Introductions: Donna Miskin, editor in chief, Treasury & Risk magazine.

     Donna Miskin, editor in chief, Treasury & Risk magazine: I’m pleased to introduce the Technology Excellence Awards category with this year’s moderator, Marie Hollein. Marie has been the president and CEO of Financial Executives International since January 2009. FEI is a professional association for senior level corporate financial executives and dedicated to advancing ethical, responsible financial management.

     Marie has more than 30 years of extensive corporate and financial services experience. She was previously managing director of financial risk management for KPMG, where she led the treasury practice and provided treasury and risk management advisory services to U.S. and global corporations and banks. Prior to joining KPMG in 2005 she worked at Ruesch International and has held senior financial executive positions at ABN Amro, Citibank and Westinghouse Electric Corporation. She earned a master’s of finance in management from Carnegie Mellon University and a bachelor’s of science from La Roche College.

     Moderator Marie Hollein, president and CEO, Financial Executives International (FEI): Thank you, Donna. It's a pleasure to be here this afternoon, and I would like to thank Treasury & Risk for inviting me to be the moderator for this particular panel. Tech is a timely topic, especially for treasury, and what a year it has been for corporate treasurers and for treasury departments in general.

     Having been in treasury for so long myself, I look at the treasurer now as being the chief liquidity officer. Having a seat at the table now, especially at audit committee meetings, it has been interesting because I've served on many panels in the past when the topic of the panel was, “What value does treasury add to the organization?” Now, I think the rest of the organization knows that treasury is a very valuable part of their organization. This award is for technology excellence and recognizes corporate treasury finance departments for the creation and/or exceptional implementation of technology.

     There is usually a long lag time for technology, and many companies have had or are going through changes in their technology. I'm seeing a number of corporate treasuries that have had multiple systems. There was one I worked with prior to coming to FEI that actually had 24 treasury systems, and they were pretty decentralized, and many companies have legacy systems. It's great to see now. I look at technology as treasury organizations have such lean staffs and are getting leaner, and I look at technology as being the enabler.

     A lot of the systems that have been implemented especially now have straight-through processing improving automation. And even within my own firm, we are completely revamping not only our website, but also all of our technology processes. [Automated technology] provides an audit trail for internal controls. It also provides a global treasury platform especially this past year with the credit crisis and the liquidity crisis that we have seen. Determining what your daily cash position is has been challenging for quite a number of companies especially if they haven't enhanced their technology platform.

     They have been able to enhance cash management and have integrated systems. From a risk management standpoint, many companies are looking at all of their risk, and not what they had done traditionally, when one group did FX, one group did interest rate, one did commodities. Now, many companies have realigned where they're looking at all of their risk. There are systems now that actually will do not only the transactions but the valuations as well as tying into accounting.

     I'd like to first introduce Seth Marlowe. Seth is the director of the product management group in GE's Global Cash Management Group. He's responsible for a portfolio of cash management systems, including their global treasury workstation, SWIFT and a bank econo-administration system. Prior to GE, Seth worked in treasury operations and treasury systems at Danone Group, Praxair and Pepsi-Co. He began his career as a consultant with Ernst & Young. Seth holds a bachelor’s in mathematics from BBinghamton University and an MBA in information systems from Albany State University. Please welcome our bronze winner, Seth Marlowe.

Technology Excellence 2010 Transcript    

Seth Marlowe, director, product management group in General Electric Co.'s Global Cash Management Group: Thanks so much, Marie. Also, on behalf of GE, a big thank you to Treasury & Risk magazine for this award. This is my first time appearing here even though GE has been a frequent contributor.

     Our project is really a pair of things. It's not just a project; it's really a crisis that took place as well as a project that was several years in the making and that woke us up a little bit.

     General Electric has over 300,000 employees globally. and in 2008 earned revenues of $183 billion and profit of $18 billion. GE can be thought of as a technology, finance and media company with four main divisions of technology infrastructure: GE Energy infrastructure, GE Capital finance businesses, NBC Universal and, not to be forgotten, we do still have the GE Consumer & Industrial businesses. So we can still bring good things to life.

