As reports–confirmed but not official–circulated at press time that treasury software giant SunGard Treasury Solutions had struck a deal to acquire rival Integrity Treasury Solutions, treasury managers could feel pretty certain about one thing: In the future, they will be dealing with fewer, larger providers of treasury software offering deeper, although perhaps less plentiful, product lines. "Treasury software providers are consolidating in an unusual way," observes Susan Skerritt, New York-based partner of Treasury Strategies Inc. "Providers, not products, are being merged. Over time, there will be fewer, broader products."

But despite market shrinkage, the consolidation trend has so far stimulated price competition, not dampened it. The reason, according to Skerritt, relates to the propensity of richer companies to build their own solutions in an accelerating race to deliver functionality. "This is a good time to buy treasury technology," Skerritt suggests.

Behind the consolidation is a perception that the revenue pie is insufficient to feed so many vendors, prompting some to look for a way to cash out. "It's a difficult market," observes Jeanne Capachin, treasury software analyst at IDC Financial Insights in Framingham, Mass. "It's getting harder for the small providers to remain independent. The truth is that treasurers are not spending a lot of money on software."