Technology Transformation at Nutreco
by Jan Slootweg, Group Treasurer, Nutreco Holding N.V.
Although Nutreco’s business units operate on a largely autonomous basis, treasury is one of the business activities that has been centralised into a centre of excellence. Group Treasury acts as an in-house bank to the local businesses, providing funding services, investing surplus cash, hedging FX exposures and managing all external banking activities. Since the introduction of IFRS, Group Treasury also deals with hedge accounting, which, together with the need to improve connectivity with business units, proved one of the primary drivers when deciding to select a new treasury management system (TMS).
We had successfully used an older TMS for a number of years, but it was relatively inflexible, so as our business needs had evolved, we could not achieve the enhancement and automation to our processes that we were seeking. For example, communication with business units was a manual process, which we wanted to automate using web-based connectivity. IFRS was another driver, as had we retained this system, we would have quite some challenges to support hedge accounting. On top of that, we believe that future development and support of the TMS is important in selecting a system solution. Our TMS was then acquired by another vendor, and we were concerned about its future support status.
As a result of these factors, we decided to evaluate alternative TMS options with a view to replacing our existing system. We were fortunate that we conducted the selection and implementation process prior to the financial crisis, so we had sufficient time to dedicate to the project. With hindsight, this proved very fortunate, as once the crisis struck, our treasury agenda changed significantly and we would not have had the resources available to complete the project.
We reviewed a number of systems that were appropriate to our needs, and talked to other companies with similar budgetary expectations to ourselves. In reality, the scope and volume of our transactions, and the budget we had set, meant that there were only a few potential systems. Consequently, we did not conduct an extensive request for proposal (RFP) process and relied primarily on informal selection stages, such as demonstrations and discussions with potential vendors and their reference clients.
Implementing a system
As a result of this process, we made the decision to implement IT2. There were a variety of reasons for this. Firstly, their reference clients were positive about their experiences with the system, many of which had comparable business requirements to our own. The demonstrations of the system that we had seen were professional and the vendor was able to address our issues quickly, which encouraged confidence among the team. The look and feel of the system was intuitive and we had the impression that it was a high-quality solution. Although price was also an issue, it was not the cheapest solution that we considered. As with any system selection and implementation process, there were some challenges to be navigated. We wanted to be confident that the vendor’s shareholders and management were fully committed to develop and support the product, and we were concerned about having sufficient internal resources for the project. We decided that both of these issues were manageable and we were enthusiastic about the opportunities that the system presented.
Our project took around nine months from end to end. We made the decision for IT2 at the end of 2007, and decided to start the implementation in February once the end of year processes had been completed, although we were able to do some preparation in advance. Although we had aimed to go live before the summer, we ultimately started using the system for our live operations in August/September 2009.