     Let me tell you about the GE funds transfer landscape and the background here. First off, dating back to 2005, we have been a huge corporate user of SWIFT. In fact, we were among the proponents for getting the corporates onto the SWIFT network. With that, we have got a fully integrated, globally deployed enterprise treasury workstation. We call it “GE Web cash.” It's from a vendor that now is called GTreasury, formerly Gateway Systems Inc., near Chicago.

     Linked with that, we have an enterprise mapping solution, which is not only used with this application, but with several others as being able to map and connect various systems and interfaces. And then lastly, we've got a SWIFT node that allows us to have that great connectivity to SWIFT. All of these systems run out of a data center that's located in our treasury offices in Stamford, Conn. And we've got full DR capabilities at one of GE's mega-data centers in the state of Georgia.

     Now, to give you an idea about this platform, I sometimes refer to it as my workstation on steroids. And that's simply because the numbers here don't generally make a lot of sense relative to a typical corporate treasury environment. The system itself has 3,500 users. We're currently connected to 68 banks over the SWIFT network, and that's just for our funds transfer capabilities. We actually get balance reporting from in excess of 200 banks globally. On a typical day at GE, there are 7,500 wire transfers executed through this system, and usually at quarter’s end that's when our high volume hits from mostly our finance businesses.

     We had a high on Sept. 30, 2009, of over 14,000 transactions that day -- nearly double of what our daily average is. In addition to that, on the balance reporting front, we get account statements in either the BAI or MT940 format, to the tune of 11,000 accounts a day, and that does not account for all the accounts that we actually have at GE. That number is closer to 14,000.

     As you can see, this is a large-scale, enterprise-wide, mission-critical application used not just by GE treasury, but by all the GE businesses and GE Capital businesses all over the globe. Now, with all of that capability, and all of that critical mass of payments, we have had to spend a lot of time thinking about inherent risks that we have as a result of aggregating all of those payments and sending them out to our banks around the globe.

     As it is, we operate pretty much a 24-7 operation; we’ve got follow-the-sun support, both in treasury operations as well as in treasury systems. But we see an environment out there that always concerns us, and what do we see? We see bank consolidations and bank mergers, and as a result of that we see banking systems changing. We see all kinds of system integrations on the back end side of the bank.

     Likewise, the banks are always trying to improve their services, and the offerings to the customers which we, of course, love, but at the same time that means that at some point every one of those systems or some of those components need to be upgraded and put into production, and you don't always know when exactly that's going to happen. In addition to that, there are a lot of changes that are going on from regulatory perspectives that require new features to be added into the systems.

Technology Excellence 2010 Transcript    

 In Europe we have the payment services directive, and there's a continuous change that's happening around us. Then you throw in the credit crunch. Bank layoffs take place. Now, who are the folks that ended up no longer at the bank?  Well, I'm certainly hoping that they weren't the people who were the subject matter experts in operations and in technology, because if they are, we have a problem. Boy, we have a problem.

     In addition to all of that, as we've been on SWIFT since 2005, and with the volume of transactions we're doing with all of these different banks, we see all the little hiccups. It will be one bank on a given day in Europe that can't process low value payments. It will be another bank in Europe two days later that can't do cross-border payments. It may be a U.S. bank that's having an issue with control disbursement.

     Whatever the case is, because of our size, and the scope of what we're doing, we see all of this, and that causes grave concern for us. You know, all the technology companies that have won awards, and certainly some of my peer panelists today, everybody in California, we wait for the big one. Well, I don't want to sit and wait for the big one. I want to have a plan for when that happens, because for us payment failures are just not an option. We have to protect GE's reputation, especially on the finance side where we're making payment to all of our customers that are borrowing money from the GE Capital businesses.

     So we actually had an event, and this happened on June 30, 2008, right at the quarter-end point. We're already on alert because we know it's the end of the quarter. Volumes are going to be high. We're monitoring our systems, and our system's folks are watching. We're starting to get calls on our hot line. Payments are not being processed by one of our major U.S. banks. Mind you, we've got six U.S. banks up on SWIFT, so we've got a flurry of activity going on in the U.S. as well as everywhere else around the world. We're not getting back confirmations. No Fed reference numbers. Our commercial finance businesses are calling us and saying, “What's going on?”

