Photo of Letisa McKenzie, Senior Director, Global Insurance and Risk Management, Jennifer Brown, Global Insurance and Risk Management Analyst, Alan Chapin, Director, Capital Markets, Meredith Vance, Senior Vice President, Treasurer, David Croxville, Executive Vice President, CFO, Monika Miller, Assistant Treasurer, Global Cash Management, Bruce Perry, Assistant Treasurer, Capital Markets, Thamarai Selvan, Treasury Manager, Global Cash Management.
NTT DATA is a top 10 global IT services provider with business operations in more than 50 countries and regions.
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Transformational journey at NTT DATA is not over yet
Due to its active acquisition strategy, NTT DATA is a multi-billion-dollar organisation with expansive international operations across 65+ foreign entities, managing 30+ currencies and 200+ bank accounts spread over 20 banking partners.
Visibility over cash; a real challenge – like any treasury team, NTT DATA had to ensure that all entities around the globe had sufficient cash to operate daily. This responsibility fell on the shoulders of the small treasury team which comprised just two individuals. In the early days, NTT DATA had to first understand its foreign entity liquidity needs. The acquisitive nature of the company put tremendous pressure on treasury because of the lack of visibility into cash. With the existence of multiple banking portals and use of manual spreadsheets, the team was challenged to gain real-time visibility into the 200+ bank accounts, with many in highly complex countries where currencies are tightly controlled. With cash visibility limited to a monthly basis, treasury was unable to effectively forecast its cash. This left the team’s hands tied when it came to having cash in the right place, at the right time and in the right currency to keep day-to-day business operations running seamlessly.
The team’s struggle with cash visibility resulted in routine emergency funding daily into countries such as Costa Rica, Brazil, Malaysia, Romania and China. During this period, intercompany loans were used to fund subsidiaries, however these loans were paper-intensive, had a lengthy timeframe, created currency exposures and were costly. To meet the company’s rapidly expanding global footprint and to alleviate some of the burdens on this small team, treasury needed to rethink its infrastructure to incorporate the 65+ entities, multiple currencies and ensure it had the right people, processes and systems to scale with future growth.
The transformational journey begins – the treasury team worked with its banking partner J.P. Morgan to build an integrated treasury liquidity infrastructure that would concentrate cash in multiple currencies, streamline banks and bank accounts, simplify its FX risk management strategy and reduce physical intercompany lending. An innovative, multi-entity, multi-currency notional pool was determined to be the ideal solution for meeting NTT DATA’s unique liquidity needs while leveraging SWIFT to automate processes.
Building the right team – first, the team hired the right people to carry out this transformation. Building a strong global cash management team was imperative. Leveraging treasury networks, they were able to hire the right resources to take the team to the next level. The key was not the sheer number of resources but team members with the right technical acumen and strong leadership skills.
Five pillars of treasury transformation
- Liquidity management.
- Investments.
- FX/hedging.
- Group funding.
- Intercompany trade settlement.
The team worked on a new governance structure, developing policies and procedures around global cash management to drive strong controls and standards. By implementing a treasury delegation policy, the team was able to execute daily treasury activities on behalf of each legal entity without board approval.
International treasury centre established – treasury then set up an international treasury centre (ITC) entity, which was domiciled in the US. This first-of-its-kind, trail-blazing initiative was spurred by US tax reforms and materiality of substance in the US. This entailed creating an entity in the US acting as a hub for international treasury activities that would not only issue and consolidate intercompany loans around the world but would also be the leader of the multi-currency notional pooling structure. This entity would have the ability to hedge foreign exchange exposure and invest. By putting this infrastructure in place, treasury was able to centralise international cash and optimise the company’s US dollar investment strategy.
Technology prepares NTT DATA for next stage of journey – by leveraging a state-of-the-art technology solution, NTT DATA has automated the payment and reporting process. At the same time, treasury has built a solid foundation allowing for further growth and future enhancements that will support the complexities of the business. NTT DATA treasury has re-built, transformed itself and is well-positioned for the next phase of its journey.
Where next? – in fulfilling its role to support the company’s growth plans, treasury continues to work on opportunities to further optimize its infrastructure. NTT DATA’s treasury team has looked to harness the latest technology solutions, along with support from a banking partner who served as an invaluable and trusted advisor. By delivering crucial treasury efficiency and vital liquidity to the business, treasury has further elevated its importance to the organisation – viewed as a go-to strategic business partner in providing financial resources to achieve the company’s vision and growth objectives globally.
“Our small, but forward-thinking treasury team is constantly pushing the envelope, asking the question, ‘What more can we do?’. The team is always looking for ways to push this new infrastructure even further. The mindset is to ensure treasury is doing all it can to support the company’s continued growth. These innovative efforts around liquidity management have been executed with a keen eye toward keeping the organisation strong and lean. We never lose sight of our vital role in mastering complex challenges facing the business and supporting internal partners,” says Meredith Vance, Senior Vice President Treasurer.
The Adam Smith Awards is the industry benchmark for best practice and innovation in corporate treasury. The 2021 Awards attracted a record-breaking 309 nominations spanning 40 countries. To find out more please visit: https://treasurytoday.com/adam-smith-awards.
Lia Cao
Managing Director
J.P. Morgan
By delivering crucial treasury efficiency and vital liquidity to the business, NTT Treasury has further elevated its importance to the organization and earned it a greater voice in the decision-making process. This small, but forward-thinking Treasury team is constantly pushing the envelope, asking the question, “What more can we do?” The mindset is to ensure Treasury is doing all it can to support the company’s continued growth. Meredith and team never lose sight of their vital role in mastering complex challenges facing the business and supporting internal partners.
The efforts of Treasury are the very definition of world class and I am delighted that they have been recognised with this award.
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