Issue

Succinctly describe the issue or problem statement that this Decision addresses. Why is a decision required? What business or technical problem does it address?

A decision is required as to whether to transition Treasury activities from Quantum to SAP S/4HANA, and whether a change in scope should be requested in order to bring Treasury operations into the SyWay ERP Project.

Recommendation

Summarise the recommendation being made for the reader, leaving the pro/con evaluation and exact decision-making process to the subsequent sections.

The Recommended option is: Option D: Transition from Quantum to S/4HANA  as part of the ERP Rebuild project - Increased scope for value adding items

Main points supporting the recommendation:

S/4HANA can meet the Treasury business requirements with mostly standard design.  Minimal custom development may be required.

Treasury activities transitioning from Quantum to S/4HANA will result in significant simplification of design and integration. 

Accuracy and automation level will increase.

Improve the level of support via Syensqo IT.

Although this has the highest implementation cost, this cost is partially offset by annual License savings and the potential to eliminate other related applications like Misys. 

Should any funds be needed to improving Quantum, the view is that a better use of resources would be to channel efforts to S/4HANA and reap the simplification, automation, integration and improved business processes for the longer term.

The assumption is that additional scope will be assessed on a case by case basis, to ensure there is a balanced between scope, cost, benefit and complexity.

Additional Scope considerations for Option D.

1. Short-Medium Term liquidity forecast
2. Increase Scope for Inter Company Loans
3. Additional value adding \ medium to high frequency instruments (to be assessed on a case by case basis)
4. Moving Correspondence and matching from Mysis to SWIFT and S4\HANA.
5. Reporting:  Review of reports including Credit Risk & EMIR reporting. 
6. Bank fee analysis for main core banks.

Out of Scope: 

Commodity Risk management will remains out of scope for the SyWay project. 

High Level points relevant to the other options considered;

Option A: Continue Treasury Operations activities in Quantum, "As-Is"

The most cost effective option from an implementation perspective, although annual licensing costs are higher.

Business will continue with the existing gaps and complex integration into S/4HANA. This integration between systems will need to be built by the SyWay project.

Continue with the FIS vendor offering poor level of support.

This option is an effective in the short to medium term solution, but not the most optimal for the longer term future proofing of Syensqo.

Option B: Continue Treasury Operations activities in Quantum, but invest to improve the functionality

Although the overall implementation cost will be lower than transitioning to S/4HANA, this is not seen as the best utilization of the additional resources, as the complexity associated with integrating Quantum with S/4HANA will continue. 

If any funds and resources are to be allocated to the Treasury system, these funds should be directed to S/4HANA and not Quantum.  

Option C: Transition from Quantum to S/4HANA  as part of the ERP Rebuild project - "like for like" Scope 

This is the second best option, as it simplifies the implementation being like for like.

This option has a lower implementation cost, but comes with slightly lower\later improvement and future proofing. 

Background & Context

Explain the context in which the decision is being made.

Quantum

Quantum is an application provided by FIS. It is a common application in the market to manage Treasury operations.

The Quantum system was implemented for Treasury operations as follows, wave 1 = Q2 2019, wave 2 = Q2 2020, and the existing 5 year license expires on 14th June 2028. 

The Quantum system functionalities currently do not meet all requirements and would require ad'hoc developments by FIS.

FIS in not seen as a good partner.

• Dissatisfaction with FIS, the supplier of Quantum, due to operational challenges and support issues.
• The current treasury processes are heavily reliant on manual interventions and face significant challenges due to system limitations and supplier issues.
• Poor support from FIS makes evolutions all the more cumbersome. No significant evolutions in Quantum have been deployed since 2020.
   

S/4HANA

The Treasury Operations modules in S/4HANA are;

1. TRM: Treasury Risk Management
2. CM:  Financial Cash Management

A scope review was performed to determine whether S/4HANA has the functionality to manage Syensqo Treasury activities. The outcome of the review highlighted that SAP has a high fit level, along with the opportunities to make improvements. 

Refer to the Scope & Analysis section for for details on Treasury activities 

LICENCING COSTS

Quantum

• License Acquisition, One-off every 5 years 300k
• Annual Hosting Cost of 100k per annual
• Support cost of 70k per annum.