     We went through the day, working very closely with that bank, who shall remain nameless, and we basically broke into a crisis team. I worked closely with our technology team and GE deputy treasurer Dennis Sweeney, who I work for, took a slightly different approach working with some of our banks. We had always talked about, “What do we do?”, and this dates back to the issues that happened on 9/11. What do we do if a bank can't process? Well, the thought was, we need to redirect. We need to take the payments that we're planning to send to one bank and we need to somehow manage to get them to another bank to get the payments out.

     We limped through June 30, and fortunately, by the end of the day, all the processing got caught up. The Fed extended that evening and as a result, and all the payments went through.

     I come in the next morning, July 1, Dennis grabs me and says to me, “Seth, I think we need to redirect today.” And I, of course, looked at him and said, “OK.” When Dennis says something like that, you usually say “OK.” He tells me to jump, I'll figure out how high. So I grab my colleagues, my business partners on the IT side. Got a hold of my vendorGTreasury. We got a conference bridge line.

     We had had previous discussions with one of our fund's transfer banks, and that one I will name: Bank of New York Mellon. We had talked about the concept of doing this, so they already had the theory of what we had planned to do. As a result of that, we got them on the phone and we said, “Listen, here's the situation. We think we have some capabilities to make a couple of little tweaks in our system so that we'll be able to send you Bank  A’s payments today and you're going to be Bank B.

Technology Excellence 2010 Transcript        

We work closely with our systems team, and we found a piece of our platform that we had only recently retired. It had been doing our mapping for our low-value payments in Europe. So we've got our legacy mapper, which was home grown, and it's still in production. Patrick Maher, who is in attendance with us today, found that we could make literally one change to one line of code in that legacy mapper, and we would be able to get these payments not to flow to Bank A, but rather to Bank B.

     We did testing quickly in our Q/A systems and it looked like it would work. We spoke with Bank of New York Mellon, and our relationship manager got ahold of the technology team. They're folks in upstate New York and a variety of people who had been on our earlier discussions, and they were able to work out something if we sent them payments. The ordering party’s message came from GE, but not for a bank account they were familiar with. Because we certainly have plenty of bank accounts at Bank of New York Mellon, they would be able to route it directly to one of our corporate accounts at the bank with that one little change made on their side.

     So we made a tweak. They made a tweak. And it allowed us, by twelve o'clock on July 1, to start sending payments out of our GE Web cash workstation, through our legacy mapper, which got reawakened in production. We then had that mapper send it to our SWIFT node, out to the SWIFT network, and bada bing, bada boom, we had payments flowing to Bank of New York.

     While this was going on, we had everybody on the phone. We were carefully watching and monitoring. We wanted to get a trickle of payments out, just to make sure that all the theory really worked in production. Low and behold it did. So we opened up the floodgates and it was 10 payments. It was 50 payments. By the end of that day, we had managed to get 1,200 payments out the door that were processed by Bank of New York Mellon that were destined for our primary bank, Bank A.

     We continued to operate this way as an ongoing test of all of this theory of what we would do. Over the course of three days, we executed 3,600 payments plus, through Bank of New York Mellon. This gave them some nice volume, and quite honestly, one of the reasons why we were working with Bank of New York Mellon on this was that they were our payments bank for the custody business, which is fairly small, and they were continually clawing into us to try to find, “What else can we do for you? What else can we do for you?” Coming to us with some great ideas. As a result, we had a one-off discussion, and it led to a variety of in-depth discussions of, “How could we do this? Let's talk about this.” All of that preparation and what may have been a bit of blue-skying actually resulted in saving us over the course of the days that we saw this outage with one of our banks.

