Financial Technology

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Achieving Treasury Potential through Treasury System Hosting FLSmidth was faced with the ongoing difficulty of securing resources from the company’s internal IT company, which was preventing treasury from taking advantage of essential new functionality. We find out how they solved this problem.

Achieving Treasury Potential through Treasury System Hosting

Bo Jorgensenby Bo Jørgensen, General Manager, Head of Group Treasury, FLSmidth & Co. A/S 

Leading supplier of equipment and services to the global cement and minerals industries FLSmidth has been a long-standing user of its treasury management system, SunGard’s AvantGard Quantum. The company was faced with the ongoing difficulty of securing resources from the company’s internal IT company, which was preventing treasury from taking advantage of essential new functionality. In this article, Bo Jørgensen, Head of Group Treasury describes how he and his team opted to outsource management of the solution to take advantage of a more responsive service and specific expertise. In addition, FLSmidth has been able to leverage its treasury infrastructure to streamline bank communication for both cash and trade.

Key points

Treasury organisation

We have a centralised treasury team of five people based in Copenhagen. Treasury acts as an in-house bank for around 50 subsidiaries globally, providing a full range of cash, FX funding and investment services. To support our treasury operations, we have used AvantGard Treasury (Quantum) solution for more than a decade.

IT challenges

We recognised that in order to manage the changing demands of a dynamic organisation effectively, it was essential to ensure that our treasury solution, AvantGard Quantum was well-maintained. This included upgrading the system regularly to take advantage of new functional, technical and usability benefits. The challenge, however, was that our internal IT department, based in our shared service centre in Chennai, India, lacked knowledge and expertise in the system so upgrades were difficult and time-consuming. Furthermore, as our treasury is a small department, it was not easy to secure the necessary resourcing ahead of system projects with a larger number of users, despite the business-critical nature of our activities.

Catalyst for change

In 2010, we were keen to upgrade to the new version of AvantGard Quantum but found it difficult to justify the project with IT. Although we had a group-wide policy of maintaining systems in-house at that time, we obtained a quote from SunGard to host the solution, and put together a business case to IT. Specifically, we were able to demonstrate SunGard’s proven, long-term commitment to our business, expertise and experience in providing hosting and managed services, and the company’s financial stability.

Although outsourcing IT services was not part of our policy, IT undertook a cost benefit analysis of SunGard’s proposed hosting and managed services. Based on this and SunGard’s reputation and reliability, the proposal was accepted. The benefits were clear for both treasury and IT. In treasury, we would gain a more responsive service from a dedicated team with specific expertise in supporting AvantGard Quantum, based on a documented service level agreement. IT would no longer need to support a specialist application with a small number of users, and could focus instead on front-line systems. There is no additional cost for us in treasury as the hosting services replace an IT responsibility, so this cost is funded by IT.

Hosting in practice

The migration to SunGard’s hosting services was smooth and straightforward, and coincided with a software upgrade which was rapid and seamless due to the specialist expertise that SunGard offered. We now have a single point of contact for all aspects of the relationship with SunGard, and the system is managed by a dedicated team.

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