Stedin - Setting up new treasury after the carve out
Stedin Group consists of the electricity and gas regional grid managers Stedin and Enduris (total 2,2 million customers), which operate in a large part of the province of Zuid-Holland, Utrecht, Zeeland and in parts of Noord-Holland and Friesland. In addition, the group offers services in energy infrastructure under the names NetVerder and DNWG Infra. Energy has become indispensable in the world in which we live. The energy transition requires substantial adjustments to the energy grid, or more accurately, our energy system.
Stedin used to be part of the Eneco Group, an integrated utility company responsible for the sales, service and distribution of electricity and gas. Being one company, Stedin and Eneco used the same legacy Treasury Management System (TMS) for over 10 years. Due to regulations the company however needed to unbundle and separate the commercial units from the grid operator activities.The goal for the treasury team was to select and implement a new treasury management systems which met the specific requirements of both companies and have both systems in place at the unbundling date. Parallel to the system implementation the organisation needed to (physically) split up, the banking system and IT infrastructure needed to be duplicated and two financial closings were planned near the go-live date.
A multidisciplinary project team including support from Orchard Finance was set-up to analyse three possible scenarios for the replacement of the current TMS:
● Split the legacy system
● One company keeps the legacy system, the other implements a new system
● Both companies implement (the same) new systems
The first option was abandoned since the legacy system was end-of-life and support would cease in the near future. The second option was considered a fallback option since carving out data from the legacy system would not be easy. And the option for two new systems was not considered due to resource and timeline constraints.The decision was made to select new systems for both companies. Although both companies had different types of needs, the RFP process was a joint effort with the objective to serve the current and future needs of both companies in a first phase. In a second phase, diverging of functionalities was foreseen. The key objectives were defined as:
● improved control over liquidity, interest and currencies (financial risk reduction)
● enhanced reporting and scenario planning capabilities
● operational risk reduction:
simplified structures and standardized processes
link with ERP workflows and improve ‘straight through processing’
less dependency on local infrastructure and availability local employees an automated accounting interface with SAP and hedge accounting under IFRS 9
After a thorough RFP process the project team concluded that ITS, one of the treasury systems from the ION portfolio could serve both needs and the choice was made to simultaneously implement an individual, but similar, system for each company. Main reasons for selecting ITS were the modularity and functionality of the system, combined with the ability to configure the system with highly automated workflows suitable for both companies.Because of the tight implementation lead time of 8 months in combination with the other unbundling activities, it was decided to use a phased approach and to start with the cash management module, the liquidity planning and the deal capture functionality. Before the unbundling date this was realized for both companies and the legacy TMS was kept as a fallback environment for a short period of time. After using the new systems for a while for cash management and deal capture, the accounting interface was delivered for straight through processing of the monthly valuation postings to the ERP systems.Key success factors and lessons learned:
● Managing two implementations at the same time can be challenging but also efficient if planned and managed effectively (including phased go-lives)
● A flexible multidisciplinary team of treasury, TMS vendor consultants, Stedin / Eneco IT, Orchard Finance consultants, bank IT is a must in achieving the goals on time
● Management attention from Eneco’s and Stedin’s Group Treasurer was key for timely decision making.
Scope overview (realized simultaneously for the two companies):
“The key to success was a dedicated project team all with the same goal to meet the deadlines, a modular implementation of the two systems with very tight and flexible project management.”
Sebastiaan Weeda, Group Treasurer