     With that done, we immediately went in a different direction. We recovered. Before I get to what we went on to do, we had sent all of these payments out of Bank of New York Mellon through one GE bank account. Now, the problem is that all of our businesses are running on Web cash. We had no visibility as to what had actually happened. They saw completions, they saw Fed reference numbers and didn't quite understand why they were marked as being processed by Bank of New York Mellon. Although we had communicated to them, over the course of the next several days, we did hard-cash settlements to actually pull the money, and treasury initiated these payments to pull the money back out of the businesses’ bank accounts at Bank A to reimburse corporate for all the payments that went out.

     In fact, our finance and accounting folks in treasury loved the fact that we did that. Everybody had an audit trail of an actual cash transaction representing all of the activity. We had some businesses that may have had one bank account, and it was only one or two wire transfers. We had other businesses that may have had dozens of bank accounts and hundreds of individual payments. So we were able to provide them with reporting, and they were able to reconcile and get everything posted to the general ledger. So we had a lot of fairly happy finance and accounting people, despite the fact that there was some manual work that had to be done. But we did not fail a single payment.

     With this done, we thought it was great that we had work-arounds. It was great that we were, as a team, able to rally around and make all of this work. But really what was necessary, was to create a commercially ready redirection tool that would allow us to do this in the application without having to make any systemic changes. We began a process of building out a conceptual spec, working with GTreasury and having internal discussions on how this would work. We have fleshed this all out at this point. It has gone through conceptual, functional and technical design. It's actually at this point, in testing, and is expected to make it into our production environment before our system freeze before the end of the year.

Technology Excellence 2010 Transcript    

     We're just a couple of weeks away from that. And we're very excited, because what we've built here is a rules-based engine that allows us to redirect from any Bank A to any Bank B.  It knows the currency of the different bank accounts so that we can redirect payments. Let's say we have a bank in Europe and we've got accounts there that are U.S. dollar, euro dollar and pounds sterling. We can redirect the U.S. dollar payments to one of our U.S. banks. We can redirect the euro payments to one of our other European banking partners. We can redirect the pound sterling payments to a secondary bank we have up and running in the U.K.

     In addition, we've got a number of more sensitive tax entities, or we've got banks that actually need to be more stand-alone. In those cases, we can actually have bank accounts set up at alternative banks in the event this situation happens, and we will have the rules that will allow us to be able to override it and say, “OK, for this particular bank account’s funds transfers, don't send it to the standard corporate account, but instead, send it to that businesses-specific account at that other bank.” At the end of the day, the scenario will allow us to be able to redirect in multiple different directions and be able to make sure that all payments are able to get processed.

     It has been a huge effort to get this far, and we couldn't have done it without a team. Our treasury system's team is one of the best in the world. And of course, the finance and accounting folks as well, who have bought into the whole concept. We have a couple of folks who are here with us, including Dennis Sweeney. Dennis, if you could just stand up for a second? Dennis is our deputy treasurer for global cash management, and he's a visionary and I would say our evangelist internally on cash. Patrick Maher. Patrick, if you could stand up? Patrick is one of our SWIFT project leaders and is a systems architect on our IT team and is actually working with us very closely now on moving forward with the ISO 20022 standards in the SWIFT world. We have a great team that managed to help us through this. I would like to thank all of them that are not here, and again thank you for your attention and congratulations to the other panelists.

     Moderator Marie Hollein: Thank you, Seth. You are very insightful, and now we understand why you’re one of our award winners. Next, I would like to introduce our silver award winner, Cindy Wang. Cindy is the global co-head for treasury systems and operations for Toyota Financial Services.

     Cindy joined TFS as treasury liquidity projects manager in 2005, and prior to then Cindy had professional and managerial experience in tax, accounting, pension management, fixed income investments and liquidity management. She leveraged her diverse experience and broad vision to transform enterprise cash management practices at Toyota Financial Services. The success led to her promotion to director of treasury systems and operations in 2007. Following her success building and integrating a global, scalable and flexible treasury infrastructure, she was promoted again to her current role in 2008.

