This case study demonstrates the value of effective relationship management by geography, stakeholders both internal and external and finance and banking following the acquisition by Lenovo of Motorola Mobility at the end of 2014.
Photo of Valerie Heng, Lenovo and Melvyn Low, Citi.
Senior Manager, Global Treasury Operations
Lenovo is a global leading Chinese multinational technology company. Lenovo has operations in more than 60 countries with more than 54,000 employees and sells its products in more than 160 countries worldwide.
in partnership with
At the end of 2014, Lenovo acquired Motorola Mobility (MM) for a value of US$2.91bn. The treasury and finance integration only began in mid-2015 to early 2016. As with any large organisational integration, the process is highly complex, requiring end-to-end re-organisation from policy, processes and systems perspectives.
Among some of the key concerns Lenovo’s treasury team had to consider during this strategic relationship management initiative were:
MM is spread across 27 countries around the world.
The single most important factor for successful integration is the right coverage and key messaging to all stakeholders. In Lenovo’s case, they were looking to strike the right cord with internal partners across procurement, accounting, legal, IT, auditing, country/regional/global finance teams and also the various business divisions. Externally, Lenovo also worked with regulators, rating agencies and investors as well as their key banking partners.
Finance and banking
Structural treasury integration requires people, processes, systems and banking alignment. The process is a long drawn out one, involving basic platform building – harmonising payables and collections practices, rationalising banking arrangements, and achieving visibility and control. Once Lenovo had a basic architecture in place, their next step was to manage liquidity, currency exposures and working capital synergies. Given Lenovo works on SAP and MM on Oracle, a long-term objective was to consolidate into a single platform.
Lenovo partnered with Citi on a global scale across all entities to cover opening accounts, building connectivity, harmonising file formats, setting payment authorisation, reporting of balances and liquidity structures. Given the coverage of this project across 27 countries with very different regulations and payment set-ups to cater for local norms, Citi worked closely with Lenovo to set up over 100 different payment types covering payroll, taxes, utilities, vendor payments as well as treasury transfers. The overall project spanned eight months and had a global project lead on both sides for monitoring.
“The Adam Smith Awards Asia are the industry benchmark for achievement in corporate treasury. Receiving the award is not only a recognition of the Lenovo treasury team but also a recognition of the efforts of all the other functional teams within Motorola that were involved in getting this project done in such a short period of time.”
Valerie Heng, Senior Manager, Global Treasury Operations, Lenovo
As a result of Lenovo’s relationship management, the company managed to overcome several challenges and achieved timely integration of MM into Lenovo’s fold. The integration project demonstrated the benefits of global partnership and efficient stakeholder management to deliver success.
Phase 1 covered account opening, payment factory, overdraft facilities, account visibility, H2H, harmonised file formats, collections reconciliations and payment authorisation limits.
Phase 2 covered evolved working capital techniques for cash creation such as liquidity concentration, FX exposure management and trade finance for AR/AP.
Phase 3 is currently under way and includes ERP consolidation to a single platform – SAP – across the firm. The focus on building strong foundations from the get-go has resulted in steady and speedy execution.
Best practice and innovation
Lenovo’s model is unique and in many ways, different from other Asian corporate treasury models. Lenovo has a lean global treasury team run out of Singapore, which is responsible for overall treasury management comprising 15 people and runs all the 60 countries centrally. There are only two people outside Singapore in NA and LATAM markets supporting them locally on account of regulatory and market constraints.
Valerie Heng, Senior Manager, Global Treasury Operations says, “We run a US$46bn company in a highly centralised, controlled and digital manner. All of Lenovo’s payments, collections, liquidity and reporting are fully driven through digital channels. We have implemented solutions such as payments factory, H2H, global liquidity pool as well as an auto reconciliation module in the last decade, thus paving the way for scalable operations. During the MM integration, we galvanised teams with 500 plus touch points across procurement, sales, IT, legal, compliance and accounting to deliver collaborative value.”
Speed of transition.
Unified process via single bank.
Effective stakeholder management.
Repeatable roadmap developed.
Key learning points
Leadership by communication.
Have clear, transparent and consistent communication channels and policies with both internal and external stakeholders.
Use the power of influence rather than authority to engage all stakeholders and get buy-ins from internal business teams.
Build strong relationships with your banking partner and collaboration with internal functional teams.
Think ahead and execute in phases – Lenovo’s treasury team gathered a deep understanding of Motorola’s current infrastructure and used that as a basis for setting up phase goals.