SAP ECC (existing Licenses utilized by Treasury)

• TRM

S/4HANA

• TRM License Cost (perpetual license in place):  20k per annum.  TRM is required in S/4HANA whether or not Quantum is transitioned, and there is existing limited use of TRM in PI1 for Intercompany loans. Hence, should Treasury activities transition to S/4HANA, there are no "additional" license costs.
• CM License Cost:  Already in place.

License Savings: Annual saving of Euro 100,000 on licensing costs. 

IMPLEMENTATION COSTS

 Refer the the Options section for the estimated implementation cost for each option considered.

BRIEF OVERVIEW OF QUANTUM AND S/4HANA IN RELATION TO TREASURY ACTIVITIES

QUANTUM

   Front Office

      High Frequency FX instruments are in Quantum and are working effectively. Low Frequency deals are not in Quantum.

      Money Market: only short term deposits for Thailand and India are in Quantum, which are working effectively.

      Securities, Guarantees, Working Capital, Equity Derivatives - are not configured in Quantum,

   Middle Office

      Basic reports are in place, however further detailed analysis is often performed in excel.  Not able to develop new reports.

      Quantum cannot manage or assist with EMIR reporting 

      Confirmations are automated, although a separate application is used to perform the matching. 

   Back Office

       Accounting is poor and not fully automated. For example Quantum cannot manage the flip between interest expense and interest revenue.

       Inter-Company Loans require integration with SAP and Quantum cannot manage long term to short term reclass, which is also the situation for all financing and bonds.  Interest is calculated manually.

S/4HANA

Scope:

Standard S/4HANA functionality can effectively meet Syensqo's treasury business requirements, largely with Standard configuration, however some enhancement may be required. 

Existing scope can be managed and additional scope can be considered.  

Improvement opportunities:

 S/4HANA can bring improvements in the following areas;

•  Accounting: increased accuracy and automation.
•  Liquidity Forecast:  will be implemented to provide a short-medium (4-5 weeks) term cash forecast. 
•  Inter Company loans:  will see improvements in coverage and automation.
•  Assist with EMIR reporting , whether in manual or automated.
•  Correspondence can be streamlined, potential to eliminate existing separate matching system.

Simplification: 

•  With Treasury operating fully in S/4HANA, and fully integrated in the one system to all relevant process, this will significantly simplify the design the integration (interfaces, reporting, accounting, payments, market data, confirmation).

Automation:   

•  Further automation can be achieve, from fully automated accounting entries, automatic liquidity forecasts, automated treasury payments 

SCOPE AND DETAILED ASSESSMENT BETWEEN QUANTUM AND S/4HANA

Instruments:  FX

 Instruments:  Money Market

Instruments:  Securities

Instruments:  Working Capital

Instrument Guarantees

Currently out of scope and done manually.

Instruments Equity Derivatives

Interfaces & Communication

Treasury Payments & Bank Statements

Cash Management

Reporting

Accounting

Assumptions

Clearly describe the underlying assumptions which informed or limited the choices available, or impacted the decision: cost, schedule, regulatory requirements, business drivers, country footprint, technology, etc. Include links as necessary. This section is important because a future change in circumstances might invalidate some key assumptions, which then prompts a decision to be revisited. 

Additional review and assessment will be conducted for the implementation timing after the decision of the KDD is concluded. If the decision is to stay with Quantum, then no additional tasks are required in regards to this KDD.  If the decision is to move to S/4HANA, then an additional step is required to determine the implementation approach and timing.

Any increase in scope from that available in Quantum today will be assessed on a case by case basis, to ensure the implementation in focused on added value items.

Any configuration within Quantum is out of scope for the SyWay project.  Hence, Option B will be managed outside of the SyWay project.

Implementation cost estimates have been provided in the KDD to aid high level comparisons.  The detailed cost will be determine as part of the official change request.

For option C & D, the temporary Quantum integration cost is conservative, with the possibility to reduce depending on the implementation approach decided.

Constraints

Capture any constraints or limitations inherent to the recommended option. This could be aspects which, if changed or removed in future, could cause the decision to be revisited or invalidated. For example, a constraint might be that a new product has significant gaps in important functionality, which caused an older alternative to be recommended. If those gaps are closed in future, this might cause the decision to be invalidated.

Existing Quantum License.  Expiry date 14th June 2028.  Can this be extended by one year

Impacts

Describe the impact of the decision on other aspects such as other processes, infrastructure, other SAP modules or systems, data cleansing and migration, developments, automations, interfaces, in-flight projects, etc.