     Cindy holds a bachelor’s degree in economics and business from UCLA and an MBA in finance and investments from USC. She is a CPA and a CFA charter holder.    Cindy Wang, global co-head for treasury systems and operations, Toyota Financial Services: Good afternoon. I'm very privileged to be here representing Toyota Financial Services..I'm responsible for three functional areas at TFS: cash management, treasury operations and systems. Our company grew very rapidly over the last few years. We service over 3.8 million lease and retail customers And over 2,000 dealers. We have a fairly large balance sheet. We have $3.7 billion in assets as of March 2009 and $73 billion in total debt. Our treasury raised over $25 billion in financing during fiscal year 2009, none of it government funding.

     At treasury, we saw potential to kill two birds with one stone: treasury technology could enable our business growth and transformation and also improve our core treasury infrastructure. We wanted to move from many standard, legacy loan systems that performed vertical functions to an integrated platform. We wanted transaction management for straight-through processing, and we wanted it to allow us to customize different system workflows depending on their policy and business requirements. What this does, also, is decentralize the approval process to the decision makers. So for example, when a treasury trader captures a trade in the system, it goes through the front, middle and back office approval process. Alternatively, when our field sales organization wants to make a decision to fund a working capital loan for a dealer, the transaction is routed to our dealer credit management for approval. And cash management releases the wire through SWIFT.

Technology Excellence 2010 Transcript        

    Secondly, we wanted a flexible plug-and-play architecture with other systems. With a combination of a powerful treasury management system in SWIFT, it allows the ease of integration with other enterprise systems within TFS and also gives us the global connectivity with all our banking partners. What technology enables us to do is transform from a decentralized banking service model to a standardized and centralized banking model.

     When all the transactions flow through treasury, including the information for both our assets and liabilities, what we see is that we'll have better information for liquidity management. We can consolidate volume and get better pricing from our service providers. We can move our business to banks that provide valuable credit to us with more ease and speed, and we move to a bank-agnostic model where banks compete on costs services instead of sticky proprietary banking services and interfaces. Lastly, what it provides to treasury is a tool for us to provide transparency of information to provide to the business for transfer pricing.

     Next, I want to share with you our execution strategy. I'm not from an IT background, so I believe that technology is really only as good as its users.  Technology is not a barrier to entry. The latest and the greatest technologies are available to many companies. But the benefits and effectiveness really depend on people leveraging that technology to enable innovation of products and to automate vertical and cross-functional processes. Products drive revenue growth. Efficient processes help you to control costs.

     At our company, we view the opportunity to work on a system of implementation as a great development opportunity for our associates. During our implementation process, our people are challenged with learning new system capabilities, rethinking our existing business processes and most importantly designing new processes for the future. Using our organization’s treasury resource -- with the knowledge base of our products, processes and systems and with cross-functional participation -- we believe we can start to build what we think is a living system.

     What that means is, post-implementation, the organization will have a new capability and capacity because people would have built this new knowledge, experience and exposure. They will be able to make continuous improvements, which is one of Toyota’s values. The Japanese equivalent is Kaizen. When you start to build up this series of continuous improvements, we believe that it will rapidly drive innovation.

     What have we implemented? There are actually two pieces: the technology infrastructure and the organizational infrastructure. At the core of our treasury transaction management system is the Wallstreet Suite [system. We implemented this suite of products, which is a fully functional cash management module including in-house bank connectivity with SWIFT. It includes a payment factory? and multiple currencies. And then we also have the core treasury transaction management module. We have a fully integrated accounting module that interfaces to our people's soft ledger on a daily basis and, as part of the treasury platform, we have interface with our asset liability management system. Our interface with our market data providers gets up to 2,000 data feeds -– Rate feeds a day.     We have interfaced with our commercial paper’s direct issuance system, which is part of our daily liquidity positioning, and of course we have our own SWIFT infrastructure sitting in our data center, and that interfaces to our banking partners. We also have an in-house developed integration layer that enhances data from time to time as needed, and that interfaces with our internal enterprise systems.

     In order to do this, we also align our organization, and this is just a quick picture of how our organization is organized to support, maintain and continue to drive implementable improvements and intervention. Thanks.

