For Steffen Diel, Senior Vice President, Head of Global Treasury at software giant SAP, there is much to enjoy about a career in treasury – but above all, he values the experience of working with people who are drawn to the profession.
“People are so passionate about treasury when they work in the function,” he observes. “They really like to solve business problems jointly with other finance functions. It’s always very rewarding when you work with passionate people who put the health of the company as their first priority.”
Likewise, Diel values the experience of working with the other professionals that have contact with treasury. “You work with a whole plethora of internal stakeholders,” he says. “You have dealings with legal colleagues, those responsible for corporate financial reporting, investor relations and all those that you are involved with in joint projects. At the same time, you have an exposure to the external stakeholders, the banks, the rating agencies and debt investors. It is a really interesting combination and gives every day a different flavour.”
On another note, Diel believes that having to face unexpected developments in the capital markets – and therefore having to constantly question existing strategies – is what makes treasury particularly exciting. “Not everything is plannable,” he says. “And that applies to treasury to a very large extent. I think that’s also the reason why so many people usually work for a long time in treasury and do not move on after two or three years.”
Career path
Nevertheless, as for many finance professionals, treasury was not the first port of call on Diel’s career journey. Starting with a bank apprenticeship at Deutsche Bank after leaving school, he went on to study for his Master of International Business Administration, continuing to work for the bank during semester breaks.
Although Diel returned to the bank after his studies, he developed a strong interest in treasury and finance, and it wasn’t long before he took the decision to join the corporate world. “I was much more interested in looking at business problems and working out solutions than in providing tools and ready-made solutions,” he recalls.
In 1997, Diel stepped into the treasurer’s role at KUKA, a leading automation and industrial robot provider in the automotive and aerospace industries. Solely responsible for the treasury function in the first instance, he was able to shape its development as he built a treasury team at the company. “It was a great experience,” he remembers. “I was able to define the processes and establish the treasury guidelines and the interfaces to other departments.”
Diel subsequently joined SAP in 2006 as Head of Treasury Finance, just as the company was embarking on a major mergers and acquisitions programme. “It was a very exciting time,” he says. “I was responsible for the external funding of all these large M&A transactions and the related hedging strategies. I was also fortunate to lead the external rating process with Moody’s and S&P. Since most large organisations already have a rating, that’s a rare experience.”
Leadership role
In October 2014, Diel became the company’s Head of Global Treasury. As part of the leadership team in Finance and Administration, he reports directly to the group CFO, with responsibilities that include global cash management and risk management, external and internal funding, capital market strategy and M&A financing, as well as treasury reporting and accounting and managing relationships with banks and rating agencies. Diel is also a board member of Taulia, the working capital management solutions provider which was acquired by SAP in 2022.
Geographically, SAP’s treasury has a central team based in the company’s headquarters in Walldorf in Germany, with a further large team based in the US. Additionally, the company has regional treasurers who manage the countries in their respective regions.
“From an organisational perspective, we are divided in a traditional way,” says Diel. “The front office takes care of the trading and trading strategies, with the middle office – Treasury Finance – dealing with financial risk management and aspects of the business such as internal and external funding and the management of the relationship with rating agencies and debt investors.”
In addition, the Treasury Operations and Processes team has responsibility for global cash management and the running of SAP’s payment factory. “And then we have our financing entity in Ireland,” adds Diel, “which is responsible for intercompany loans, and which in the past has provided additional liquidity for M&A transactions in the US.”
Alongside these responsibilities, Diel is keen to mentor younger colleagues when he can. As a leader in the finance organisation, he believes he is well placed to share his career experiences. “As well as contributing to their careers, and talking to them about the various situations they might face, I can also learn a lot from them and their experiences,” he adds.
Innovation and agility
As a member of the leadership team, Diel is also heavily involved in many of the changes being implemented at SAP, especially in the treasury and finance areas. These involve not only digitalisation projects, but also the adoption of agile methods of working and of developing products. “We started a couple of years ago by looking at the first elements of agile transformation, such as psychological safety,” he comments. “We also had our first so-called ‘screw-up nights’, where we talked about failure and what we can learn from that. So that’s an interesting journey as well.”
Sometimes the boundaries between responsibilities can become blurred, especially given the large degree of collaboration across the team. “So we have quite a few cross-team functions, such as our innovation layer,” says Diel. “As the treasury of a software company, we are able to contribute heavily to enhance the functionality of our own treasury solutions.”
Indeed, working for one of the world’s largest business software companies puts members of the treasury team in a unique position. With agile working embedded into the company’s development process, treasury has a direct link to software development via the ‘product owner’ structure adopted by the company. “So, we have product owners in my organisation that work continuously together with software development, with IT and with our analytics colleagues to really drive new solutions and enhance the functionality of existing solutions,” Diel says.
What makes being in SAP’s treasury organisation so exciting, he adds, “is that we are fully embedded in the process of working continuously with our development colleagues. We are able to influence how the software works. In treasury we have our own ideas of what is needed, and we can bring those to the development process.”
