© 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)

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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.

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What About Your Organization?

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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.

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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

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Qualitative Benefits

Greater Operational Efficiency

Improved Controls

Stronger Reporting

Stronger Organizational Profile

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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.

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What Would It Take At Your Organization?

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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

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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

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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?

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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?

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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?

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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)

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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

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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.

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Quantitative Scoring + Qualitative Factors + Technical Factors + Cost Considerations + References = Best Choice

Evaluate Vendors

Take a comprehensive approach:

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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.

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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

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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.

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Evaluate Vendors (cont’d.)

Should you conduct a proof of concept?

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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

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1.  Re-think processes.

2.  Consider future state needs.

3.  Observe and work with potential systems.

Success Factors

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Implementing Treasury Technology

TMS Implementation Phases

Plan Design Build Test Migrate/ Go-Live

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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

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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!

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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.

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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

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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.

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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.

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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. Laurie_McCulley@TreasuryStrategies.com (312) 628-6918

Chad Ridgway Manager Treasury Strategies, Inc. Chad_Ridgway@TreasuryStrategies.com (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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