Technology Transformation for a Best-in-Class Treasury Function

by Muriel Alvarez, Assistant Treasurer, Dana Holding Corporation

As a corporation that experienced the full force of the global economic crisis, Dana emerged from bankruptcy with a renewed focus on efficiency, control, and cash and treasury optimisation. The first step in achieving this was to review and revise cash management policies, processes and banking structures. A logical next step was then to enforce these principles through an efficient, automated treasury technology infrastructure. Furthermore, a major focus amongst senior management post-bankruptcy was to ensure timely, accurate and complete access to information. Given that Dana had over 40 ERPs in place, resulting in fragmented processes, flows and information, implementing a dedicated, specialist treasury management system (TMS) was the only way to overcome this fragmentation and achieve consistent processes and comprehensive, complete information.

Key Points

• In 2012, Dana’s treasury decided to select and globally implement a new TMS as part of an overall strategy to centralise, rationalise and optimise its operations
• SunGard’s AvantGard Integrity solution was chosen, with one primary objective of achieving 100% visibility over the company’s cash in real time
• The author describes the global roll-out of the solution, region by region, which was completed in 2014
• Key objectives have been achieved and the many benefits of the new system, including automation and standardisation, are summarised

Systems background

Before 2012, our global treasury teams were relying on spreadsheets and a huge number of bank portals to manage cash and treasury operations. Our accounting and bank account reconciliation processes were manual and labour-intensive, which meant that our treasury team was spending its time producing data rather than analysing and acting on it. Our financing and investment transactions were also tracked manually on spread sheets, so we lacked visibility and control. With a lack of timely, complete reporting, it was difficult to measure and monitor risk to financial counterparties.

In 2012, we received management approval to select and implement a new TMS that would be implemented globally as part of an overall strategy to centralise, rationalise and optimise our treasury operations and decision-making.

Approach to evaluation

We appointed an external consultant to support the process of selecting and acquiring a TMS. We did not have TMS experience within the treasury team, which was all new, and our IT organisation had been restructured, moving to an outsourced support model, so we needed to access specialist expertise and project management skills externally. Dana had an existing relationship with Treasury Strategies, and I had also worked successfully with them at a previous employer, so it made sense to work with them on this project. We found that working with an external consultant was very valuable during the selection process and project planning, but we found that it was easier to use internal resources later in the project to increase accountability and ensure that the right resources within the business could be deployed. Consequently, I became 100% dedicated to the project, and consulted with Treasury Strategies as required.

Appointing a vendor

We appointed SunGard as our TMS vendor and implemented the AvantGard Integrity solution. There were a variety of reasons for our decision. We were aware that SunGard was a leader in treasury technology, and we were impressed by the company’s reputation and experiences of comparable corporations that were using their systems. We also liked the fact that SunGard offered different solutions to organisations with different profiles, which meant that they were able to recommend a solution that was closely aligned to our needs. Our selection team included representatives from both US and Europe, which was challenging as we often had different priorities, but ultimately we could agree on the AvantGard solution as it supported our global requirements and specific needs in each region. AvantGard could also be integrated seamlessly with our existing risk management system in Europe, therefore providing a cohesive technology infrastructure.[[[PAGE]]]

Aims and objectives

The primary aim of our TMS implementation, alongside the enhancements we had made in our banking relationships and cash management structures, was to achieve cash visibility over 100% of our cash in real time. In addition, we were seeking to manage all of our balances and transactions, including balance sheet items such as financing transactions, on a single platform, with full visibility and control over these activities. We recognised that implementing a best-in-class TMS would also enable us to standardise, automate and control our daily cash management processes in a more consistent way, so we could redirect our treasury resources to more value-added tasks.

There were other ancillary benefits that we were looking to achieve by implementing a new TMS. Firstly, we were seeking to achieve global visibility over our counterparty risk, which would then support our FX risk management for which we had an existing system in our European RTC. Secondly, we could automate our treasury accounting processes. This was historically one of our greatest challenges, particularly given the complexity of our ERP environment. However, by implementing AvantGard, we were able both to automate the production of our accounting entries, and integrate this automatically into a number of our ERP platforms.

