Photo of Beatrice G. Ransquin, Edward R. Barrie, and Byron R. Jackson of Itron Inc. and Mark Sutton of Citi.

This is a truly global multi-faceted project that has focused on delivering an architecture that simplifies, standardises and centralises all treasury processes across 130 countries, whilst ensuring a best-in-class automated straight-through reconciliation model and enhanced liquidity optimisation.

The challenge

In 2007, Itron had ballooned through a transformational, international acquisition that created a decentralised business with 150 legal entities in 40 countries. The company had FX exposure to more than 30 currencies and a lack of visibility into its banking AP/AR and payroll activities. Its technology architecture comprised multiple ERP systems, proprietary banking interfaces, accounts with nearly 60 banks, and there was no centralised intercompany lending and no multi-currency netting or crossborder pooling for euros. In short, it had a very complex, highly inefficient, sub-optimal technical and operational architecture.

“Our main challenge was around the sheer scale of the change management within the organisation,” explains Edward Barrie, Assistant Treasurer.

The solution

The global re-engineering solution that was implemented has delivered operational and financial efficiencies through these core features:

• An efficient and compliant SEPA solution using ISO 20022 XML payment message standards.
• On-boarding of over 30 banks globally for various levels of data integration and messaging over SWIFT in less than 12 months including statement reporting, wire payments, bulk payments and other data exchanges.
• Daily global electronic visibility to 88% of Itron’s bank accounts, covering over 98% of Itron’s cash balances along with advanced reporting of balances by subsidiary, country, region, currency and counterparty.
• Real-time visibility of daily and short-term cash positions through the importing of ISO 20022 XML payment files generated from Oracle, along with current day statement reporting received via SWIFT into the IT2 application.
• Standard technology and process for generating wire payments through IT2 and the SWIFT FIN network.
• Migration from bank proprietary to SWIFT/ISO XML for A/P and A/R processes, enabling greater automation, standardisation and simplification.
• Introduction of automated bank statement reconciliation on a daily basis – without human intervention, generating both labour and financial efficiencies.
• Improved compliance and fraud mitigation through the introduction of daily bank statement reconciliation.
• Lower processing and routing costs through the adoption of the ISO 20022 XML bank statement from the receipt of additional structured data.
• Banking master reference data management sourced from SWIFTRef and shared across the organisation in Oracle and IT2 to reduce failed payments and enhance compliance.
• FiREapps provides robust analytics that bring balance sheet FX exposures into sharp focus and allows effective management through targeted hedging. The circular nature of payments, bank statement reporting and reconciliation with posting to the G/L provides more timely FX exposure balance data to be reflected in FiREapps with hedges adjusted accordingly.
• Integration of FX trades executed via FXall into IT2 with subsequent cash wire settlements managed via SWIFT messaging.

Best practice and innovation

This is a truly global multi-faceted project that has focused on delivering an architecture that simplifies, standardises and centralises all treasury processes across 130 countries, whilst ensuring a best-in-class automated straight through reconciliation model and enhanced liquidity optimisation. A single global instance of the Oracle ERP (R12) provides the foundation of the technology stack, which is integrated with the IT2 Treasury Management System and supporting specialist applications including SWIFT, FiREapps, Bloomberg and FXall.

“This was a global project that had scale and complexity, which has now enabled the definition of standard global processes and provided full visibility and transparency of transactions in addition to using information to make better informed decisions. This solution leverages technology to the max, to free people from managing transactions and manual analysis to systemic analytics with standardised financial data to optimise financial and operational efficiencies,” explains Barrie.

“This global strategic initiative has delivered best-in-class cash management architecture for Itron,” concludes Barrie.