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© 2013 Treasury Strategies, Inc. All rights reserved.
Presented By
Global TMS Selection & Implementation Workshop
May 31, 2013
Laurie McCulley Partner
Chad Ridgway Manager
Agenda
• Assessing Project Objectives (10 min)
• Getting Your Project Approved (10 min)
• Selecting Technology – 40 min (including breakout) - Key Elements of Process
o Global Business Requirements – Breakout Session (15 min) o Vendor Demonstrations o Follow-up
- Success Factors • Implementing Treasury Technology – 45 min (including breakout)
- Phases - How to Choose What Gets Implemented When and Where – Breakout Session - Minimizing Delays
• Next Steps (15 min)
2
Project Objectives
Project Objectives
1. Optimize global liquidity and cash visibility.
2. Improve reporting.
3. Increase controls and segregation of duties.
4. Manage risks and exposures.
5. Improve decision-making through better, real-time data and sophisticated analytics.
6. Increase integration with other departments and systems.
7. Enhance staff efficiency through STP and reduction of manual processes.
4
What About Your Organization?
5
Getting Your Project Approved
Getting Started
Ensure you’re addressing top-of-mind issues for senior management.
Approach project with focus on details.
Be creative – seek out other departments for possible benefits.
7
Quantitative Benefits
Cost savings range from reduced interest expense and bank fees to savings from centralization efficiencies, and lower bank account fees. Labor efficiencies can be characterized as soft-dollar benefits. SAMPLE
Hard savings to be realized FY 20XX Thereafter Notes/Assumptions
Mobilization of global cash - reduced borrowings and CP issuance
Assume $X cash mobilized. For each additional $X mobilized, savings of $X interest expense
Reduction in bank fees from reduction in bank accounts (i.e. foreign currency accounts for legal entities)
Assumes a conservative reduction of X bank accounts @ $X per year. Increased visibility to cash provides for negotiation strength in lowering of bank fees.
In-sourcing services from bank providers
Consolidation of treasury locations Physical costs, IT costs - no labor reductions = X
Fewer FX transactions from consolidated FX exposure reporting
Retirement of current systems
Elimination of annual maintenance costs for current systemsReduction in overdrafts
Total - Hard savings $0 $0
Soft savings to be realized FY 20XX Thereafter Notes/AssumptionsCentral treasury labor savings Increased labor efficiency through re-deployment - Estimate of
time savings or redeployment opportunities
Other treasury locations - labor savings Estimate of time savings or redeployment opportunities
Accounting - labor savings Estimate of time savings or redeployment opportunities
Total - Soft savings $0 $0
8
Qualitative Benefits
Greater Operational Efficiency
Improved Controls
Stronger Reporting
Stronger Organizational Profile
9
Financial Analysis
Any business case needs to include a cost-benefit analysis that includes breakeven analysis and return on investment calculation.
• Investigate organizational policy and tools for capital projects.
• Obtain internal cost of capital rate applied to capital projects.
• Distinguish between costs that can be capitalized and those that can be expensed.
• Ensure benefits are net present-valued.
• A frequent hurdle rate for ROI is 30%.
• Some organizations add contingency amount to overall project.
• Use five-year horizon.
10
What Would It Take At Your Organization?
11
Selecting Technology
Evaluate Current Processes!
Assemble Project Team!
Define Requirements!
Conduct Gap Analysis!
Identify Vendor Systems!
Develop Request for Proposal (RFP)!
Conduct Scripted Vendor Demos!
Evaluate Vendors & Conduct Proof of
Concept Tests!
Develop/Finalize Business Case
Technology Selection Steps
13
Evaluate Current Processes!
Define Requirements!
Conduct Gap Analysis!
Identify Vendor Systems!
Conduct Scripted Vendor Demos!
Evaluate Vendors & Conduct Proof of
Concept Tests!
Key Elements of Process
14
Evaluate Current Processes
Evaluate existing workflows and processes:
• Cash management and forecasting
• Bank relationship management
• Payments
• Approvals and control points
• Trade lifecycle management Assess your existing system(s) (if applicable) – both current usage and potential capabilities. Investigate your workflows thoroughly – are you re-keying data? What does your ideal treasury look like?
15
Define Global Requirements
Determine functional priorities – breakout session
• What’s most important in your organization?
• How do you prioritize by region?
• How will you integrate to external and internal data sources?
16
Conduct Gap Analysis
Review current system usage.
Assess additional functionality now available.
Evaluate gaps between global requirements and system capabilities.
Decision point:
• Remain with existing vendor?
