SunGard, one of the biggest providers of corporatetreasury technology, is being acquired by Fidelity NationalInformation Services, also known as FIS. The deal is causing someconcern among companies that use SunGard's treasury products.

FIS provides banks with technologies and services related tocustomer and account management and payments. The company'sannouncement of theacquisition cited its interest in SunGard's products for banksin areas like trading and asset management, and emphasized the waythese technologies complement FIS's product line. But theannouncement made no mention of the products that SunGard sells tocorporates. That led to questions about the extent of FIS's focuson SunGard's treasury products and whether it would continue toinvest in them.

“You've got a company whose primary focus is financialinstitutions and the buy side, and here you have [SunGard] thatdoes offer a corporate treasury solution,” said Keith Bergman,international treasury accounting controller for HuaweiTechnologies, who is based in Amsterdam. “Personally I thinkthere's a concern for those corporate customers that are usingSunGard.”

Enrico Camerinelli, a senior analyst at technology consultancyAite Group, said in an email that he thinks companies that useSunGard products will have no reason to worry “as long as FISensures sufficient management and regular updates/enhancements of[treasury management system] functionalities (e.g., payments, cashmanagement, liquidity, trade).

“My major area of concern is that very little—if any—mention wasmade regarding the corporate space,” he continued. “I suspect FIShas not made any final decision, not because they have enoughcoverage of corporate needs but because the corporate market maydistract too much from the captive financial services space thatconstitutes the real focus for FIS.”

An FIS spokeswoman declined to comment on the company's plansfor SunGard's treasury products, noting that the acquisition is notexpected to close until the fourth quarter.

Ten Years as a Private Company

In 2005, SunGard was taken private by a group of private-equityinvestors including KKR & Co., Blackstone Group, and SilverLake. The company filed for an initial public offering this June,but on Aug. 12, FIS announced the deal to purchase SunGard.

Tenyears is a long time for PE firms to hold an investment; theturnaround is usually around five years.

Craig Jeffery, a managing partner at Atlanta consultancyStrategic Treasurer, said that in the last few years SunGard seemedto focus more on managing expenses, which had an impact on productdevelopment.

But Jeffery noted SunGard's history of supporting its clientsand the fact that when it has acquired treasury products in thepast, it has supported those products for extended periods.“They've showed extremely strong commitment to their existingclients,” he said.

And Jeffery sees “promise” in SunGard's future as a part of FIS.With FIS in the picture, “I think that existing users could andshould benefit from a renewed focus and deeper pockets that arewilling to spend more for a longer period of time,” he added.

The Long Haul

SunGard's AvantGard unit provides treasury management systemsranging from Quantum for the biggest, most sophisticated companies,to Integrity for midsize corporates and Integrity XE forless-sophisticated companies. AvantGard also provides otherreceivables management solutions and a SWIFT service bureau.

Corporate treasuries tend to stick with a treasury managementsystem for a number of years once they've implemented it. A surveyof 400 treasury professionals conducted earlier this year by gtnewsand the Association for Financial Professionals showed more than40% of respondents' companies had used their treasury managementsystem for more than five years, and 27% had had the same system inplace for more than eight years.

But a company that's expecting to get five or more years of usefrom a system can find those plans upended if its provider fails tosupport the system or doesn't continue to develop it, leaving thesoftware to become outdated.

Given the FIS deal, “there is a concern among corporatecustomers in that the [SunGard] product might not get the R&Dthat's required to continue further support,” Bergman said.

“Someone's got to pay for the enhancements, someone's got to payfor the constant upgrades, someone's got to pay for the changes asthe industry evolves,” he said. “If FIS decides not to put anymoney into it, the only way those changes get done is by thecustomers effectively paying for it themselves.”

Bergman argued, though, that given the number of companies thatuse SunGard treasury systems, “it would not be to [FIS's] advantageto sunset that system.

“I would expect FIS in the short term to maintain SunGard'soperation as it is today, and that the people who are running thecorporate treasury practice worldwide would start assuring theirclients that this acquisition is not going to affect them,” hesaid. “If they don't do that, it would be cause for corporations tostart searching and seeing what's available.”

Jeffery said that if he were a SunGard client, he'd be listeningto comments from the company and watching for signs that investmentin the SunGard treasury products is continuing or growing.

“What's really important is that they decide right away. If theydon't decide, the decision usually means there's not investmentmade in a particular set of products,” Jeffery said.

“No one's going to say, 'We're going to bag this one area,'” headded. “But if you don't pay attention to it, it will decline.”