delivery channel does not stay open, or is slow. Furthermore, there is the question of which components of the treasury should reside in the web‐based environment.

To understand the extent of changes to treasury systems, the different components of treasury systems have to be considered (adapted from Large, 1999:40):

Front office (transaction execution)

Market management

1.	Trading systems a. Dealer support b. Electronic deal‐capturing systems c. Automated real‐time position‐keeping d. Valuation e. Straight‐through processing
2.	Pricing systems
3.	Market data feeds

Middle office (risk identification)

Middle office administration and management

1.	Risk, and profit and loss
2.	Management control

Back office (settlement and administration)

Back office administration

1.	Cash liquidity management
2.	Workflow management
3.	Safe custody
4.	Accounts and database

6 RESEARCH FINDINGS

As mentioned, questionnaires were sent to the members of ACTSA. The response rate was 17,63 per cent, which is lower than the accepted norm of 20 per cent. Of a total of 278 members, 49 questionnaires were returned, of which three respondents indicated that they were no longer involved in the treasury environment and therefore were not in a position to complete the questionnaire.

The overall response rate is relatively low because persons employed in a treasury environment generally work under pressure and therefore have difficulty in finding time for additional tasks, such as completing a research questionnaire. However, according to ACTSA, the response rate is much higher than for similar surveys done in the past. The better‐than‐usual response rate may be attributed to the use of email for despatching and returning questionnaires.

Note that responses were received mostly from corporate treasuries and banks and financial services with a turnover of more than R1 000 million per annum. This research may therefore be representative of large companies. Due to the similarity of risk management processes in companies of all sizes, it is not unreasonable to assume that the findings would apply to smaller companies as well.

The research findings were discussed with a corporate entity that conducted similar research independently. This was done to determine whether the outcome of this research could be confirmed by the results of other studies. The discussion indeed confirmed the overall outcome of this research and no testing for non‐response bias was therefore carried out. The tables and text that follow reflect the arithmetic mean of the scale values obtained from the returned questionnaires.

The responses were from ACTSA members in corporate treasuries in various sectors of the economy, as indicated in Table 2.

Sectors of the economy in which the respondents are involved

	Frequency
Financial: Banks and financial services	23
Financial: Other	8
Industrial: Consumer	4
Industrial: Electronics	1
Industrial: Food	1
Industrial: Retail	2
Industrial: Service	1
Industrial: Steel and allied, building and construction	1
Industrial: Telecommunications	1
Insurance: Short‐term insurance	2
Mining resources: Metals and minerals	6
Mining resources: Mining holdings and houses	1
Non‐mining resources: Chemical	1
Non‐mining resources: Steel	2
Non‐mining resources: Paper	1
Parastatals	2
Note: Some respondents indicated that they were involved in more than one sector. Consequently, the responses in this table add up to more than the total number of responses received.

Respondents indicated that they were involved in some or several aspects of treasury management (Table 3). This further underlines the importance of the Internet and web‐based technology from the point of view of the treasury decision makers.

Treasury area of involvement

	Frequency
Administration/accounting	11
Asset‐liability management	1
Corporate finance	1
Dealing	16
Marketing	3
Operations	1
Systems	9
Treasury/risk management	28
Research	1
Other	3
Note: Some respondents indicated that they were involved in more than one sector. Consequently, the responses in this table add up to more than the total number of responses received.

The respondents were further grouped according to the level of responsibility. Most were at management level (27 respondents), with three directors and 16 in the category ‘other’.

Respondents were requested to indicate the size of the treasury operations in terms of money turnover. Apart from the 38 companies with a turnover of more than R1 000 million per annum, two had a turnover between R200 million and R1 000 million p.a., and one less than R200 million p.a. Four respondents filled in ‘not applicable’, and one gave no response.

