Treasury Today Country Profiles in association with Citi

Treasury with bottle

Coca-Cola bottles in the factory

Seeking improvements to its overall technology landscape led Coca-Cola HBC, a multinational Coca-Cola vendor and bottling operation, to undertake a project to centralise its treasury operations and onwards towards improvements in its banking connectivity.

When a project is worth doing, it is surely worth doing properly, but opportunities have to be taken when they present themselves. This at least seems to be the message behind Coca-Cola HBC (CCH)’s progress towards integration, centralisation and connectivity that it started back in 2008.

CCH is a multinational Coca-Cola vendor and bottling operation, serving 28 countries and generating revenues in excess of €7 billion. The company is a product of the merger in 2000 between Coca-Cola Beverages London and Hellenic Bottling Company. Having realised that increasing complexity goes hand-in-hand with increased risk, it undertook a major project to rationalise its software which the firm also saw as a vital step towards creation of a more efficient operation.

As part of the progressive roll-out of an end-to-end SAP-based infrastructure, CCH’s finance operations came under the microscope, with the view that the firm’s existing SAP treasury system should be upgraded. But further potential gains became apparent in the banking arena. CCH had been using a range of proprietary bank message types over its infrastructure. It was felt that simplifying connectivity to its banks would allow the company to reduce the technology required to manage message production and transmission, whilst also delivering a far more timely view of its overall cash position.

“We have multiple counterparties because we operate in 28 countries,” explains Bart Jansen, Director of Treasury and Risk Management at CCH. Having relied previously on proprietary bank software in every country, Jansen and his team knew that it would be possible to “leverage the opportunity of the big SAP roll-out” by moving each of these countries in the direction of SWIFT connectivity.

Direct SWIFT connectivity was ruled out on the basis that it would require too great a commitment of resources, not only in implementing the required technology but also maintaining it. It was also felt that CCH did not have the in-house expertise required to take on such a project internally. With this in mind, it began the search for a service bureau to which it could outsource the day-to-day operation of its SWIFT connection.

The process started with a request for proposal (RFP). This led to the selection of Switzerland-based BBP, part of the Fundtech group. Jansen cites the vendor’s experience in providing connectivity to SAP systems – and in particular its knowledge of SAP’s Bank Communication Management (BCM) interface connectivity, which at the time was relatively new – as a key influencing factor for this decision. “This was particularly important because, as part of the larger project, the treasury team were under pressure to work to tight deadlines and the firm wanted to incur as little risk as possible.” For Jansen too, BBP’s level of experience was akin to it “having already invented the wheel”. This, he adds, “gave us the comfort that we would not be running a big risk.”

Business case

To define the business case for the SWIFT project, CCH considered the costs of maintaining each one of its bank accounts across multiple countries. Taking on board cumulative administrative, audit and compliance fees, these appeared to be relatively uniform across every bank connection. By managing multiple and often incompatible message-types, it was also clear that each of these standalone connections was considered to be a potential security risk. For CCH, by improving in-house cash management and simply reducing the number of in-house bank accounts it held, it would be possible to reduce the amount of cash held in each of its countries. Quantifying the potential savings, Jansen suggests an approximate figure “in the multi-million euros annually”.

Project progress

Right from the start of the project, CCH engaged a team from its own IT and audit functions. This was to ensure that progress adhered to its own technical standards. In order to evaluate the improvements that a single connectivity route could deliver, the company also brought in its security specialists. The effort around connectivity saw team members from both BBP and CCH working together to make sure the project was delivered on time and budget, with as much of the known risk mitigated as possible.

Treasury project delivery was required to fit in to the schedule of the SAP roll-out, with treasury work, including the various testing stages, scheduled to take place in specific weeks of the year. If go-live procedures for these phases faced any delays it would create a knock-on effect for the rest of the project, adding significantly to the final cost. In an effort to prevent this happening the project team set up and progressed according to a strict scorecard scheme. A scorecard in this context is used to assess the level of risk and complexity within a project and this in turn determines the process, methodology and documentation guidelines.

As part of the connectivity work, the first bank to go live through the service bureau was connected in 2010. The team then extended the reach via SWIFTNet with seven more banks in that year. “It was very successful,” says Jansen. “In 2010, while we were implementing SWIFTNet connectivity for the treasury team, we were also re-implementing the SAP treasury functionality with the latest version that was available.” That part of the project went live at the beginning of 2011, with the focus throughout the rest of 2011 on bringing in more SWIFTNet-connected countries.

Nearing the end

CCH is now live on the SAP platform in 24 of the 28 countries that it operates in, with plans in place this year to run services into Russia. Most of these have deployed the same connectivity solution. CCH is currently using both SWIFT and XML message types, with the ISO 20022 message standard being used also for trade payments (covering elements such as demand guarantees and standby letters of credit (LCs), financial invoices, invoice financing requests and trade services management).

Having centralised its core-treasury system with SAP technology and upgraded its messaging connectivity with Fundtech’s BBP, Jansen says he has seen significant cost and efficiency improvements. But the firm will not rest here.

With messaging volumes having increased “significantly” over the years, he now believes CCH has achieved “mainstream connectivity” within SWIFTNet and is now using in-house cash for the majority of its country operations. However, in the meantime, the firm has established a financial shared services centre (SSC) in Bulgaria “which is doing accounts payable (AP) for the majority of our countries”. With these payments being executed though the SWIFT network, via Fundtech’s BBP, and using in-house cash, he states CCH now has “much more efficient and secure connectivity”.