Johnson Controls, based in Milwaukee, WI, is a global diversified technology and industrial company operating in over 150 countries with 162,000 employees. It creates quality products, services and solutions to optimise energy and operational efficiencies of buildings; lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles; and interior systems for automobiles. The company’s global sales were US$40.8bn in fiscal year 2011. The company has approximately 30 treasury personnel worldwide.
Johnson Controls decided to implement a SWIFTNet solution for all of its consolidated entities worldwide. Its key objectives were to simplify its auditing process, strengthen security/control on payment initiation and approval through a segregation of duties, and achieve full control and ownership over user access rights management to improve Sarbanes-Oxley (SOX) compliance.
In addition, the company wanted to reduce IT costs, rationalise multiple proprietary connections and standardise file formats. The aim was to achieve efficiencies by eliminating fees associated with bank proprietary internet banking platforms.
Johnson Controls planned to improve the efficiency of its cash management, increase visibility on cash flows allowing for better liquidity management and intraday balance reporting, and improve working capital management (WCM). Overall, it required a secure and reliable solution that is scalable, flexible, bank independent and efficient.
Project Plan and Execution
Johnson Controls adopted a phased approach for the project. Firstly, it implemented MT940 reporting, which was concluded in March 2008, with the aim of having global visibility across all bank accounts. Secondly, the company implemented a multi-banking payment platform with SWIFTNet standards and connectivity.
The key project stakeholders within Johnson Controls were treasury, finance and IT. Treasury worked on connectivity and standardisation between the multi-banking platform and the banks, while IT and finance worked on connectivity between enterprise resource planning (ERP) systems and the multi-banking payment platform. As the solution was implemented concurrently across all business and sub-business units, internal teams were subdivided across the businesses.
A steering committee supported the project team, removed any road blocks and ensured proper resource planning.
The first challenge Johnson Controls treasury faced was how to explain the solution to top management and secure a strong commitment from all parties involved (partners, banks and internal resources) on its strategy. Similarly, it was essential to co-ordinate the three divisions and multiple subdivisions involved in the project.
In planning a global roll-out strategy it was important to ensure that the implementation followed global/local standards and not bank-specific interpretation regarding local banking requirements (language, tax, etc). Without the existence of shared service centres (SSCs), numerous processes within each division had to be changed and adjusted and multiple ERP systems accommodated to achieve successful implementation. In order to deliver the project on schedule it was essential to allocate sufficient resources for training, change management and also to recognise technical faults swiftly when going live with banks.
Other obstacles that were overcome included the absence of service support in Asia-Pacific or the Middle East for Johnson Controls’ multi-banking platform vendor (it was subsequently introduced) and a temporary halt to the roll-out when server capacity was overwhelmed by transaction volume.
The implementation provided treasury with full access to all bank accounts in the region from a single platform. The company has gained full visibility of its bank accounts and has streamlined money transfers, access rights and settlement procedures. Johnson Controls’ management team were impressed by the dashboard reports provided by the solution, as well as the ability to access real-time data across a single system globally.
Johnson Controls’ project was implemented globally, and in 23 countries in Asia Pacific & Middle East, multiple ERP systems (based on four global templates), and four banks in just 19 months. The company was the first solution of its type to be implemented fully (MT940/942, MT101, XML20022 (pain.001), and pain.002) with a Japanese and a Chinese bank. The solution has delivered immense efficiency improvements and achieved all of Johnson Controls’ key objectives.
This case study is based upon an entry into the gtnews
Awards for Global Corporate Treasury 2012
, sponsored by Bank of America Merrill Lynch (BofA Merrill). The winners of this year’s annual awards, now in its third staging, were only revealed at a gala dinner on 24 May at the Sofitel Grand Hotel in Amsterdam, the Netherlands, after the opening of the two-day gtnews
Forum for Global Corporate Treasury.
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