• Evaluate larger vendor pool?
• Include existing vendor in selection process?
17
Company Background
Treasury Activities
Critical Functional
Requirements
Business Requirement
Response
Critical Requirements
Technical Specifications Pricing
Company Information: You Supply
Vendor Information: Vendor Supplies
Current Systems and
Banks
Develop Request for Proposal (RFP)
18
Identify Technology Possibilities
Bank online systems
Bank-offered treasury systems
Fully integrated best-in-class Treasury Management Systems
ERP treasury modules
Specialized systems
• FX
• Bank-to-Book Reconciliation
• Risk Management
• Multilateral Netting
• Bank Account Administration
Trade execution portals
Bank connectivity alternatives
19
Conduct Scripted Vendor Demo
Schedule onsite visits for vendors.
Allow sufficient time for demos.
Create customized script including your specific data.
• One script should be used for all vendors for equal comparison.
Ensure stakeholders attend, including all business unit users.
20
Quantitative Scoring + Qualitative Factors + Technical Factors + Cost Considerations + References = Best Choice
Evaluate Vendors
Take a comprehensive approach:
21
Evaluate Vendors (cont’d.)
Quantitative Scoring:
• Score vendor offerings based on RFP and demos.
• Consider a standard scale such as:
1 = Major functionality gaps
3 = Capabilities are acceptable; minor gaps
5 = Meets or exceeds requirements
• Weight functional areas to emphasize business needs.
22
Evaluate Vendors (cont’d.)
Qualitative factors – what do you think are most important?
Factors to consider may include:
• Ease of system integration into your environment
• Vendor’s experience with similar firms
• Vendor’s understanding of and ability to apply business requirements and sample data
• Peer reference feedback
23
Evaluate Vendors (cont’d.)
Cost considerations:
• Ensure number of core and light (read-only) users are not
under- or overestimated.
• Assess costs on a consistent basis (installed, hosted, ASP).
• Compare vendor system & implementation costs to budget.
24
Evaluate Vendors (cont’d.)
Should you conduct a proof of concept?
25
1-2 Weeks
4 Weeks
8-10 Weeks
TBD
Phase 1 – Evaluate Current State
Phase 1 – Intensive On-site for Determination of Business Requirements
Phase 2 – Technology Selection
Phase 3 – Implementation
Typical Timeline
26
1. Re-think processes.
2. Consider future state needs.
3. Observe and work with potential systems.
Success Factors
27
Implementing Treasury Technology
TMS Implementation Phases
Plan Design Build Test Migrate/ Go-Live
29
Plan Phase
What do you think happens in planning phase?
Contracting Project Resourcing Project Planning
• Vendor license contract • Vendor scoping • Vendor Statement of Work • Hosting contract (if
applicable)
• Company resourcing
• External resourcing
• Vendor resourcing
• Implementation scope • Implementation
sequencing • Detailed project plan • Timeline
30
Sequencing the Implementation
Revisit global business requirements and priorities – how would you sequence?
Functional quick win examples:
• Cash management with primary bank(s)
• Deal capture
• Bank account database
Allow more time for:
• Treasury payments
• Accounting
• Hedge accounting
Phase 1 (Domestic)
Phase 1 (International)
Phase 2 (Domestic)
Phase 2 (International)
Phase 3 (Domestic)
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Design Phase
• Design sessions should include global treasury staff, accounting, IT, consultants and vendor.
• Match workflows to process maps.
Capital Markets Accounting
• FX • Debt (I/C, Credit Facilities) • Investments • Interest rate derivatives
• G/L accounting • Hedge accounting
Cash & Liquidity Management
Payments Cash Forecasting
• Cash positioning • Bank relationship
management & statements • In-house banking & pooling
• File processing
• STP opportunities • Request & approval
workflow
• SWIFT
• Controls
• Policy and approach • Consolidation and
gathering from subsidiaries • Efficiency and
standardization
• Performance analysis
Reporting
• Dashboard • Ad-hoc reporting • Standard reports • Management reporting/
metrics
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Design Phase – Workflows
Future&State&Process:&&Long1Term&Debt&&
Fron
t&Office&
Middle&Offi
ce&&
!!!!!!!!!!!!!!!!
Back&Office&&
!!!!
Start!
Integrity!!!
Determine!!strategic!!
financing!plan!
Approval?!
Yes!No!!!!
Review!plan!!with!Treasurer!
Select!preferred!banks!for!debt!issuance!
Execute!debt!issuance!
GL!Interface!!
SAP!!End!