     Moderator Marie Hollein: Thank you, Cindy. I’ve had the unique pleasure of working with each of these companies, but in particular with Toyota Financial Services, Chris Ballinger and his team in one of my previous lives. Next I would like to introduce our gold award winner, Google, with Tejinder Mann presenting. As corporate engineering manager for treasury systems of Google, Tejinder is responsible for treasury and risk management systems. She joined Google in January 2006 after a decade of working with high tech companies in Silicon Valley. Prior to Google, she worked at eBay, PeopleSoft, Cisco, Hewlett-Packard, and Xerox PARC.

Technology Excellence 2010 Transcript      

   She received a B.S. in business administration and a B.A. in economics with a double minor in environmental economics and English literature from UC Berkeley as well as an MSC in management of information systems from the London School of Economics and Political Science. She’s currently finishing her Ph.D. in management of information systems from the London School of Economics and Political Science. Please help me in welcoming Tejinder, and congratulations on the gold award.

     Tejinder Mann, corporate engineering manager, treasury systems, Google: Thank you, Marie, for that introduction. I would also like to thank Treasury & Risk magazine for honoring Google with an award for technology excellence. You may think, “Surprise, surprise. Google won an award in technology excellence.” You may even be more surprised if we didn't win an award in technology excellence.

     But I want to spend a few moments and describe Google's technology systems team a year ago. In fact, Google didn't have an IT treasury team a year ago. Twenty thousand employees at Google, and we didn't have a single IT treasury person, the reason being that our treasury toolbox consisted of spreadsheets. A year ago when we formed the team, our combined experience in treasury and treasury systems was zero years, zero months and zero days. None of us had a treasury background in systems or in treasury functional.

     I'm here to accept this award on behalf of Google, and none of this would be possible without the trust, empowerment and vision of our leaders -- Brent Callinicos, who is our vice president of treasury at Google, and Ben Fried, our senior chief information officer -- and the collaboration, teamwork, pursuit of excellence and career risk of our team, Jessica Chin on portfolio systems, Lilly Won on FX, and Frank Cho, cash management.

     Google has transformed itself from an organization that relied on manual process to an organization that has leveraged technology to automate end-to-end treasury operations within a year. As part of this remarkable transformation, Google treasury systems has implemented seven world-class systems, all within one year—

from vendors like Quantum, SunGard, FXall, FiREapps and Reval and SWIFT. These provide straight-through processing for cash management, real-time visibility to over 400 bank accounts for greater return on working capital and developed a cutting-edge foreign exchange strategy to mitigate currency fluctuations and protect Google's revenue.

     Google's innovative text solution has liberated treasury team individuals to focus on value and strategic issues instead of occupational inefficiencies. Given the global climate of uncertainty and FX fluctuations, the timing could not be more opportune for us. In fiscal 2008, Google had $50.8 billion in cash and short-term equivalents in 400 bank accounts in 40 countries and in 40 different currencies, and it generated over 50% in non-USD. Despite the enormity of Google's cash deposits, complexity and volume of their wire transfer process, and expansiveness of the FX trade and transactions, we didn't have any formal systems in place, except spreadsheets. It really does seem quite remarkable that 50% of our revenue is generated overseas, and we didn't have a cash flow hedging program at the time.

     To give you an example, our visibility into our global cash positions consisted of two cash management employees coming in daily, spending four to five hours every day going to bank portals, pulling down bank balances, putting them on a spread sheet and aggregating them to get 48% visibility. The objective that we were given a year ago was to have an end stake where cash operations would have real-time visibility to global cash deposits to increase returns and limit idle capital. Dovetailing the cash management objective was the strategy to have straight-through processing for Google's foreign exchange program. The foreign exchange team had changed Google's FX strategy from a rudimentary balance sheet program that hedged three or four currency pairs to over 35 currency pairs and a hedge flow cash-in program with phase I33 accounting?? treatments.

     Again, with the approach and implementation, as we embarked upon this, we had two guiding principles. The first was best of free technology. We had no old systems. We didn't have to depreciate anything. We were basically given a blank canvas and told to go out there and create state-of-the-art, end-to-end systems best approved.

