Transforming Treasury Technology at Bombardier
By Susana Aristizabal, Director, Assistant Treasurer and Christine Jensen, Manager, Treasury & Risk Management, Bombardier Transportation Financial Services
Bombardier Transportation Group has a proactive strategy of investing in leading mobility solutions, capturing global growth opportunities and flawless execution. Vital to achieving this strategy is attracting and retaining key talent globally, demonstrating strong financial discipline, pursuing an active risk management strategy and committing to corporate social responsibility. As the group’s treasury team, we play a critical role in fulfilling these ambitions, but we need the right skills, technology, policies and processes to do so effectively. A flagship treasury project to facilitate our corporate and treasury strategy has been the implementation of a new treasury management system (TMS), FIS’s Quantum 6, which went live in 2016.
Our Transportation Group treasury function is based in Zurich, Switzerland, and comprises a team of 13 treasury professionals with a wide range of responsibilities. These include:
- FX (including risk management, hedging and accounting);
- Cash management (including bank account management, minimising trapped cash, and centralised payments that operates on a payments-on-behalf-of (POBO) basis);
- In-house banking (including intercompany loans, cash funding and cash pooling), and
- Trade (including guarantees, factoring and reverse factoring).
We work with more than 30 currencies in over 400 accounts spread across 35 different banks, each with high transaction volumes that include more than 500 FX transactions monthly.
We had used our previous TMS – FIS’s Globe$ solution, for almost two decades. In that time, our business requirements evolved beyond what Globe$ could accommodate. We had created a patchwork of workarounds and add-ons to meet our treasury needs, and as a result, we reached a point where our treasury technology architecture was far too complex, fragmented, and expensive for IT to support. We were also conscious that we were reliant on a very few key people, which presented a significant risk to our business. Given the scale of our group ambitions, and our treasury commitment to remaining best-in-class, we needed a system that would support secure, automated processes on one hand, and facilitate high-quality decision-making on the other.
We developed a robust business case in 2013, having conducted an initial review of available systems and talked to other companies that had a similar profile to our own. This was triggered in part by the demands of IFRS 9, as we were concerned that we would not be able to support the new standard using our existing TMS. We had already had to develop EMIR reporting, which had proved costly and difficult, and we recognised that IFRS 9 was likely to prove even more challenging. The cost-benefit analysis was also compelling: the cost of a new system, including hosting, would be equivalent to the amount we were already spending on maintaining our old system, but the functionality, resilience and scalability would be far superior.
With an approved business case, we then issued a request for proposals in mid-2014 and conducted a rigorous selection process across a variety of leading TMS vendors, involving different parts of our business. A major decision was whether to implement the treasury modules of our ERP or a specialist TMS. As our ERP environment remains somewhat fragmented, we decided to implement a dedicated TMS that we could then integrate into different parts of the business.
While every organisation has its own priorities, it was important for Bombardier that a new system would support our hedge accounting requirements, and facilitate efficient, secure and highly-automated treasury operations. It was also important that the system would continue to meet our needs, so the vendor needed to demonstrate the ability and commitment to maintaining the system over the long term to support changing technology, market and regulatory practices, as well as the evolution of our own business.
Based on a comprehensive evaluation, we opted for FIS’s Quantum 6 solution. The solution, and the vendor, met our requirements more closely than the other systems included in the RfP process. FIS’s ability to host the solution in a secure, private cloud-based environment was important for us as we did not want to find ourselves in the same position as we had been previously - with a high degree of dependency on a few individuals. A hosted solution would also allow us to limit the amount of IT resources dedicated to the project and the ongoing maintenance of the system. We completed contract negotiations in December 2014 and started the implementation in the new year.