Photo of Ng Cheng Chang, Dell Technologies and Saurabh Gupta, Citi.
When in 2016, Dell completed the flagship acquisition of EMC, it signalled the firm’s transition into a global technology leader. This brought new opportunities and challenges for its treasury operations organisation. It set about delivering a global framework, serving over 500 legal entities across 69 countries via treasury operations leadership in Singapore and regional hubs for Asia Pacific and Japan, EMEA and the Americas. By employing a ‘test, learn and grow’ strategy, more usually associated with start-up operations rather than with mature multinational corporations, it has been able to fulfil its ambitions. This is teamwork in action.
Dell Technologies is a unique family of businesses that provides the essential infrastructure for organisations to build their digital future, transform IT and protect their most important asset, information. The Company services customers of all sizes across 180 countries – ranging from 99% of the Fortune 500 to individual consumers – with the industry’s most comprehensive and innovative portfolio from the edge to the core to the cloud. It is today one of the largest privately controlled technological corporations in the world, employing more than 145,000 with revenue across all its companies totalling US$80.3bn, combined non-GAAP FY18 revenue (non-GAAP net revenue for the fiscal year ended February 2, 2018).
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Delivering a global integrated treasury operations framework across one of the world’s largest tech corporations in record time
When, in 2016, Dell completed the flagship acquisition of full-suite technology business EMC, it signalled the firm’s transition into a global end-to-end technology leader. This brought new opportunities and challenges for its treasury operations organisation.
Today, Dell’s treasury organisation serves over 500 legal entities across 69 countries. Its global treasury operation is organised through regional concepts spread across three core hubs in the Americas, APJC and EMEA and a Treasury Shared Services Centre (TSS) in Bratislava, with its leadership based out of Singapore.
The three regional teams are responsible for cash and liquidity management, bank account management, governance and control, working capital, trade finance and bank relationship management. TSS manages global treasury technology infrastructure and integration, global liquidity management, treasury operations controls and business intelligence.
The rapid integration of EMC’s treasury activities whilst equipping the business to deliver on its dynamic change and innovation strategy, created particular challenges for Dell’s treasury team. Over the past 18 months, Dell’s treasury team has been working with key banking partners in transforming its activities, delivering a robust, secure and scalable treasury operation. Not only has the treasury team been ambitious in its objectives, but it has also delivered in a remarkably short time. One key to success was its culture for embracing change and collaborating with internal and external stakeholders.
The integration included creating efficiencies and harmonisation as a combined company, enhancing treasury decision-making by leveraging banking technology and big data analytics. It also accelerated transformation by using a build-learn-grow strategy more akin to start-ups than a mature multinational.
Treasury transformation was structured around three pillars:
In terms of operational efficiency, an objective view of banking infrastructure across both Dell and EMC was carried out using analytics on a country-by-country basis to determine the most appropriate banking model. This included account structures, payments, collections, FX and risk management and liquidity management. Dell then consolidated its activities with its primary banking partners, leading to significant cost savings and new liquidity management opportunities.
With Dell and EMC using different business models and ERPs making it difficult to standardise and create economies of scale in a shared services environment, the treasury team played an instrumental role in the group-wide initiative to align global deployment for payments, collections, bank account management and technology.
For the liquidity management pillar, a global liquidity solution was established. With an increased debt burden, the treasury team found innovative ways to service the debt. This included optimising cash mobility and centralisation, and unlocking trapped cash wherever possible.
A comprehensive, fully automated liquidity solution was implemented for convertible currencies, including country level pooling for all entities, a global physical pool for 20 currencies and a notional layer across 189 legal entities/accounts. In restricted markets, such as India, China and Brazil, Dell has implemented highly bespoke compliant solutions. Dell also used its global cash management banks to create a pool-volatility analysis tool to track and predict cash flow.
Dell implemented innovative solutions to achieve working capital metrics whilst increasing the resilience of its complex supply chain. It standardised trade terms with common global suppliers and its partnerships with strategic suppliers were strengthened, scaling up its supply chain financing programme more than five-fold over a period of nine months to more than US$1bn.