Michael Watts was on the cutting edge of treasury outsourcing. Unfortunately, he got nicked through no fault of his own. As the manager of global cash for Eastman Chemical Corp., he volunteered his company to beta test Wachovia Bank's proposed cash-management venture in outsourcing called AssistantTreasurer.com. "We were hoping to shift routine activities to someone with the technology, skills and staff-depth to specialize in that area," says Watts. "We liked the AT.com plan, and feedback from the bank was positive."

Then Wachovia merged with First Union National Bank, and the project was put on hold. "With the merger in the works, we knew this could happen," Watts observes. "We took a chance and lost. Now, it's time to move on." (AssistantTreasurer.com has since been sold to JMH Financial Services Ltd., which merged it with its Vtreasurer outsourcing solution.)

When it comes to treasury outsourcing, it's always something. Despite the fact that the idea has been bandied about for years as a possible cost efficiency, most treasury departments are still reluctant to hand over internal operations to outsiders–even if it happens to be your trusted banker. In a recent survey by Ernst & Young LLP, for example, only 5% of nearly 150 treasurers say they currently outsource risk-management operations, reports Robert J. Baldoni, partner and leader of the Global Treasury Advisory Group. "It's still an evolving concept in the United States and even in Europe," he observes. "Treasury has been one of the last functions to embrace outsourcing."