Where cash flow forecasting is concerned, for example, the treasury seeks to combine the indirect calculation method for cash flow – estimating future cash flows by analysing financial results in the past – with a more direct approach using SAP’s own treasury solution. “This should give us a more transparent and accurate picture of what is happening,” Diel notes.
As part of the development process, Diel and his colleagues also seek out the opinions of those who work in other treasuries. “We talk a lot to our peers in other organisations and we try to get their input on how we can best develop our solutions,” he notes. “And we are heavily engaged in sales support, which is something that gives our younger colleagues an early exposure to our existing and potential customers.”
Mobilising technology
In a constantly evolving world, and with new business models emerging, the treasury must always be prepared to adapt – and this is certainly the case at SAP, which is in the midst of a multi-year transformation process. For treasury, says Diel, this means understanding not only what new consumption-oriented business models mean for the business from a P&L perspective, “but also what this means for cash flow patterns.”
When it comes to applying new technologies, Diel observes that this is a two-stage process. In the first stage, he says, treasury teams have been working to gain a real-time view of liquidity and financial risk. “This can give a clearer picture of what is happening in treasury at the present moment and the current state of our finances,” he says.
In addition, Diel says there is a “second wave” of adoption, in which treasurers harness newer technologies in order to make more intelligent decisions. “For example, we can have greater transparency about what is happening in working capital, and we can gain more insight into what is driving cash flow,” he explains. “From there, we work directly with our colleagues in controlling to come up with value driver trees that would impact not just P&L, but also cash flow.”
Solving business problems
Diel notes that it can be challenging to understand the implications of technologies such as artificial intelligence (AI), advanced analytics, cryptocurrency and distributed ledger technology – and that real value can only be achieved by focusing on real use case scenarios, rather than the theoretical benefits that technologies can bring. “So, our goal is to understand the technology first, and then try to combine it with real business problems in order to decide which mix of technologies can help to solve those problems.”
One example is in the area of software solutions that employ embedded intelligence, whereby algorithms incorporate AI and machine learning (ML) in order to adapt to new situations, make decisions and independently execute tasks.
“For example, we have come up with an automated hedge proposal,” Diel explains. “For the planned license payments that we will receive from subsidiaries, the system provides an automated foreign exchange hedge proposal based on the hedging strategy and the underlying data. The trader just looks at that and can sign it off, and then it’s automatically routed to 360T.”
Rising to the challenge
Turning to the current issues facing treasury, Diel notes that one particular challenge lies in the potential combination of pure financial risks, such as interest rate movements, together with the threat of geopolitical events which could have a significant impact on capital markets and loan markets.
In addition, Diel highlights the challenges that come with operating in a complex global environment, not least because different regulatory frameworks in different countries can make it difficult to repatriate profits from certain geographies. “You need to centralise your liquidity to be able to pay dividends or give money back to your shareholder via share buyback,” he reflects.
Bank account management is also rife with complexity, not least because of KYC processes and the challenges that come with changing bank account signatories. “It is incredible what we have to invest there in terms of manual effort,” Diel comments. “We try to simplify processes and simplify tasks, but it’s incredibly difficult in a world with so many different regulatory environments. So that’s also a big challenge.”
Driving improvements
Looking ahead, Diel believes the most important area of development for treasury is the continuing drive towards automation as a means of increasing efficiency, allowing greater insight and improving decision making. “Wherever possible, we try to leverage technology in order to automate processes and remove the manual steps in an end-to-end finance process, as well as reducing errors and compliance risk,” he adds.
This increased drive towards efficiency also extends to the company’s payment factory. “The tools that we use there can also be applied to the shared service centre,” says Diel. “For example, we can reduce complexity in the procure-to-pay processes by limiting the number of electronic banking devices used for payment processes.”
Diel is particularly enthusiastic about the importance of gaining greater insights in order to facilitate better decision making. “A few years ago, we came up with an interactive and real-time treasury dashboard, and every year we have added more functionality,” he explains. Scenario analysis, for example, has made it easier to understand what might happen in scenarios such as a downgrade of one of the company’s banks, and how this might affect counterparty limits. “As well as providing information that we use ourselves, we try to give our group CFO better insights into what would happen in terms of financial risk and liquidity,” he adds.
Diel is also keen on further automation and increased accuracy in the area of cash flow planning. “It’s about getting more insight into what happens in the working capital area, which is always a bit of a black box,” he says. “That’s also a big focus area for 2024.”
Time out
While much of his time is taken up by a job that by any measure is both challenging and time-consuming, Diel recognises the importance of the work life-balance. In his spare time, he enjoys spending time with his family and keeping up with his adult sons via regular virtual brunch meetings and WhatsApp.
As well as meeting up with friends and going to music concerts, Diel has a passion for reading novels, as well as specialist books about history and politics. When time permits, he also enjoys swimming and going to the gym.