Hedging?!!No!!!!
Yes!
Go!to!IRS!Process!
Receive!deal!details!
TMS!generate!journal!entries!
Cash!flow!reconciliaLon!
Enter!debt!deal!into!TMS!
Cash!flow!Interface!
Decision!Point!
Manual!Process!
!
Control!Point!
!
Report!
Involves!TMS!Involves!Excel!
System
SHAPES LEGEND
COLOR LEGEND
Import!prior!day!bank!report!
Validate!&!!accept!deal!!in!TMS!
Verify!!!G/L!!
entries!!!
TPOps!receives!proceeds!
into!corporate!!account!!
SeRlement!!
Process!!
Rate!resets!applied!to!floaLng!rate!swaps!
Review!!and!verify!rate!resets!in!TMS!
Start!floaLng!rate!debt!
maintenance!Interface!!
AutoPimport!of!market!rates!into!
TMS!
FloaLng!rate!reset!process!
33
Build Phase
Configure static data, bank balance and transaction rules, instruments, cash positions, workflows, reports.
• Resource-intensive
• Lots of details to attend to
- Static data
- Bank data
- Market data
- Deal details
• Allow time for bank onboarding/implementation.
• Assign functional area responsibility to team members.
34
Test Phase
• Allow sufficient time for the two different types of testing, especially UAT.
• Vendors don’t provide test scripts .
Unit Testing User Acceptance Testing
• Do bank balances and transactions in system match bank website?
• Do financial instrument cashflows generate correctly in system?
• Does SWIFT testing environment process messages?
• Step-by-step check through workflow process, data flow throughout system
• Register positive and negative results in central place
• Have process and assignments for resolving defects noted during testing
35
Migrate/Go-Live Phase
All hands on deck for parallel testing:
• Pay special attention to month-end processes. Develop migration plan:
• Plan migration to Production environment well in advance.
• Vendor needs advance notice to migrate you from implementation to customer support.
Document your new treasury processes.
• Don’t rely on system help documentation. Go-live date should be realistic.
36
Minimizing Delays
What do you think are the best ways to avoid implementation delays? Act early.
• Gather static data:
- Bank accounts
- Counterparties
- Entities
- Settlement instructions/repetitive payment templates
- Holidays
- Currencies
- Chart of accounts
• Confirm market data requirements.
• Confirm bank connectivity contacts.
Ensure sustained attention to project.
• Determine ability to support project.
• Assign project team members.
37
Next Steps
Next Steps
• Evaluate objectives for treasury technology and plan a roadmap for overall project.
• Assess processes before launching technology selection and implementation.
• Determine your most critical requirements for treasury technology.
• Pay attention to global priorities and sequencing – don’t wing it!
• Ensure sustained effort by celebrating milestones.
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Questions?
Laurie McCulley Partner Treasury Strategies, Inc. [email protected] (312) 628-6918
Chad Ridgway Manager Treasury Strategies, Inc. [email protected] (248) 363-0223
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Treasury Strategies Treasury Technology Practice
Solutions for Treasury Departments Solutions for Technology Vendors • Pre-implementation Best Practices Review • Process Review & Re-engineering • Gap Analysis with Current Technology • Corporate SWIFT Connectivity • Technology Selection • Technology Implementation & Optimization • Strategic Roadmap
• Implementation Resource Partnering • Functionality Enhancement • Business Strategy
Our expertise in treasury best practices, knowledge of technology solutions and unbiased viewpoint provide our clients with an experienced team to guide them through the technology maze.
Clients • Corporations • Not-for-Profit Organizations • Public Sector Organizations • Technology Vendors
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About Treasury Strategies, Inc.
Who We Are Treasury Strategies, Inc. is the leading treasury consulting firm working with corporations and financial services providers. Our experience and thought leadership in treasury management, working capital management, liquidity and payments, combined with our comprehensive view of the market, rewards you with a unique perspective, unparalleled insights and actionable solutions.
What We Do Corporations We help you maximize worldwide treasury performance and navigate regulatory and payment system changes through a focus on best practices, technology, liquidity and controls.
Treasury Technology We provide guidance through every step of the technology process – which includes creating a roadmap, selection, implementation and optimization. Our expert approach will uncover opportunities to optimize the value of your treasury through fully integrated technology solutions.
Financial Services Our experience, analytic approach and benchmarks provide unique consulting solutions to help you strengthen and grow your business.
www.TreasuryStrategies.com/ content/networking-communities
@TreasuryStrat
Accreditations
Connect with Us
Locations Chicago • London • New York
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