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Optimising the Treasury Technology Framework
Interview #3 with Peter van Rood, Group Treasurer, and Johan van der Westhuizen, Treasury Controller, AkzoNobel
In his last two articles for TMI, Peter van Rood, Group Treasurer of AkzoNobel, introduced the treasury transformation project that he has spearheaded, and outlined the approach that the company has taken of defining treasury policies, including exploring how the company obtained financing during the climatic period of late 2008 and early 2009. In this article, Peter and Treasury Controller Johan talk about the new treasury technology infrastructure that was put in place to support the new and evolving needs of the business.
What treasury technology did you have in place before the transformation project, and what were the limitations of this infrastructure?
As we had inherited treasury technology from both the AkzoNobel and former ICI businesses, it was important to put in place a new solution that satisfied the needs of the newly combined treasury function and businesses. We used Wall Street Systems’ Wallstreet Suite (formerly Trema) which had been implemented relatively recently, but this was surrounded by a plethora of legacy systems, including a mainframe system that we used to support our in-house banking and payment factory requirements. This mainframe system was based on obsolete technology and created operational risk in two key ways: firstly, maintaining the system was becoming increasingly difficult and costly; secondly, it was not sufficiently robust to handle the transaction volume and complexity that we required. In addition, we had a variety of other systems in place, including Misys for confirmation matching and SAP FI (financial accounting). These systems were not completely integrated, leading to process inefficiencies and manual processes with the increased risk of errors and requiring significant resourcing.
Essentially therefore, with a variety of fragmented systems, some of which had outlived their usefulness, we knew that our IT portfolio would not support the treasury transformation that we intended to roll out. Implementing a new treasury infrastructure was therefore an important element of our overall project.
What were your objectives when devising a new technology strategy?
The objectives for our treasury technology project were aligned with our overall transformation initiative, as opposed to setting standalone objectives. Therefore, we were seeking to achieve 1st quartile treasury performance to enable the full operational and strategic potential of treasury to be realised. To enable resourcing to be allocated to more value-added activities, we needed access to a full range of functionality and a high degree of automation and efficiency in our treasury processes. In addition, we wanted to reduce our IT costs, which had become very substantial as we were the only user of our mainframe system, and reduce our dependence on our banks.
How did you go about selecting new systems?
We considered our functional needs in the context of our business environment. For example, we have a group-wide strategy to implement SAP, so each department is mandated to implement SAP unless there are compelling business reasons otherwise. As a treasury function, we have kept our deal execution requirements relatively straightforward, so we did not need a highly complex solution, but we needed the ability to process large volumes of transactions. In addition, one of our greatest technology challenges was to achieve effective integration between the systems of group treasury and our subsidiaries. Based on these key factors, we made the decision to implement SAP in treasury, although we also considered third-party treasury systems that would also have supported our requirements.