by John Colleemallay, Senior Director, Group Treasury & Financing, Dassault Systèmes

Dassault Systèmes (DS) is a fast-growing innovator, and has experienced a doubling in revenues to over €2bn in the six years between 2006-2012. Treasury has had a major role in DS’ achievements so far, and is critical to delivering on its strategic vision of the future. DS’ financial position differs from many organisations in that it has zero net debt. However, centralising cash balances and enhancing the efficiency and automation of processes across the business is no less important. By optimising the use of cash, funding working capital requirements without the need for external borrowing and reducing costs, treasury is helping DS to invest in new technologies and innovation that will drive growth and further increase customer satisfaction. This article outlines some of the recent initiatives on which treasury has embarked and how these contribute to DS’ strategic vision.
Treasury at Dassault Systèmes
We have experienced enormous growth at DS since the company was founded in 1981, to become the world’s leading 3D software design company. This culture of dynamism and innovation is inherent across the entire business, not least in treasury. We have a small but highly focused team that aims to embrace and pioneer the latest developments in cash, treasury and risk management, and leverage integrated, secure technology to enhance performance and efficiency. These objectives influence not only the way in which we have organised the department, but also in the projects on which we embark. For example,
- Treasury is organised regionally, with common processes, policies and systems;
- We have reviewed our bank relationships and connectivity globally to ensure rapid, secure access to our cash assets;
- We have an active risk management programme with constant monitoring of our market and credit risks;
- We have reviewed our corporate legal structure with a view to promoting simplification and transparency;
- We have centralised and harmonised core processes such as payments on a global basis;
- We have been early adopters and champions of technology such as XML, SWIFT and 3SKey to promote and enhance standardisation and security across our treasury processes globally.
As a result of these initiatives, treasury has been a significant contributor to the successful integration of a number of major acquisitions realised over the last six years, allowing us to double our revenue and position the business for future growth.

Phase 1: Rationalising cash management banks
In such a fast-growing global organisation, managing cash efficiently is a major priority for DS. We therefore sought to improve the visibility of our cash, ensure rapid, secure access, and maximise the value of cash assets globally. The first phase of this project was to rationalise our bank relationships. One of the results of such rapid international growth was the proliferation of banks and accounts, with at least 83 bank relationships in place across our three core regions: Europe, North America and Asia. We made the decision to reduce this number to four banks.
We issued a request for proposal (RFP) to a number of respected international banks with the solutions, credit quality and geographic reach that we were seeking. A key criterion for our decision was bank communication. When rationalising our banking partners, we wanted to implement a single, bank-neutral connectivity channel that is integrated with our treasury management system (SWIFT integrated with Kyriba) as opposed to installing multiple proprietary systems. This would permit greater efficiency and more consistent security in the short term, and greater independence in our choice of banks in the future; however, not all banks could satisfy this requirement.
This project took around two years, but these four banks now cover 99% of our cash flows, with the remaining 1% handled through local banks for regulatory reasons. As a result of rationalising our banking relationships and reduced the number of accounts, we were in a better position to centralise our cash balances. Using the example of Europe, each entity has an account in each relevant country. These are zero-balanced into a non-resident euro account per country held by Dassault Systèmes S.A. These balances are in turn transferred to an account in France. We now have cash pools in USD, EUR and JPY, our three major currencies, with header accounts in each relevant region.[[[PAGE]]]
Phase 2: Global multi-currency cash pooling
While this arrangement successfully addressed the challenge of centralising cash for each currency, within each bank, we wanted to extend our cash pooling concept further to centralise cash held with each of our banks and in all currencies that could then be managed by our headquarters in Paris. This would enable us to reduce FX risk, leverage our cash assets more effectively and optimise cash investment. We reviewed a number of alternatives but ultimately decided to appoint Bank Mendes Gans (BMG), part of the ING Group, to implement a multi-currency, multi-bank cash pool. BMG was the only bank that was able to offer daily pooling across all currencies, which was more cost-effective and efficient than members of our treasury team transacting multiple FX swaps with the banks to reduce our FX exposure (figure 1). The header account, denominated in euro, is based in Amsterdam, Netherlands, with balances denominated in foreign currencies translated at the European Central Bank daily fixing rate. The balance on this header account is then itself swept to our central Euro account in Paris on a daily basis, where all our cash investments are done. Each foreign currency is then revalued the following day and any adjustments made.

