| Status | |
| Owner | Antonio Zappone |
| Stakeholders |
Issue
The Treasury process currently performed in Quantum was recently approved to be part of the SyWay project scope. The overall SyWay deployment approach for Release 4 is to spread the go-live of Syensqo entities across two groups, Group 1 and Group 2. A decision is now required as to when to deploy Treasury activities, whether in Group 1, Group 2, or after Group 2 with the In-House Bank deployment. With the multi-group deployment, managing the complexity of the interim period between Group 1 and Group 2 is a challenge for the Treasury activities.
Recommendation: Option F: Deploy; Treasury (Treasury Risk Management & Cash Management) with Group 2, IHB in Group 2, Syensqo SA in Group 2
The optimal timing to deploy the Treasury modules is with Group 2.
In-house banking and the Syensqo SA entity are significantly integrated with Treasury. As such the recommendation is to also deploy them at the same time in Group 2.
The initial view in conceptual design was to defer the IHB to lower the associated risk in this area. However, now that Treasury has come into scope for SyWay, deploying Treasury and IHB separately will actually increase risk. Additionally, as the detailed design has progressed, it is now clear that the new IHB design will reduce the significant complexity currently existing is this area, which will also result in a reduction of risk. As such, with Treasury now in scope and with visibility of the new IHB design, the recommendation within this KDD is to move the In-House Bank deployment earlier and within Group 2.
The recommendation is to also move the deployment of the Syensqo SA entity from Group 1 to Group 2, to reduce cost and complexity resulting from new interim interfaces required to support the related accounting transactions. The Go-Live timing decision for the Syensqo SA entity will be decided outside of this KDD. Should Syensqo SA Go-Live in Group 1, the recommended option within this KDD will move from Option F to Option E. Option E still recommends Treasury and IHB going live in Group 2. The difference between Option E & F is when the Syensqo SA entity goes live. A Group 1 go-live increases the number of interim interfaces resulting in increased complexity and cost.
Main supporting factors for the recommendation:
Cash Management: All entities will be operating with S4 at the Group 2 stage, and Cash Management will have a full view of the cash in the company. With the centralization of cash within the In-House Bank, it is also best to align Treasury and IHB deployments.
Exposure Management: Similar to the above point, All entities will be operating with S4 at the Group 2 stage, and Treasury Risk Management Cash Management will have a full view of the exposures in the company. With the centralization of exposures within the In-House Bank, it is also best to align its deployment.
Accounting for Treasury Deals: This option allow streamlining of the accounting postings to support the treasury deal processing. In the interim period the current as-is Quantum process will continues. Once TRM is live in Group 2, all posting will be automated within S4. There is no need to build and deploy any new interim interfaces to manage Treasury postings.
Accounting for In-House Banking: With the added complexity whereby the IHB currently resides in the separate PI2 system, it is optimal to align its deployment with Treasury and Syensqo SA for ease of accounting postings, and avoiding the need to build new interim interfaces for accounting purposes.
Inter-Company Loans: IC loans will be managed in the new TRM module of S4. As all in-scope entities will be operating in S4 at the Group 2 stage, both sides of the loan relationship will be in S4 allowing the IC loans process to operate effectively. Similarly loan settlement for principal and interest using In house bank accounts and the End of day process of IHB including interest postings are all within the one system. This all contributes to eliminating the need to build and deploy new interfaces for the interim period.
Treasury Deals outside of the central treasury entity: Group 2 deployment will allow treasury to best manage the need to deal directly for entities within Syensqo group. The as-is Quantum processes will continue in the interim. Once TRM is live in Group 2, deal processing will transition to S4. Again avoiding the need to build new interfaces for the interim period.
Cost Savings: A Group 2 deployment avoids interfaces for the interim period. Avoiding the cost to build, test and deploy loans interfaces. Avoiding spend that would only be necessary for the period between Group 1 and Group2.
Cut-Over activities: Treasury and IHB will deploy with the rest of Group 2, aligning with the wider cut-over planning any avoiding additional cut-overs and potential downtime.
Background & Context
Key Decision Document KDD075 - Future system to support Treasury activities
Change Request CR0003 - Transition Treasury from Quantum to S/4HANA
The above KDD and Change Request were approved to bring Treasury activities into the scope of the SyWay project,
A decision in now required as to when the deploy the Treasury modules within the SyWay deployment Groups, which is the focus of this KDD.
There are currently two official deployment groups, Group 1 and Group 2.
Relevant Treasury Modules in S/4HANA
- Treasury Risk Management (TRM)
- Cash Management (CM)
- Inter-Company loans will also be fully managed within TRM.
Systems
Quantum: The current Treasury management systems
PI2: The treasury accounting and also the IHB reside in this separate system. Relevant company codes are 2232 & 4044 (note as part of the IHB design, 4044 will be removed to aid simplification and achieve added financial value).
PF2: The legal entity for Treasury and IHB is Syensqo SA, and this entity resides in PF2. The relevant company code in this system is 2002. Local Statutory reporting is performed from this entity\system. Also, non IHB exposures exposure coming from receivables and payables not factored to the IHB need to be interfaced to PI2.