Technology Excellence 2010 Transcript    

  The other objective was that it had to be completely outsourced. We were aware that we weren't going to get any engineering resources, now or ever. Google engineers want to work on chrome -– Or they want to work on add projects, research. They don't want to support treasury systems.

     So with those two, our scope was everything. Portfolio, FX, cash management, bank agnostic with SWIFT -- we could just go out and do what we wanted. We hired consultants to help us run our AP receivables process. We standardized the evaluation criteria, and we did a reverse option for the vendors who were going to provide the systems and the system integrator we were going to use to actually implement the systems that we selected.

     We wanted a big bang approach with everything at the same time. Luckily, at the same time there were budget constraints, and we had to revise and refocus our scope. With that, we focused on two areas, cash management and FX. The new goal was 99% visibility to global cash bank accounts. We wanted to create an infrastructure that utilized cloud banking and made us bank agnostic. What we didn’t want to do was build an infrastructure that would be obsolete or lock us into a single bank within two to three years.

     We wanted to automate wire transfers. We wanted to reduce the head count in cash management. We wanted to send out 99% of wires on time, and we wanted 99% reliability of our systems. Our FX goals were to increase the balance sheet hedging program to 30 currency pairs. We currently protect 50% of our non-USD revenues, and save $2 million in currency conversion rates by using reverse auctions.

     We also changed our implementation to an iterative approach rather than a big bang approach. We decided to have monthly and quarterly launches.

     The next phase was Quantum and SWIFT integration. We wanted to get all our 400 bank accounts, counterparties, 40 countries and currencies into Quantum, and then we wanted to receive 98% of our bank cash positions via SWIFT. Next was Reval’s solution for FAS 133 and our cash flow hedging program. Finally, the last phase was to integrate FXall into Reval for FAS 133 and straight-through processing for our accounting, and then FXall into Quantum so we could have straight-through processing for the spots and forwards that we were executing. As of July 2009 we have a fully outsourced integrated system supported by four FTEs. We work on future enhancements.

     The example I would like to give is for FX spots and forwards. The end-to-end process used to take two to three days every month, with about four to five of the employees being engaged in that. Now that we have a fully integrated system, using FXall, Reval, Quantum, and SWIFT is a two- to three-hour process with straight-through processing and automation confirmations to our counterparties. FiREapps were used for analysis, FXall for hedge and FX executions. Reval is our accounting engine. FXall goes to Quantum settlement and execution, and Quantum to SWIFT for communication with the banks.

     We learned a lot of lessons along the way. One important lesson was implementation. The big bang approach doesn’t work at Google. We need to be iterative. We need to be agile, and we need to be able to revise and refocus when necessary. Outsourcing the RFP process wasn’t a great idea, either. We needed to maintain more control and we were able to auto-correct through part of the process.

     Budget review: One of the things that we were successful at was that we would have daily budget reviews and weekly budget reviews on how much of our actual budget we were spending on consultants. When the budget decreased, we were able to quickly auto-correct and look at how much we had spent and then refocus and get executive buy-in because we had analysis and figures to support the new approach that we were taking.

     Automating processes that don’t exist: We didn’t have a revenue forecast hedging program, so we were trying to automate processes that didn’t exist. That was a difficult point for us. I think the biggest lesson that we learned is the green team. None of us had treasury experience either in treasury functions or treasury systems. One of the benefits of that, though, is that we did come with a clean slate. We didn’t have any old paradigms or old processes that we brought with us. We trusted and empowered each other, and we had diverse backgrounds that were challenging each other’s ideas and thoughts. The team was like sponges, they were so eager to learn. It was just fantastic being part of that team. Looking forward, we have built an integrated best of breed solution, which is fully outsourced and supported by four FTEs. We have a strong foundation to leverage, and we continue to automate.

Technology Excellence 2010 Transcript    

    Portfolio, risk and compliance: Inefficiencies in the cash management process provide great visibility to our investments. Enhanced cash management: We just launched an additional module in Quantum, the investment module. Next we’re going for AR/AP and payroll integration so we can increase our forecasting and take advantage of natural hedging. FX additional hedging programs, portfolio additional asset classes that we’re getting into and accounting for straight through processing. We’re leveraging SWIFT beyond treasury for other parts of the Google business.