The next section wished to establish how important respondents rated the Internet from a treasury systems and management point of view. The questions asked were:

1.	To what extent has the Internet and web‐based technology already influenced treasury management systems in South Africa?
2.	Do you think that the Internet and web‐based technology will have a material influence on treasury management systems in the future?
3.	Do you think the Internet and web‐based treasury systems will have a material influence on treasury management in the future? The average scale values of the answers were calculated, and are shown graphically in Figure 3.

Importance of the Internet to respondents

Table 4 reflects the responses to questions as regards the benefits that the Internet and web‐based treasury systems may offer. Note the consistently high values of the responses.

The effect of the Internet and web‐based treasury systems on treasury management

Benefits	Average value
1 Improved system integration	6,11
2 Web‐enabling of clients (frees current resources)	6,43
3 Reduction of overheads	5,24
4 Increased productivity and therefore lower operational costs	5,81
5 Web‐based systems or e‐business produces more data or management information	6,12
6 Better integration of cash flow into back office operations	6,42
7 Better access to systems from any location shortens management cycle	6,96
8 Electronic billing and payment systems open up new markets and communication channels	6,81
9 More universal and more user‐friendly screens	6,64
10 Object‐oriented web development tools make updating and maintenance easier	6,96
11 Lower cost of development; small companies can now also participate in electronic data interchange	6,44
12 Web‐based software easier to maintain as it resides in one location	6,93

In addition to the benefits listed in the questionnaire, individual respondents listed and rated the following benefits (Table 5).

Additional benefits listed by respondents

Benefits	Value
1 Greatly reduced cost per transaction when utilising Internet‐based systems to remit payments to foreign suppliers	8
2 Improves interaction with the public and on a business‐to‐business basis	9
3 Lowers costs of setting up wide area networks	Not rated
4 Transparency	8
5 Speed (not bandwidth) of use	6
6 Web‐based training and development of people	7
7 Better able to trade at finer rates	7
8 Will overcome previously felt geographical and physical boundaries	10
9 Sharper and more effective focus on money, cash flow, key corporate values and policies	10
10 Shift away from accruals to immediate payment for goods and services will promote simpler accounting principles	10
11 Lower capital costs	7
12 Lower maintenance costs	5
13 Quicker implementation	7
14 Promotes global cash management/funding activities	9
15 Automated trading exchanges and platforms in unregulated markets	10
16 Ease of integration into the globalisation of resources and procedures	10

Respondents were requested to indicate which components in their companies should be converted, or had already been converted to the web environment. The results obtained are shown in Table 6. Note the high percentages in the table for specific components to be run in a web browser or to be accessible on the Internet/Intranet. (This does not mean that back office systems will run in the web environment or should be converted to do so.)

Components of the corporate system to be converted to a web‐based technology environment

System components	Yes – will be/has been converted (%)
1 Market data links (for rate feeds)
• Reuters	68,9
• Bloomberg	37,8
• I‐Net Bridge Telerate	55,6
2 Trading systems	77,8
3 Deal‐capturing systems	80,0
4 Pricing systems	73,3
5 Exposure limits
• Available to clients	55,6
• Dealer limits	51,1
6 Risk tools	57,8
7 Middle office, back office management information	60,0
8 Availability of treasury management information
• Movement reports	66,7
• Cash management information	57,8
• Portfolio risk information	48,9
• Simulation/modelling information	60,0
• Client risk exposure	62,2
• Exception reports	57,8
• Safe custody	55,6
• Accounting/portfolio information	62,2

Respondents were requested to indicate how committed their companies were to converting to, or developing web‐based treasury systems. On a scale of 1 to 10, an average value of 6,14 was obtained for all respondents. They also had to estimate how long this conversion or development process would take. The average period of 2,78 years indicated is surprisingly long, especially in view of the opportunities that the Internet may offer. The length of time required may possibly underline the complexity of treasury management, and the fact that these systems are not easily developed and implemented. It may also indicate reluctance on the part of corporates to move too fast on this issue, or may point to a wait‐and‐see attitude. The question of security and bandwidth may also play an important role here.