Implementation in practice

We implemented Europe and North America concurrently, and then rolled out the solution region by region. We started the project at the end of the 2nd quarter of 2012, and completed it within nine months. Latin America then followed in quarter 3, 2013. Asia Pacific was more challenging given the decentralised treasury organisation and diversity of requirements across the region; however, we took a phased approach, so cash reporting was completed in quarter 1, 2014, and cash management processes and financing shortly afterwards.

Driving success

There were a number of factors that contributed to the success of the project. We had a clear vision and strategy and commitment to the vision throughout, which was shared across the global team. We had supportive and engaged executive leadership that provided guidance, made swift decisions, and influenced other parts of the organisation to make things happen when required. Throughout the project, we engaged participants that brought the right skills and expertise, both SunGard and Treasury Strategies, but also our treasury and IT resources. Having conducted a rigorous evaluation process, our AvantGard solution provided the appropriate degree of sophistication, ease of use and functionality to handle our infrastructure and regional complexity. Finally, by identifying project risks early on, we were able to put in place practical plans to mitigate these risks without compromising our project objectives or timelines.

Overcoming challenges

Integration was one of the most challenging areas of the project, primarily as we found that we needed to connect AvantGard with more internal and external systems than we had originally envisaged. For example, although we have one primary cash management banking partner in Europe, we realised during the course of the implementation that there were a further 20-30 banks that we needed to include. This added to the potential scale of the project considerably, but once again, we took a phased approach. Starting with Europe, we selected a subset of key banks, and worked with our global pooling bank as consolidator for accounts with the remaining banks. Once this was complete, we then did the same in Latin America and Asia Pacific.

With multiple ERP platforms, which were based on a variety of versions and formats, it would have been very complex to create multiple different formats for each ERP, and it was not feasible to adapt our ERP formats. We therefore used middleware to translate formats between AvantGard and our ERP systems, which greatly simplified the process. The final integration step now is to integrate AvantGard with other tools, such as online dealing, but these are more straightforward.

Project benefits

By transforming our treasury technology infrastructure, we are now able to demonstrate best-in-class financial processes that are consistent across our treasury centres, with a very high level of efficiency, control and cost-effectiveness. We have achieved our key objective: global visibility over cash and treasury balances and transactions, including cash, debt and investments, with the ability to measure and monitor financial and credit risks. By gaining a complete insight into bank balances and flows, we also have the ability to calculate and reconcile bank fees. We have improved cash and liquidity management by automating cash concentration across banks, alongside initiatives to reduce the number of local bank relationships we maintain, and enabled efficient internal financing and liquidity structures, such as an in-house bank.[[[PAGE]]]

From a control perspective, we have automated our accounting processes and been able to apply consistent market metrics for all financial systems across the company. We have also standardised system-enforced security, such as user rights, password controls and audit, and created rigorous, transparent disaster recovery plans. With a global TMS, we are now able to enforce treasury and IT policies globally and monitor compliance.

By automating cash and treasury processes, and the production of reporting and management information, we are now able to redirect treasury resources towards more value-added tasks to optimise liquidity and management across the business. Furthermore, we have greater agility in the way that we deploy resources (including a global back-fill capability) given the ease of use of the system, its consistent use globally, supported by standardised (self-directed) training and comprehensive procedures documentation.

Future plans

Having implemented and bedded down our treasury technology infrastructure, we are now looking ahead to ensure that we have an appropriate upgrade strategy that allows us to take advantage of new functionality, so that we can continue to take maximum benefit of AvantGard. We have progressed our corporate practice significantly over recent years, to which the implementation of AvantGard has been a major contributor. By standardising, automating and centralising both processes and decision-making across an integrated regional treasury organisation, we can take advantage of economies of scale, support future growth and evolution of the business, and help navigate the business through changing times ahead.