Against the Clock: Creating the Treasury Organisations of the Future
by Jean Philippe De Waele, Vice President & Treasurer EMEA, and Mario Del Natale, Director Treasury Operations, Systems & Applications, Johnson Controls International plc
Since Alex Molinaroli became CEO of Johnson Controls International plc (JCI, formerly Johnson Controls Inc.) in 2013, the business has been through a radical transformation. Initially, this included divesting a number of business units and divisions, and some small acquisitions to refocus the business; however, in June 2015, JCI announced the spinoff of its automotive business, effectively half of the company, into a new corporation, Adient, with a target completion date of October 2016. Soon after, JCI announced its merger with Tyco, which then took place in September 2016, only a month before the conclusion of the Adient spinoff. The impact of these events across the former JCI and Tyco businesses, as well as the new Adient corporation, has inevitably been enormous, not least for treasury. In this article, Jean-Philippe De Waele and Mario Del Natale of JCI discuss some of the factors that contributed to the successful creation of the Adient treasury function, particularly focusing on the treasury technology implications.
A ticking clock
Once the spinoff of Adient had been announced, we had a finite period of time – effectively September 2015 until July 2016 - to make all the necessary preparations. By July 2016, the new spinoff company had to have a fully functioning treasury department, complete with systems, bank relationships and accounts, credit facilities etc. It was clear that we would need help to achieve this, not least as we still needed to resource our day-to-day treasury activities. Therefore, we worked closely with FIS (formerly SunGard) which provides our treasury management system, Quantum, and payment factory system, Trax to make sure that we had their support for the project. We also appointed a number of consultants and contractors to supplement our internal resources based on their experience, knowledge of JCI and commitment to our project.
We spent October and November 2015 in detailed planning, and started the spinoff project in December. Quantum and Trax were critical to our treasury technology infrastructure at JCI so it was essential that the new Adient treasury function could benefit from the same capabilities given that the business had comparable requirements. We therefore made the decision to ‘clone’ our existing Quantum and Trax applications, including migrating the FIS-hosted infrastructure to the UK, to support the new business. This approach was complicated somewhat by the fact that we were using an old, unsupported version of Quantum. Although we had planned an upgrade to Quantum 6.2 version, we needed to accelerate this process and complete the upgrade before cloning our infrastructure for Adient. As well as offering an enhanced user experience and updated functionality, the new version also provided performance benefits. We were already using an up-to-date version of Trax, so we only had to focus on the replication process.
Replicating the treasury technology environment
We therefore had eight months to upgrade our Quantum architecture, and to replicate it for Adient, including all the necessary testing and integration work. For Adient’s payment factory (Trax), this included connecting to SWIFT in 35 countries, which involved technical integration and onboarding banks with Adient’s new BIC code. We spent five months on the Quantum upgrade and three months on the replication, and completed the project exactly on time on July 1 2016. This included a ‘clean up’ to remove obsolete data and reflect the new entity structure. One important issue, however, was the jurisdiction of the new business. Johnson Controls had previously been headquartered in the United States, but the new Adient and merged JCI/Tyco corporations would be headquartered in Europe. Both treasury functions therefore needed to produce EMIR reporting, which was supported in Quantum.