Global TMS Selection & Implementation Workshop

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 systems Reduction in overdrafts Total - Hard savings $0 $0 Soft savings to be realized FY 20XX Thereafter Notes/Assumptions Central 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

Technology Selection Steps Evaluate Current Processes! Assemble Project Team! Define Requirements! Develop Request for Proposal (RFP)! Identify Vendor Systems! Conduct Gap Analysis! Conduct Scripted Vendor Demos! Evaluate Vendors & Conduct Proof of Concept Tests! Develop/Finalize Business Case 13

Key Elements of Process Evaluate Current Processes! Define Requirements! Identify Vendor Systems! Conduct Gap Analysis! Conduct Scripted Vendor Demos! Evaluate Vendors & Conduct Proof of Concept Tests! 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

Develop Request for Proposal (RFP) Company Information: You Supply Company Background Treasury Activities Current Systems and Banks Critical Requirements Vendor Information: Vendor Supplies Business Requirement Response Critical Functional Requirements Technical Specifications Pricing 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

Evaluate Vendors Take a comprehensive approach: Quantitative Scoring + Qualitative Factors + Technical Factors + Cost Considerations + References = Best Choice 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

Typical Timeline Phase 1 Evaluate Current State 4 Weeks Phase 1 Intensive On-site for Determination of Business Requirements 1-2 Weeks Phase 2 Technology Selection 8-10 Weeks Phase 3 Implementation TBD 26

Success Factors 1. Re-think processes. 2. Consider future state needs. 3. Observe and work with potential systems. 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? Phase 1 (Domestic) Phase 2 (Domestic) Phase 3 (Domestic) Phase 1 (International) Phase 2 (International) Functional quick win examples: Cash management with primary bank(s) Deal capture Bank account database Allow more time for: Treasury payments Accounting Hedge accounting 31

Design Phase Design sessions should include global treasury staff, accounting, IT, consultants and vendor. Match workflows to process maps. FX Cash & Liquidity Management Cash positioning Bank relationship management & statements In-house banking & pooling Capital Markets Debt (I/C, Credit Facilities) Investments Interest rate derivatives Payments File processing STP opportunities Request & approval workflow SWIFT Controls Accounting G/L accounting Hedge accounting Cash Forecasting Policy and approach Consolidation and gathering from subsidiaries Efficiency and standardization Performance analysis Dashboard Reporting Ad-hoc reporting Standard reports Management reporting/ metrics 32

Design Phase Workflows Future&State&Process:&&Long1Term&Debt& & Front&Office& Middle&Office&&!!!!!!!!!!!!!!!! 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 Do bank balances and transactions in system match bank website? Do financial instrument cashflows generate correctly in system? Does SWIFT testing environment process messages? User Acceptance Testing 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 Ensure sustained attention to project. Determine ability to support project. Assign project team members. - Counterparties - Entities - Settlement instructions/repetitive payment templates - Holidays - Currencies - Chart of accounts Confirm market data requirements. Confirm bank connectivity contacts. 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. 39

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 40

Treasury Strategies Treasury Technology Practice 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 Solutions for Treasury Departments Pre-implementation Best Practices Review Process Review & Re-engineering Gap Analysis with Current Technology Corporate SWIFT Connectivity Technology Selection Technology Implementation & Optimization Strategic Roadmap Solutions for Technology Vendors Implementation Resource Partnering Functionality Enhancement Business Strategy 41

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. Locations Chicago London New York Accreditations Connect with Us www.treasurystrategies.com/ content/networking-communities @TreasuryStrat 42