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Organization

The Pain of Treasury Transformation

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November 30, 2017

How do you transform treasury to be its best self without it hurting too much?

Game planFor companies using multiple treasury systems, banks and other providers of whatever they need or want, things can very complicated. Like a juggling act that includes plates, knives, forks, chainsaws and a live kitten, treasury’s tool box can get overwhelmingly complex. Thus, the department’s strong urge to simplify and streamline.

At a recent NeuGroup Treasury Group of Thirty Leadership Group meeting, the group heard from a member who currently was going through a very arduous transformation project. This resonated with most members, as more than three-quarters of them were in the midst of similar efforts.

The member began by describing how his company addressed a fragmented and outdated treasury system infrastructure. Goals included increasing the reliability and accuracy of cash-flow forecasting, boosting the percentage of cash under control and achieving further optimization of working capital. In short, as one slide described it, the company wanted to “simplify, centralize, automate, integrate and standardize the future treasury organization.”

Notably, treasury chose to use third parties to oversee the transformation and help navigate the vendors and do an RFP, starting with a company that provides software solutions for automating the finance processes and then moving to e5 when the IT department wanted a say in the SaaS system. Changes included replacing Quantum with SAP for cash management and replacing Quantum with Reval for capital markets.

The member described the biggest challenge as one of change management—specifically the resistance put up by business units to the changes treasury wanted to implement. He said treasury ended up having to use a little extra energy to fight off resistance by establishing metrics to get affiliates on board. Another pain point involved finding that SAP is more fragile than treasury thought, leading to the conclusion that the company should have done more testing before it went live with the new system.

Don’t Be Afraid to Use Force

This company’s experience proves that despite meticulous planning in choosing systems and vendors, internal resistance can thwart successful and timely implementation of transformational change. Change management is hard and communicating effectively and having the support of the C-suite is critical. Take the time to build support above and below. Don’t be surprised if you have to use force like imposing certain KPIs to make progress.

Despite having a dedicated team from IT to get up and running, this member said that only force and treasury staffers doing three jobs each got the job done. He learned that the team needed to consider the alternatives but accept that staffers may be stretched and stressed if there are none.

Planning Pays Off
Rigorous preparation is the key to success for many endeavors, and this is always true for treasury. This member’s company spent so much time evaluating its options (the project has taken about eight years) before acting that there’s little he would do differently if starting over now. So, ask lots of questions and take your time before making a transformational leap.

Nonetheless, even the best preparation can’t prepare you everything. Thus, prepare for more change as the project goes along. In this case, it means having to up the skill level of current staffers to meet the growing challenges -- particularly as it relates to technology which can change quickly. At this point, the presented said, treasury should “bring on a treasury technology expert to be able to manage everything going forward.”

This company’s transformation journey captures the complexities members should expect as they start, complete or implement projects designed to, as this member put it, “define the future treasury program using a phased approach to implement system improvements and a more efficient banking landscape.” Whatever the specifics, success depends on formulating a clear “destination strategy,” deciding if third-parties can add appreciable value to the process of guiding technological transitions and making sure both internal and external stakeholders are in agreement on this “treasury roadmap.”

A final recommendation is to establish steering committees with appropriate constituents to ensure buy-in. But don’t expect that buy-in to come easy; and don’t underestimate the need or power of force (and encouragement) to bring business units along in a process that they may initially resist.

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