Photo of Wayne Fu, Visual Risk, William Mah, PwC, Adam Malik Azlan, Maybank Berhad, Nur Hamizah Dzulkafli, Nor Asikin Mohd Dun, Mohamad Zamzuri Ahmad, Azahari Mohd Yunus, Tenaga Nasional Berhad.
Tenaga Nasional Berhad (TNB) established a comprehensive Treasury Management Transformation (TMT) project to address a number of strategic as well as operational challenges. The project was designed around the implementation of three key components; a new treasury management platform, new banking structure and platforms and an integrated ERP financial platform.
Nor Asikin Binti Mohd Dun
General Manager, Treasury & Liquidity Management
Tenaga Nasional Berhad (TNB) is the only electric utility company in Peninsular Malaysia and also the largest power company in Southeast Asia, with MYR99.03bn worth of assets. It serves over 9.2m customers throughout Peninsular Malaysia and the eastern state of Sabah. TNB has established its presence in the region including the United Kingdom, Turkey, India, Saudi Arabia, Kuwait, United Arab Emirates and Pakistan.
in partnership with
Technology delivers Treasury Management Transformation (TMT) project
The challenge
Currently, TNB’s treasury manages more than MYR10bn of surplus cash for TNB and its subsidiaries on a daily basis. Treasury also handles foreign currency exposures of approximately RMB9bn annually. In addition, debt management for TNB and its subsidiaries is also monitored by treasury.
TNB initiated a comprehensive Treasury Management Transformation (TMT) project to address a number of strategic and operational challenges, including:
- Treasury was focused on transactional activities including payment processing and forex purchasing to meet organisation payment obligations.
- Cash management was sub-optimal due to lack of a robust forecasting capability, meaning that excess liquidity was parked in low yielding accounts.
- Timely information was lacking to support business decision-making and analysis of financial risk due to excel-based reporting processes.
- Significant amount of manual and redundant tasks, with excessive levels of approval adding to overheads.
The solution
The TMT was designed around the implementation of three key components:
- A new treasury management platform.
- New banking structure and platforms.
- An integrated SAP financial platform.
The project combined an innovative and uniquely designed solution to deliver a single data source. The combination of a new integrated treasury management solution with a unique banking model has delivered a truly financial transformation initiative, where treasury has made a vital contribution.
The new system enhances cash flow forecasting capabilities and accuracy which supports the company’s ultimate objective in treasury transformation to optimise cash management. The new module is a single source for forecasting to derive the available cash balance for the day. Cash flow planning and management has become strategic with the visibility of cash flow information for analysis and decision-making purposes.
“Winning an Adam Smith Asia Award represents a remarkable success for the team, and is wonderful recognition for all of those involved in the project. The treasury team at TNB has certainly moved beyond their comfortable ‘traditional’ responsibilities, embracing new challenges such as optimising cash and liquidity management. For this, the team is now better equipped to develop the necessary skills and experience. We believe that there will be even greater success in the next phases of our journey.
For the company, the award demonstrates that treasury is ready for the challenge as a major enabler, supporting TNB’s ten-year strategic objective to become a top-ten global utility company by 2025.
Substantial changes have been seen in treasury’s roles and responsibilities in becoming a ‘Centre of Excellence’. These have been driven by the Value Unlocking Programme (VUP) which is laying the foundation for our on-going transformation and journey towards the reimagining of TNB. Today, the key focus of treasury in TNB is on providing both value-added services and strategic advisory on financial risk management, as we drive the organisation forward and deliver shareholder value.”
Best practice and innovation
- Restructuring the treasury operation’s organisational structure to create a Centre of Excellence.
- Transactional functions were centralised and shifted to a shared service centre.
- A new integrated TMS with enhanced workflows and STP capabilities (via host-to-host payments integration) was implemented, enabling automated and real-time treasury reporting and settlements from “one source of truth”.
- Connectivity with other systems ie SAP, Bloomberg trading platform and SharePoint platform enabled rapid, automated generation of cash flow forecasts and risk exposures in the TMS.
- A new banking model was rolled out, incorporating products like host-to-host connectivity, virtual accounts, intraday payment services and centralised cash-in-transit service for optimal cash management.
- Built from the ground up with the client in mind, the partners provided a modular solution that is suited to the company’s specific needs.
“This project has developed Tenaga’s team capability and unveiled all the hidden potentials which I am very proud of. The commitment and perseverance of all parties involved ie Tenaga, Visual Risk and PwC Malaysia have indeed contributed to the success and realisation of our dreams. I expect we will sail smoothly into the next phase of our journey for greater success,” says Nor Asikin Mohd Dun, General Manager, Treasury & Liquidity Management, Tenaga Nasional Berhad.
Key benefits
- Interest savings of approximately RMB11.1m per annum expected, through the use of the advanced analytical tools of Visual Risk TRMS.
- Man-hours savings of approximately 385,260 FTE per annum expected, through the use of automated and streamlined processes.
- The trade facilities request cycle has dramatically reduced from approximately two months to only seven days, leading to increased efficiencies in operations.
Key learning points
- Select the right team, define clear objectives, allocate appropriate resources and a disciplined project approach at all stages.
- Adopt and implement the right system to achieve the right outcome. Leveraging on new technology can bring enormous opportunity to improve processes, increase visibility, accuracy and completeness of information and support better decisions
- Engaging stakeholders early to understand their pain points is essential in order to address their concerns with the right solutions.
- Establish a clear communication with continuous momentum to ensure accurate information will reach our stakeholders and in turn gain their support and commitment.
- Enhanced capability and competency building for our fellow project team members as well as for the end users.
- Progressive project monitoring for tracking of milestones, issues and potential risk, whereupon proactive measures are taken to ensure the project’s success.
Overall, the user experience is now enhanced and simplified with the solutions applied in their daily operations. We are also continously seeking opportunities for treasury system improvement in order to support our company towards growth in a more challenging future.
