At Urenco, we had been making do with an integrated treasury management system (TMS) solution that was part of our hosted enterprise resource planning platform that we implemented around eight years ago. The combination of the security infrastructure limiting how our systems spoke to the outside world, inadequate support from the outsourced service provider and an imperfect pattern of system upgrades (a patchy set of patches!) meant that we didn’t have an efficient treasury environment with optimised controls. When the spectre of the reference rate changes also loomed, the catalyst to make fundamental changes had arrived.
We took this as an opportunity to consider the strategic direction of the treasury function and build capability to do the things that we wanted to do but had been held back by systems limitations. We had two key strategic drivers: to develop the capability to better manage investment assets, which we are building to meet long-term decommissioning liabilities; and the wish to transact more sophisticated FX hedging strategies. It should come as no surprise that the desire to reduce our reliance on spreadsheets also featured in our business plan.
The project had several phases:
As part of the selection process, we spoke to a few of the treasury consulting practices. Most of these technology firms were known to us (the highest profile of which attend the Association of Corporate Treasurers conferences and events). However, as we wanted to take a fresh look at the latest market products, we did the bulk of research ourselves.
Setting out the functional needs in a questionnaire was very much in our comfort zone and we felt comfortable in our capability to interpret the results. And, although we did not do so, we recognise that it is possible to compress the timescale of the selection process by using a suitable advisory firm for this phase of the project.
Our questionnaire was issued to around 10 TMS providers and sought to answer some key questions:
1. Will the TMS currently have the full breadth of capability to do what we need now and also meet our long-term and strategic requirements?
2. Will the TMS provider be able to evidence this capability by way of similar business references sites?
3. Does the TMS provider have the resource and financial support to sustain investment in the product over the entire life of the contract?
While we were researching the market offerings, we set about building the business case, then obtained budgetary approval and convened a steering group.
The steering group constitution is in my mind one of the key factors influencing the success of any transformation project. The more influential the team, the greater the challenge, but make no mistake – it remains the best means of overcoming hurdles encountered.
Having considered all the options, we concluded that a software as a service (SaaS) solution that integrated easily with external services outside of our ring-fenced network and enabled automatic upgrades was the most suitable for us.
We shortlisted three potential providers. This phase allowed for demonstrations and references, and for our IT team to ensure that systems processes were resilient. Naturally, because of Urenco’s business sector, security reviews were also completed. The decision was close and one preferred provider was selected.
We commenced detailed negotiation with the shortlisted TMS provider.
A multidisciplinary team was convened that included in-house counsel and procurement. In addition, we engaged a specialist SaaS lawyer to support negotiations, since this type of contract was relatively new to Urenco. The treasury team was engaged from start of the negotiation to signature of the contract.
We tried to learn from others’ mistakes. I have seen other implementations where the procurement team negotiate the contract with the legal team before a project manager with no responsibility for the negotiation is given the task to deliver a project with no levers in place to support delivery.
As well as the service level agreement, the negotiation focused on the conditions for exiting the contract. This ‘prenuptial’ approach, which on the face of it can appear negative, was essential in order to have the option to exit should the service deteriorate or fundamentally change. Clearly, this approach also needs to be balanced and allow for a positive and supportive long-term business partner, so getting the balance right is challenging.
COVID-19 hit just as the negotiations were concluding, but we took the decision to progress anyway. As a result, much of the implementation activity was carried out by our team working from home.
We firmly believe that the key to success lies in ensuring that all of the team are engaged throughout the implementation. Ensuring that mitigates the risk of the loss of key personnel as well as providing a trained team at each stage of the ‘go live’ phases.
As at the date of this article, most implementation activity is complete with some residual complex accounting matters being evaluated for compliance with the contract.
Joe Peka is deputy treasurer at Urenco