WP2: For Treasury exposure management, the non IHB exposures for the entities within WP2 are required.
BFC: for Consolidation purposes, Syensqo SA (2002) and Syensqo SA Treasury Division (2232) send packages to BFC for Consolidation.
Assumptions
SyWay deployment for Release 4 will be execute in two groups, Group 1 & Group 2. Multiple group go-lives adds significant complexity in regards to Treasury deployment.
Constraints
Existing Quantum License expires 14th June 2028.
Impacts
KDD070 - Deployment Approach for In-House Bank (IHB)
Extract from KDD070
Recommendation: Option E - Defer the deployment of In-House Bank functionality for all GBUs and Entities until after the second group go-live.
This Conceptual Design recommendation will be re-assessed during Detailed Design when more information will be available to support a decision. Options B, C, and E will form part of the reassessment. Any long lasting impacts on S/4HANA from the legacy interim IHB requirements will also be considered at this time.
Impact
Treasury and In-House bank are heavily integrated, as such the deployment timing of the In-House Bank comes into consideration.
The Conceptual design recommendation was to deploy the IHB "after Group 2". For the ease when reviewing the options within this KDD, IHB go-live will be referred to as "Group 3" instead of "After Group 2". Note: there is no official Group 3.
The Syensqo SA entity (ECC Company code 2002).
Local Statutory Reporting for this entity is performed in 2002 \ PF2.
Treasury
2002 holds the accounting for both Treasury and the In House Bank. The current approach is to remove the existing Treasury reporting entity (2232), and as such all financial transactions will be directly within the Syensqo SA entity 2002.
Statutory entries from the PI2 system are interfaced into 2002 in PF2 to produce statutory accounts, and also interfaced to BFC for financial consolidation.
Non- Treasury
Significant non Treasury Activities also occurs in this entity, including Head Office activities and Intercompany service billing which 1) receives charges from other entities 2) send invoices to other entities within the Group 3) Interfaces with WP2.
Impact
Treasury: The current system design for this entity adds complexity to the deployment approach for Treasury, which is one part of the Syensqo SA entity. Analysis conducted for this KDD highlights that it is optimal (less interim interfaces) to deploy entity Sysensqo SA with the rest of Treasury and IHB.
Inter-company service Billing: This process will also have the complexity of multiple systems in the interim (between Group 1 and Group 2 Go-Lives).
Go-Live Timing
Entity 2002 Syensqo SA resides in PF2 and is currently scheduled to go-live with Group 1.
Business Rules
There are no relevant business rules at this point in time.
Options considered
The main deployment consideration relates to Treasury TRM & CM.
However, the decision also requires consideration of;
a) Go-live timing of IHB.
b) Go-live timing of the Syensqo SA entity.
The below table represents a summary of go-live timing options for Treasury TRM & CM, IHB and Syensqo SA.
Options Summary
| Activity to Deploy | Option A | Option B | Option C | Option D | Option E | Option F | Option G | Option H |
|---|---|---|---|---|---|---|---|---|
| Treasury (TRM & CM) | Group 1 | Group 1 | Group 2 | Group 2 | Group 2 | Group 2 | Group 3 | Group 3 |
| IHB | Group 3 | Group 3 | Group 3 | Group 3 | Group 2 | Group 2 | Group 3 | Group 3 |
| Entity Syensqo SA (2002) | Group 1 | Group 2 | Group 1 | Group 2 | Group 1 | Group 2 | Group 1 | Group 2 |
Evaluation Summary
Numerous options were consider and evaluated within this KDD and have been documented to support the recommendation. The detailed options have also been documented as a store of information for future reference. The evaluation table below may be complex for some reader, accordingly a high level summary will assist the readers for whom the detailed evaluation table may not be of high importance.
Treasury Modules:
Cash Management: the ideal timing for cash management to be implemented is when all entities are live within the new S4 system, in order for the module to directly access data (eg bank statements, AR & AP invoices) and produce reports on the cash within the organization. Hence a Group 2 or 3 go-live preferred. As the majority of the organization cash is managed within the IHB, it is ideal if cash management and IHB are in the new S4 system at the same time.
Treasury Risk Management: In order for Treasury to process deals within the IHB header entity to limit the risk (eg exposures) within the organization, transactions will be processed in the new S4 system in future. The accounting of these transaction will occur automatically, but it requires the Syensqo entity to be in the S4 system. In addition, to view the exposure across the whole organization, all entities along with the IHB need to be on the new S4 system together, so that any Treasury trades required for Non IHB entities can also be managed centrally. In addition, to effectively manage the intercompany loans within the organization, it is best if all entities and the intercompany loan functionality within TRM are within the S4 system together.
Where the above mentioned alignment is not in place, new interim interfaces will be required for any interim period (between Group 1 and Group 2, and until the IHB is live). New interim interfaces bring added complexity plus cost and are only utilized for a short period of time. As such, an alignment of Treasury, IHB and Syensqo SA in Group 2 represents the optimal timing and is the recommended deployment approach within this KDD.
