Published: January 01, 2010
When Yara was demerged from Norsk Hydro, we originally took on Norsk Hydro’s treasury and payment systems so the new treasury function could get up and running quickly. As part of this infrastructure, we inherited a highly functional payment factory and in-house banking system, which had been built in-house at Norsk Hydro. Although the system met our functional needs, however, we recognised that a system developed in-house is very expensive to maintain and it is difficult to reflect industry developments. Furthermore, our lease for the system was only for five years, so the system had to be replaced.
In addition, while we recognised the value of a centralised treasury and payments infrastructure at Norsk Hydro, we had not determined whether this was the right business and technical model for Yara. We therefore conducted a study to determine whether Yara should maintain a centralised treasury, payments and collections factory. The outcome of this was very positively in favour of a centralised infrastructure, so we made the decision to select a new payments factory and in-house banking system.
As our existing system was built in-house and enhanced over a number of years, it was functionally-rich and was closely integrated both with our in-house systems and external banking partners. We had a number of systems from which payments originated around the group, and we work with a number of banks globally, using EDIFACT and SCORE (Yara has joined SWIFT as a corporate member) in our communication with banks. We were also using the system to process collections on behalf of business units around the world, which we needed to replicate in a new system. In addition, we wanted a liquidity management tool.
One issue we discovered when we reviewed the potential solutions that were available on the market was that in most cases, in-house banking capabilities were integrated as part of a treasury management system, as opposed to being a standalone function which could be used independently. We were already using SAP for core treasury management and did not intend to replace this unless the business case proved otherwise. Furthermore, most payment factory solutions did not support collections, which was also part of our project scope.[[[PAGE]]]
We ended up reviewing five different systems, and having conducted a very thorough review process, we made the decision to implement DataLog Finance’s CashPooler solution. This was an unexpected choice from our perspective, and having initially discovered the company nearly by chance, it had really been the ‘wild card’ in our selection process. There were a variety of reasons for our decision, however. Firstly, it was offered as a standalone payment factory solution, as opposed to having a treasury management system at its core. Secondly, the system supported both our payment and collection requirements, including our integration needs, and DataLog was willing to develop and integrate the required liquidity management tool in the system.
One of our initial challenges was that although we could use DataLog’s CashPooler to manage the payments factory, it did not provide in-house banking capabilities. To address this, we set up SAP to manage basic in-house banking using the BCA (bank customer account) module. We run an end-of-day process in CashPooler which then updates the SAP intercompany balances. Data is then passed back to CashPooler and transaction and interest statements can then be accessed by business units.
As with any complex project, the implementation was very challenging. We could not implement the system gradually, due to the nature of a payments factory operation, which meant a major ‘go live’ including integration with a number of banking and internal systems, and a large number of payments in progress. Data conversion between the existing and new system was the most difficult aspect of the project which would not have been the case had it been an entirely new set-up.
To ensure the success of the project, we appointed Accenture to provide project management services, in addition to the team from Yara. DataLog also provided considerable assistance to implement CashPooler.
We went live on CashPooler on October 1 2008, so we have now been live for just over a year. Although inevitably there were some teething issues, these were quickly resolved through a number of fixes and system updates. Since we went live, the system has proved very successful, we need far fewer system fixes, and we have been very satisfied with the project outcomes. It was notable that although the previous system had met our needs very successfully, the new system was received very positively by the users. CashPooler can now be accessed by subsidiaries globally through a web interface, which has been far easier to roll out than implementing software in each location across more than 50 countries. The system has proved very attractive to users in our subsidiaries who now have online access to their payments and statements (both intercompany and bank statements).
We are now using CashPooler to make intercompany, cross-border and domestic payments across Europe, United States and Canada. We also have a presence in Africa, Asia and Latin America and we want to extend our use of the system to domestic payments in these regions. Consequently, we have commenced a project in Singapore as the first step to achieve this. Also, having two different systems as payment factory and in-house bank is challenging integration wise. DataLog is about to introduce in-house banking capabilities into the system, and we will follow this development with interest.
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