     Thank you again, Treasury & Risk, for awarding Google with the technology excellence award.

     Questions and Answers:

     Moderator Marie Hollein: After listening to these three panelists, I think there is no doubt why they have been award winners. Great presentations! We would like to open it up for questions now, and I will start with a question here. What was one of the most difficult challenges? Technology implementations usually take long and usually require a lot of people to be involved in them. What do you feel was the most difficult challenge along the way?

     Tejinder Mann, Google: I can take that. I think the most difficult challenge was that we actually didn’t have complete control during our RFP process, and that dictated the trajectory we were taking with the implementation. At one point we had about 15 consultants from a system integrator and seven consultants from vendors. If we had been in control of the RFP process right from the get-go, we would have been able to manage budgets a little bit better and gain control. We were able to correct that after six weeks, but it was six weeks of hard learning.

     Moderator Marie Hollein: Any of the others?

     Seth Marlowe, General Electric: I think that one of the other things that happens is, after you’ve got something up and running, you then have to deal with the day-to-day support of that. Your team ends up being split between the next new project and maintaining service to businesses. Unless you’ve got dedicated teams, that split can be difficult. We’ve made a number of efforts, particularly on the system side, to split the strategic from the run activities. But on the business side it’s a continuous challenge to be able to split the two.

     Moderator Marie Hollein: I would say too that one of the challenges is not only internal, but with any of the system vendors, 50% of it is customer service, and you really need to rely on that support from your particular vendors.

     Q: Question for Seth. It sounds like there was a bit of good luck associated with your project, and luck, of course, is being where opportunity meets preparedness. I was wondering, what aspect of your operations do you credit for that preparedness? Was it controls? Was it procedures? Was it disaster recovery reviews?

     Seth Marlowe, General Electric: It’s a great question. Number one at GE, particularly in treasury, we have always had a focus on disaster recovery and business continuity. In fact, when I arrived at GE I was in awe of the fact that the culture dictated that you’d have to conduct full disaster recovery drills multiple times a year. And I’m not talking about a test to see that your systems work. I’m talking about full fail over to your backup systems and running on them. Back in those days we were doing it for a one-day fail over. In today’s environment, as we’re just about 24/7, we have enough of a window to be able to fail over on a Friday night and be in that environment for a full week. With that as a culture, something that was very much in our DNA, we were always thinking about, “Well, what else can happen? We’ve got our systems covered, that’s great, but what about the things that we can’t necessarily control?” And that really led us to thoughts of, “What happens if a bank fails, either financially or systemically?” And so, we spent a lot of time blue-skying that.

     Q: This is a question for Seth. When you talked about using your legacy system to route the payments through Bank B, a couple of things came up. One is, did you have enough balance in that account at all times to process these payments that were not meant to typically go through that account? And two, if it was a bank failure issue with Bank A and you have huge deposits because it’s your corporate account, how would you think about rescuing that cash?

     Seth Marlowe, General Electric: First, in terms of the balances, that account for all intents and purposes did not have much activity in it. I think on one of the days, we were fortunate to have investments maturing into that account, which gave us a good running start. A critical part of those event days was having our cash operations team within a stone’s throw of our conference bridge.

     We were communicating with Bank of New York to say, “OK, how much do you see that we’re now overdraft and need to fund you?”, and we would then be able to fund that account from our other accounts at our other U.S. banks. It was a very unusual funding day for us as we filtered everything to Bank of New York.

     The other question in terms of “How would we get money out?” remains as a $64,000 dollar question. It’s kind of hard to prevent money from trying to get in, but in a situation like that there’s probably not much that’s coming in, either. But fortunately, as this did resolve itself by the end of the day, we were eventually able to sweep funds out from that bank. But it’s still one of the opportunities that we have in the whole strategy.

     Moderator Marie Hollein: Any other questions? No? OK. I would like to thank you for staying as the last session of the day. Thank you, Treasury & Risk, for putting this conference on, and again, congratulations to each of our panelists.

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