Option A: Deploy Treasury with Group 1. In addition, deploy IHB in Group 3, Syensqo SA in Group 1
This option supports the treasury deals process and the related accounting of the deals. However is it complex for cash management, inter-company loans, exposure management, IHB accounting and any treasury deals directly in the GBUs. It is of higher complexity and cost resulting from the number higher new interim interfaces that will be required for the interim period between Group 1 and Group 2 go-lives.
Option B: Deploy Treasury with Group 1. In addition, deploy IHB in Group 3, Syensqo SA in Group 2
This option is similar to Option A, and reduces the complexity of the IHB accounting, however there is added complexity for the accounting of the Treasury Deals.
Option C: Deploy Treasury with Group 2. In addition, deploy IHB in Group 3, Syensqo SA in Group 1
This option is an improvement to Options A and B and there is a reduction in complexity\cost for new interim interfaces, However, new interim interfaces are still required to support cash management, exposure management and intercompany loans.
Option D: Deploy Treasury with Group 2. In addition, deploy IHB in Group 3, Syensqo SA in Group 2
Similar to Option C, but further a further reduction of complexity\cost in the accounting for the treasury deals and the IHB. .
Option E: Deploy Treasury with Group 2. In addition, deploy IHB in Group 2, Syensqo SA in Group 1
If the Syensqo SA entity cannot move from Group 1 to Group 2, the this will become the recommended option.
Option F: Deploy Treasury with Group 2. In addition, deploy IHB in Group 2, Syensqo SA in Group 2
Recommended option, as outline in the Recommendation section.
Option G: Deploy Treasury with Group 3. In addition, deploy IHB in Group 3, Syensqo SA in Group 1
Although this option support treasury deals, cash management and inter-company loans, complexity\cost\interim interfaces remains to support non-IHB exposures and the IHB accounting. In addition, this option requires additional cut-over.
Evaluation
| Criteria | Option A | Option B | Option C | Option D | Option E | Option F | Option G | Option H |
|---|---|---|---|---|---|---|---|---|
Treasury: Group 1 | Treasury: Group 1 | Treasury: Group 2 | Treasury: Group 2 | Treasury: Group 2 | Treasury: Group 2 | Treasury: Group 3 | Treasury: Group 3 | |
IHB: Group 3 | IHB: Group 3 | IHB: Group 3 | IHB: Group 3 | IHB: Group 2 | IHB: Group 2 | IHB: Group 3 | IHB: Group 3 | |
Syensqo SA: Group 1 | Syensqo SA: Group 2 | Syensqo SA: Group 1 | Syensqo SA: Group 2 | Syensqo SA: Group 1 | Syensqo SA: Group 2 | Syensqo SA: Group 1 | Syensqo SA: Group 2 | |
| Ease of integration of Cash Management (CM) |
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| Rating | Low | Low | Medium | Medium | High | High | High | High |
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| Efficient Management of IHB Exposures | IHB/PI2 goes live in Group 3
|  As Option A |
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| IHB and TRM go-live in S4 together.
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| Rating | Low | Low | Low | Low | High | High | High | High |
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| Efficient Management non-IHB Exposures |
| As Option A |
|  As Option C | As Option C | |
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| Rating | Medium | Medium | Medium | Medium | Medium | Medium | Low | Low |
Ease of Accounting for Treasury Deals (from Header Entity) |
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| Rating | High | Low | Medium | High | Medium | High | Medium | Medium |
| Ease of Accounting for IHB (Syensqo SA entity 2232). |
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| Rating | Low | High | Low | High | Low | High | Low | Low |
| Ability and ease to implement and manage Intercompany Loans |
| As Option A |
| As Option C |
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| As Option E | As Option E |
| Rating | Low | Low | Medium | Medium | High | High | High | High |
| Ability and ease to perform Treasury transactions outside of central Treasury Entity | TRM goes live in Group 1.
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| TRM goes live in Group 2.
Existing Process with Deal in Quantum to continue in the interim period. | As Option C | As Option C | As Option C | TRM goes live in Group 3.
Existing Process with Deal in Quantum to continue in the interim period. |
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| Rating | Low | Low | Medium | Medium | Medium | Medium | Medium | Medium |
| Implementation Cost Savings | 5 new interim interfaces required | 5 new interim interfaces required | 3 new interim interfaces required | 3 new interim interfaces required | 1 new interim interfaces required | NIL new interim interfaces required | NIL new interim interfaces required | 2 new interim interfaces required |
| Rating | Low | Low | Medium | Medium | Medium | High | High | Medium |
| Ease of Cut-over at implementation |
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| Rating | Medium | Medium | Medium | Medium | High | High | Low | Low |
SUMMARY | High x 1 Medium x 2 Low x 6 | High x 1 Medium x 2 Low x 6 | High x 0 Medium x 7 Low x 2 | High x 2 Medium x 6 Low x 1 | High x 4 Medium x 4 Low x 1 | High x 7 Medium x 2 Low x 0 | High x 4 Medium x 2 Low x 3 | High x 3 Medium x 2 Low x 3 |
| OVERALL RATING | Low | Low | Medium | Medium | Medium | High | Medium | Medium |