IBM EMEA optimises its financial flows with CashPooler
IBM Corporation is the world leader in the IT industry. With nearly 320,000 employees in more than 100 countries, the Group posted revenues of $89 billion in 2003 and net profit of $7.6 billion. IBM is a major player in the different sectors of the IT industry: computers (both Unix servers and major MVS systems), software (IBM software) and services (IBM Global Services, the world’s leading IT engineering and services company). IBM EMEA (Europe, Middle East and Africa) is IBM Corporation’s subsidiary in charge of the Group’s activities in Europe, the Middle East and Africa.
When the project was launched in 2001, IBM EMEA’s cash management was decentralised in the subsidiaries. Each local subsidiary (generally just one per country) was responsible for payments and collections, the only kinds of relationships it had with banks. Financing was provided by an IBM Corp. subsidiary, established in Ireland, which had the role of central corporate treasury. This decentralisation resulted in a real assortment of cash management and treasury information systems since some 30 different solutions coexisted.
Rationalisation and centralisation
In 2001, IBM EMEA had a twofold objective: rationalise banking relationships and centralise payments. Up to the project launch, IBM EMEA worked with more than 30 banks in the project’s 16 target countries, with nearly every bank imposing its protocol and its exchange format: Austria, Belgium-Luxemburg, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
Choosing a payment factory tool had to reduce the number of banks, without however going so far as a single bank approach. It also had to make possible the use of a unique protocol and a single type of file formats. The X400 messaging and EDIFACT file formats were selected because they are among the only ones that are actually used by many banks around the world.
Since IBM used many different solutions for its accounting, payroll, purchasing, etc., it was essential to select a tool that was very open in terms of interfaces. This tool also had to comply with IBM’s technical standards: Web architecture, solution running under AIX and compatible with DB2 and Websphere. Therefore the adopted solution had not only to offer rich payment functions, it also had to be very flexible in terms of managing input/output interfaces while complying with very precise technical specifications. An initial study made it possible to choose between an internal development and implementation of a software package.
After a second search of many French and international publishers, it turned out that only the CashPooler solution from DataLog Finance corresponded to the IBM EMEA’s needs. In addition to the quite rich client functions, CashPooler integrated the X400 protocol as standard plus an extremely complete and easy-to-use interface creation tool. “Without being a specialist, I was able to map a CFONB 160 format in 30 minutes on a pilot CashPooler server that had been installed for us as a demonstration during the selection phase” states Alain Rividi, Treasury Program Manager of IBM EMEA.
A project simplified by the ease of implementing CashPooler
This project is the largest managed to date by the IBM EMEA treasury department. Nevertheless, the organisation implemented by “Big Blue” was able to bring the project online quickly. From the beginning a project manager, based in Dublin, was put in charge of the different phases. Assisted by two full-time people, he collaborated with IBM’s internal contacts and the DataLog Finance teams.
Each subsidiary was involved successively and the local project teams were trained. The project’s success was also facilitated by the simplicity of implementing CashPooler, thanks to its pure Web architecture that didn’t require any installation on subsidiaries’ machines, and its openness in terms of managing formats.
Functions available today
The French subsidiary was the first to be operational. The first functions were launched at the beginning of 2003: payment of suppliers and a few other flows. In view of the pilot’s rapid success, all of the subsidiary’s flows (in the direction IBM => banks and banks => IBM) began to flow through CashPooler in October 2003. The same month, the Dutch subsidiary was operational.
At the end of 2004, several other countries used CashPooler for all of their banking flows: Spain, Portugal, Belgium and Luxemburg. Furthermore, all of the international flows of the project’s 16 target countries are centralised in the product. This represents in all nearly one million payments on an annual basis. At the end of 2005, when all of the target countries are centralised in CashPooler, this will represent three million payments on an annual basis.
Thanks to the interfaces between the different IBM EMEA information systems and CashPooler, 90% of the payments arrive directly signed and controlled in the product.
The remaining 10% are entered manually directly in the software and then sent to the banks and the information systems.
The project’s benefits substantially exceeded the initial expectations. No major incident was encountered in two years of operation, which demonstrates CashPooler’s reliability. The return on investment was substantial and very quick due to the sharp drop in banking expenses. The 16 countries’ use of the same tool instead of 30 different electronic banking solutions has homogenised the payment procedures.
This also secured the exchanges, which is important with the current regulatory developments (IFRS, Sarbanes-Oxley, etc.).
Finally, it is extremely easy today to interface between the different information systems (approximately 170 different formats) and the electronic banking tool.
Two projects are currently underway: finalise the deployment at subsidiaries by the end of 2005 as well as the recognition of manual payments, which will avoid duplicate entries of payments in CashPooler and in the ERP.
A study of SWIFTNet will also be launched during 2006.
This project was a real success for IBM EMEA. It successfully rationalised and secured the financial flows while increasing the Group’s free cash flow in the zone.
IBM Corporation is the world leader in the IT industry. With nearly 320,000 employees in more than 100 countries, the Group posted revenues of $89 billion in 2003 and net profit of $7.6 billion.
IBM is a major player in the different sectors of the IT industry: computers (both Unix servers and major MVS systems), software (IBM software) and services (IBM Global Services, the world’s leading IT engineering and services company).
To learn more: www.ibm.com
DataLog Finance is a treasury and cash management software publisher (CashPooler, CashValue, CashMatching, CashRisk) created by cash management, software and new technologies professionals. Its products are based on a full Web and J2EE 3-tier architecture. DataLog Finance has won the confidence of major Groups around the world. Its products are used daily in more than 100 countries, by more than 1,000 entities and several hundreds of billions of Euros of flows are exchanged daily with these products.
To learn more: www.datalog-finance.com