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Phase 3: Process and technology harmonisation
The third project phase has been to standardise and optimise our treasury processes. We had Kyriba already in place as our TMS, which we integrated with SWIFT to replace the various proprietary bank systems that we had used in the past. In addition, a global ERP (Peoplesoft) rollout was taking place in parallel with our treasury project, which we also integrated into our treasury technology infrastructure to streamline transaction and information flows, therefore creating a complete ‘no touch’ straight-through process.
There were two important elements to this phase of the project in addition to SWIFT:
Firstly, while SWIFT enabled us to communicate with our banks through a single channel, we also wanted to use a single format. We implemented XML ISO 20022 to achieve this. As we were an early adopter of this format, which is also the format used for SEPA payment instruments, we were one of the first corporations to comply with SEPA, significantly ahead of the February 2014 end date.
Secondly, in the past, each electronic banking system had its own security protocols and devices which was inconvenient bearing in mind the large number of systems involved. While implementing SWIFT enabled us to rationalise the number of systems, we also wanted to add personal digital signatures to financial messages as we had done previously, but using a single device. We recognised that SWIFT’s 3SKey solution, which is supported by our banks, would facilitate this requirement (figure 2).

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A far-reaching impact
The benefits of this new infrastructure have been substantial and far-reaching. Not only have we rationalised our technology infrastructure, standardised and secured processes, but we have also been in a position to implement a payments factory. DS’ Finance department has established shared service centres (SSCs) in United States (for North America) and 3 SSCs in Europe (France, Germany and UK) with payment factories located in each one. In each case, all payments for the relevant region are now channeled through the SSC and therefore through our new technology infrastructure. 3SKey has been an essential element in achieving this by increasing trust across the business and enabling a consistent approach to best-practice transaction security.
We have also enhanced our technology infrastructure with ancillary services such as Misys for confirmation matching and 360T for online transaction execution, further enriching the degree of automation and efficiency that we have achieved. Looking forward, it is our intention to extend our infrastructure to include eBAM (electronic bank account management) with 3SKey. Currently, banks are able to offer bank account management services through their proprietary systems, but not yet through SWIFT and/ or with 3SKey.[[[PAGE]]]

Project outcomes
Our project has been a remarkable success. Not only has treasury contributed significantly to growth in recent years but we have also helped position the company for future success. One of our core business assets for DS is cash, 97% of which is now centralised and invested securely. Our cash management infrastructure is robust, transparent and meets our current and future need for optimal cash and liquidity management. Similarly, by implementing best-in-class treasury technology, supported with industry-preferred standards and security, we been able to enhance efficiency, control and cost-effectiveness both within treasury and for centralised payments processing by our SSCs. This allows both greater process automation and control but also enables better visibility and control over working capital.
Delivering success
The success of a project of this scale, complexity and diversity of stakeholders is by no means guaranteed and requires considerable effort, commitment, project discipline and a shared global vision, not only within DS but also amongst our external partners, such as banks and vendors. We selected these partners carefully and worked closely together to share experiences and insights and develop common objectives. Inevitably, however, there were some challenges to overcome. In particular, it was important to work with business units to articulate and convince them of the benefits of rationalising bank relationships and centralising cash, both at a local and headquarters level. It was challenging, for example, to explain that cash would still ‘belong’ to them, but that the cost of borrowing would be reduced, and return on investment increased.
We achieved this by visiting business units and spending time with local finance executives to understand their concerns and explain the concept in detail. By rolling out a single, global technology infrastructure, each business unit had access to their own intercompany account, ensuring that they maintained visibility and control over cash information, supported by a very high quality of service. This process of education, trust and transparency was essential to the success of the project as business units were naturally apprehensive about a potential loss of control. Today, however, we have common platforms, an efficient means of centralising cash and a successful outcome across the organisation as a whole.
