When it comes to choosing FX risk management solutions, companies often face the “build versus buy” dilemma. For companies who have complex FX exposures across many legal entities, currency pairs and hedging programs, the wrong decision can come with many downstream impacts. A robust, flexible, reliable solution that can handle the complexity of FX exposure management and analytics is the best way to ensure effective risk management.
In this blog, we will explore the pros and cons of building an in-house solution versus going with AtlasFX.
The Case for Building
1. Control Over Development
Having an in-house development team gives a company complete control over the software development lifecycle, including the ability to prioritize changes, fix bugs and update the system based on business needs and feedback from users.
2. Fewer Vendors
When building a custom FX risk management solution, the company would own the software outright, eliminating the need for licensing fees and reducing dependency on external vendors.
The Case for Buying
1. Specialized Knowledge
AtlasFX’s team of corporate FX risk management experts provides an effective solution for the treasury team. We speak the language of IT and complex FX risk management.
Our solution includes scripts to extract the correct FX exposure data from the ERP system(s). We can also navigate around all the pitfalls in ERP setups including:
- Ledgers and currency setups
- Balances in local currency only — reconstruction of foreign currency balances (even for GLs managed via open items management)
- Ghost balances identification
- Precise capture of monetary accounts (GL accounts subject to revaluation)
- Revaluation reporting at the balance sheet account level
- Manual revaluations
In addition, we create fully automated FX Risk Management workflows to match each client’s requirements:
- ERP data aggregation
- Exposure forecasting
- Trade determination
- Post trade review
- Results analytics
- Enhanced FX reporting
2. API’s
Client’s can leverage AtlasFX’s API/SFTP infrastructure to connect to other technology vendors, creating a seamless end-to-end workflow:
- ERP: Oracle, SAP, Net Suite, JDE, Workday, etc.
- FP&A: Onstream, Anaplan, Hyperion, etc.
- TMS: ION, FIS, Kyriba, GTreasury, etc.
- Execution Platforms: Fxall, 360T, Bloomberg (FXGO), etc.
3. Deployment Speed
AtlasFX is designed for relatively quick implementation. AtlasFX can have a fully functional system up and running in a fraction of the time it would take to develop one internally. A typical AtlasFX deployment takes between a mere three and five months to deploy depending on:
- The number of systems to integrate
- The extent of configuration required to meet the client’s exact requirements
- The number of programs set for deployment (Balance Sheet, Cashflow, Commodities)
4. Cost Effectiveness
AtlasFX’s pricing can be lower than the cost to hire or engage a dedicated team to manage and update the software, saving clients substantially. Our solution includes maintenance, updates, professional services and support that clients would otherwise need to hire in-house.
5. Proven Reliability and Scalability
AtlasFX has been operating since 2010, and many of our clients are Fortune 500 companies. AtlasFX’s solution has won high-profile fans because our clients get a solution that is widely tested and proven which means lower software failure risk which can be catastrophic given the financial stakes involved. AtlasFX is also scalable without significant additional development time or cost. Clients can add new-to-them modules as their program(s) expand and develop.
6. Compliance and Security
AtlasFX invests heavily in security, storing all financial data in Microsoft Azure with guaranteed uptime of 99.99%. AtlasFX is IS027001 and SOC 1 Type II certified, further exemplifying our commitment to our clients’ data protection. Two-factor authentication or single sign is standard with AtlasFX. We utilize a robust change management process when our clients’ setup needs to flex with evolving business needs.
7. Custom Configuration
We recognize that no two companies have the same FX risk management process so, unlike other vendors, custom configuration comes standard with AtlasFX. Our clients can configure AtlasFX to the exact requirements and workflow that they need to effectively manage their FX risk.
8. Support
Internal systems often lack a dedicated team for a solution which can impact response times and resolutions. That’s not the case with AtlasFX; our responsive help desk caters to our users’ needs. In addition, the AtlasFX includes detailed training and is fully documented to ensure business continuity when clients need to onboard new users.
9. Maintenance
AtlasFX maintains the solution for clients; new master data (entities, GL accounts, cost centers, etc.) are automatically added to the setup with email notifications sent straight to users anytime there’s an update.
10. Self-Service Reporting
AtlasFX offers an Excel add-in for users to allow them to create and share reports with other users.
Making the Decision
Risk Assessment
For companies with a complex FX risk environment, the decision to build or buy should start with a risk assessment. Building software can come with project failure, underestimated costs, and extended timelines. Going with AtlasFX removes the development control from the in-house IT team.
Cost Analysis
A thorough cost analysis should consider not just the initial expenses but also long-term operational costs. Factors such as the need for ongoing customization, scalability, and potential downtime should be weighed.
Strategic Alignment
Your FX risk management decisions should align with the company’s strategic goals. If you need to quickly improve current capabilities with minimal disruption, buying might be the better route.
Conclusion
The build versus buy decision is ultimately a strategic choice that impacts a company’s operational efficiency and future success. This decision must be informed by the company’s immediate and future needs. By carefully weighing the advantages and disadvantages of each option, companies can choose a path that best supports their complex FX risk management environment.
