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A Global Payments Strategy at Alcatel-Lucent Until 2005, Alcatel had been using a banking system provided by one of its primary cash management banks for high volume payments and we had no immediate plans to change. However, in December 2005, the bank announced that the system would be decommissioned during the course of the following year, which meant that we had no choice but to change the way in which we made our payments. We had two options: either to migrate to the new web-based banking system that the bank proposed, or find an alternative, bank- agnostic tool for bank communications. We reviewed the new web-based banking tool, but decided that it was less user-friendly than we would have liked, and we saw the attraction of a bank-independent system. We also wanted a solution that would support IBAN (International Bank Account Numbers) in anticipation of SEPA (Single Euro Payments Area) which the bank’s system did not do...

A Global Payments Strategy at Alcatel-Lucent

by Xavier Hourseau, Director, Information Systems and Operations, Alcatel-Lucent

Until 2005, Alcatel had been using a banking system provided by one of its primary cash management banks for high volume payments and we had no immediate plans to change. However, in December 2005, the bank announced that the system would be decommissioned during the course of the following year, which meant that we had no choice but to change the way in which we made our payments. We had two options: either to migrate to the new web-based banking system that the bank proposed, or find an alternative, bank-agnostic tool for bank communications. We reviewed the new web-based banking tool, but decided that it was less user-friendly than we would have liked, and we saw the attraction of a bank-independent system. We also wanted a solution that would support IBAN (International Bank Account Numbers) in anticipation of SEPA (Single Euro Payments Area) which the bank’s system did not do.

Another issue which we needed to deal with was the lack of visibility over cash across the business, for which we needed a global treasury management system (TMS) to replace our existing software. We went through a selection project and chose a vendor; however, this coincided with the merger between Alcatel and Lucent. Lucent already had a TMS in place, so the decision was made to freeze the project until the merger become effective in December 2006. Since then, we have returned to our TMS project, selecting SunGard’s AvantGard Quantum to implement across the business.

Payments automation and bank connectivity

As part of the project to migrate to a new bank communication tool, we recognised the need, and opportunity, to further automate our payments process. We looked at technology solutions available in the market, and the clear solution was Trax, now SunGard AvantGard Payments, particularly having spoken to existing users of the system, such as Air France, who were very satisfied with the solution, based on ETEBAC 3 formats.

We decided to implement Trax, and transmit MT101 payment messages through SWIFT. We signed contracts in June 2006, and defined our workflow during July and August. By September, we had started operations and the first pilot country, Portugal, was live on the new infrastructure by mid-October. In December 2006, we achieved full deployment based on a basic set-up, to which we added further features later. Our initial implementation included connectivity to two banks: Société Générale and ABN AMRO.

During 2007-2008, Alcatel-Lucent set up three shared service centres (SSC) for accounts payable, accounts receivable and accounting. The business was highly satisfied with the capabilities of AvantGard Payments and there was significant momentum to add as many accounts as possible to the SSC. In particular, account statements were all available through a single channel and automatically reformatted so that we had a consistent view over account information.

Scope of SWIFT

Alcatel-Lucent already had a commercial bank within the group, so we already had the infrastructure and expertise in place to connect to SWIFT. We had also been connected to SWIFT under the TR-CO (treasury counterparty) model since 2005 for exchanging confirmations with banking partners. The goal was to cover as much of the Alcatel-Lucent business as possible globally, which was not easy for a company which had grown through acquisition. Today, only our accounts in Africa are not yet connected through SWIFT, although we are working on this now.

For our Tier 1 banks, which included our core cash management banks and those with which we had substantial payment volumes, we joined the MA-CUGs of the relevant banks and subsequently SCORE. We use both FIN (MT940 and MT101) and FileAct for these banks. For our Tier 2 banks, we send MT101 and MT940 through one of our core banks. For Tier 3 banks, we need only reporting (MT940 and MT950) which are sent directly through Electro Banque, our own bank.

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