From the November 2009 issue of Treasury & Risk magazine

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Two years ago, had Google typed the words "Google's end-to-end treasury automation" into its search engine, it would have come a cropper. Back then, Google's treasury was automated the way most others are, using a hodgepodge of off-the-shelf software solutions with scant, if any, integration. Making matters worse was the high volume of manual processes involved in the FX management and cash management systems, which hiked the risk of error.

Today, it's a different story, following the technology company's implementation of an end-to-end treasury system in FX and cash management that leverages best-of-breed vendors. "The last thing we wanted was some massive one-size-fits-all solution where we'd have to shoehorn stuff," says Brent Callinicos, Google's treasurer and vice president. "Sure it would be nice if you could find one vendor that would give you everything you want, but it is a bifurcated market out there so we got the best of breed for everything."

As part of its transformation, Google's treasury successfully implemented and integrated seven different solutions from vendors like Quantum, SunGard, FXall, FiREapps and Reval. At the same time, it created "connective tissue" between the applications to provide straight-through processing for its cash management and foreign exchange management. By reducing manual processing and operational inefficiencies, treasury can now focus on value-added strategic opportunities. "This wasn't a technology exercise on our part; it was strategic," says Callinicos, who joined Google in 2007 after 14 years at Microsoft, including four as treasurer. "Technology doesn't define your strategy. We looked out at each area of treasury to determine our strategy and then the processes, people and systems to assist it." Callinicos was surprised by the amount of manual processing involved. Take cash management: Google has several hundred bank accounts in various currencies all over the world. Every morning, the cash team would pull manual reports for high-volume bank accounts from bank portals and input the prior day's ending balances into a spreadsheet, where balances were manually converted into U.S. dollars using another manual process. "It was time-consuming, inefficient and required allocation of our full-time staff," he says. "I don't like stand-alone things where you have to go to a printer to print out something and then hand it off to someone. There's just the opportunity for errors to multiply." FX management also was rife with risk. The team used manual processes to manage Google's FX exposure and hedging strategies, but as volume increased and FX volatility grew, more headcount was required. "We now have an end-to-end system where FX management sits on top of our ERP system, which sucks out and calculates our exposures, feeds this into the trading platform to do spots and forwards, then feeds it into our cash management system, which feeds it into our wire transfer system, and then into our accounting system," Callinicos says. "This straight-through processing is accomplished without any rekeying of data and with real-time visibility." The risk of human error is reduced to near zero, since there is always the possibility an original input may be incorrect. It's a far cry from the way Google's treasury managed cash and FX transactions previously. Key to the transformation are what Callinicos refers to as technology "bridges" integrating disparate treasury systems, a combination of vendor-provided tools and software developed by Google's IT department. "The goal was for Google's treasury department to be recognized as world class," Callinicos says. "These were two areas we felt would yield the greatest return on investment through automation. We now have visibility to global cash deposits to increase the return on working capital and limit the amount of idle capital through more accurate forecasting."
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