Respondents (who generally entered low‐scale values in previous questions in the questionnaire) were requested to rate, on a scale of 1 to 10, why the web‐basedenvironment might not be used by corporate treasuries. A high value indicates that the specific issue is an important reason why the web‐based environment might possibly not be used (Table 7).

Reasons why Internet or web‐based treasury systems might not be used

Reason	Average value
1 Security risk	6,24
2 Uncertain reliability (allowing easy and constant access at any time of the day or night from any location)	5,19
3 General suitability of the Internet and web‐based technology for use in the treasury environment	5,11

Individual respondents also added further reasons to the above (Table 8).

Other reasons why the Internet or web‐based treasury systems might not be used

Other reasons	Value
1 Bandwidth	9
2 High cost of development	9
3 Problems with agreeing on one system (such as the Internet)	10
4 High cost of existing systems	9
5 Market acceptability	8
6 Personalised needs: company and clients	7
7 Acceptance by users	Not rated
8 Sophistication of clients	10
9 Clients' need for immediate information	10

7 SUMMARY AND CONCLUSIONS

Although this research generally focused on treasury management, the importance of this issue must not be underestimated for South Africa as a developing country. The more we take advantage of opportunities to develop our business, political and social infrastructures, the more we will be seen by the international community as a country in which to invest. Embracing technological change offers the potential for high growth and high returns due to progressive changes taking place.

The following are the main conclusions of this study:

South African companies generally see the web‐based environment and its advantages in a positive light, and recognise its possible benefits for the business environment of South Africa as a developing country. There is consensus that the Internet will have a material influence in the future, but that the benefits, for South Africa, will start realising only in the next two to three years. Although companies realise the importance of the Internet, they seem to adopt a wait‐and‐see approach. Many benefits of treasury management systems in the web environment were identified. The extent towhich these benefits will be realised for individual companies or institutions will probably depend on the nature of the business or operations. However, respondents generally agreed with the benefits listed. Remote access to systems, extension of systems to clients, and lower development and maintenance costs are highly rated benefits. Various reasons were given why companies might not decide to move their treasury systems to the web‐based environment, namely uncertain security, limited bandwidth, lack of agreement on one system among participants in the marketplace, cost of systems, and specialised client needs.

Although issues such as bandwidth and security are important, a significant degree of functionality has been established on the Internet, which may already lead to greater efficiency in treasury management now. However, the matter of bandwidth as such is outside the scope of this research.

Existing treasury systems may not necessarily have to be redeveloped. They merely need to be extended to provide additional functionality and accessibility through web‐based, object‐oriented program code and software that allow switching of information between the operational systems and the web‐based user interface. The same functionality that can be provided internally to treasury users via the Intranet, can also be provided to clients.

Although it may be argued that treasury management systems need a totally reliable network, this argument applies equally to all companies and institutions running corporate treasuries and allowing remote access through networks. This means that the ISPs should be capable of providing totally reliable services, otherwise (corporate) treasuries need to set up their own ISPs.

Further research may be conducted to gather more information about the technical issues or needs of the industry as regards web‐based treasury systems and treasury management. This should specifically deal with aspects such as the following:

1.	Bandwidth, and how it affects the current and future business situation in South Africa – this is especially important and should receive serious consideration
2.	Issues concerning security of remote access
3.	The specific web functionality that treasury managers in South Africa require, i.e. what web software should support from a management point of view
4.	Software development issues (in‐house development or acquisition from external suppliers)
5.	Cost of software acquisition from local and foreign suppliers.

Additional information

Notes on contributors

Willem Reitsma 1

Respectively, Associate Professor, Department of Business Management, University of Stellenbosch, Stellenbosch, South Africa; and Deputy Group Treasurer, Nedcor, Sandton, South Africa.

Notes

Respectively, Associate Professor, Department of Business Management, University of Stellenbosch, Stellenbosch, South Africa; and Deputy Group Treasurer, Nedcor, Sandton, South Africa.