If Treasury operations are to transition to S/4HANA the below positive impacts arise; 

 -  Integration benefits arise from all activities on the one system.  Eg. Automatic accounting postings, the intercompany loans will transition fully to TRM.

 -  Elimination of existing interfaces between Quantum and SAP

 - Allow for further simplification of the future IHB process

Business Rules

The decision may translate into business rules which enforce the decision and will require configuration. List these business rules here. For example, "An Outline Agreement cannot be created via the RFQ process. An awarded RFQ can only result in a Purchase Order". 

Not applicable at this point of the decision making process

Options considered

List the options (viable options or alternatives) you considered. These often require a longer explanation with diagrams, or references to other documents (links are best, but attachments are also possible). Use enough detail to adequately explain what you considered so that a project or business stakeholder reviewing this decision will not come back and ask "did you think about...?"; this leads to loss of credibility and questioning of other decisions. This section also helps ensure that you considered enough suitable alternatives rather than just copy/pasting SAP's recommendations.

Implementation cost estimates have been provided in the KDD to aid high level comparisons.  The detailed cost will be determine as part of the official change request.

For option C & D, the temporary Quantum integration cost is conservative, with a high probability of reducing the cost depending on the implementation approach decided

Option A: Continue Treasury Operations activities in Quantum, "As-Is"

Describe the option in sufficient detail for a reader familiar with the subject matter to understand it properly

Treasury operations will continue within Quantum, with no additional spend to eliminate existing gaps.

Continue with complex integration between Quantum and SAP.  This integration will need to be implemented by the SyWay project to link to the new S4/HANA system.

Quantum license cost is 100k higher than S4/ANA per annum.

Continue with poor vendor and support. 

Estimated Implementation Cost: Euro 780k 

No additional budget required. This cost is already in SyWay project budget

Quantum \ Syensqo Business Cost: 0

SyWay Project Cost: 780k  (this cost is already factored into the SyWay project budget).

SyWay Project Scope: WRIEF design, build, unit test, integration testing, UAT, Data, Regression Test, cut-over, support) + TRM IC Loans:  Estimate: 1 FTE over 36 months.

Option B: Continue Treasury Operations activities in Quantum, but invest to improve the functionality

Describe the option in sufficient detail for a reader familiar with the subject matter to understand it properly

Treasury operations will continue within Quantum, however additional expenditure required to eliminate existing gaps and issues.

As per Option A, except this will required additional spend on Quantum.

Estimated Implementation Cost: Euro: 1.43m 

Addition budget required for the Syensqo business (not the SyWay Project):  650k

Quantum \ Syensqo Business Cost (2.5 FTEs for 12 months) = 650k 

Additional budget required. 

Quantum is out of scope for the SyWay project. Any improvement activities within Quantum will need to be manage outside of the SyWay project.

Already budgeted in SyWay project

SyWay Project Cost: 780k  (this cost is already factored into the SyWay project budget). Estimate: 1 FTE over 36 months

SyWay Project Scope: WRIEF design, build, unit test, integration testing, UAT, Data, Regression Test, cut-over, support) + TRM IC Loans.

Option C: Transition from Quantum to S/4HANA  as part of the ERP Rebuild project - "like for like" Scope 

Describe the option in sufficient detail for a reader familiar with the subject matter to understand it properly

Treasury Operations will transition to S/4HANA as part of the SyWay project.  The scope will be aligned with the existing scope within Quantum

Simplification and automation is achieved.

Simplifies the "implementation" being like for like.

This option has a lower implementation cost, but comes with slightly lower\later improvement and future proofing. 

Estimated Implementation Cost: Euro: 3.3m 

Additional budget required for the SyWay project: 2.5m 

SyWay Project: Change request will be required to bring this scope into the SyWay project

SyWay:  TRM and CM implementation: Estimate of 3.5  FTEs  (Lead, Functional Consultants, Technical Consultant, Data Consultant, Testing, cut-over) over 36 months = 2.7m.  (This cost will be confirmed once the implementation approach is devised). 

SyWay: Temporary Integration with Quantum for any transition period : WRIEF design, build, unit test, integration testing, UAT, Data, Regression Test, cut-over, support) + TRM IC Loans:  Estimate: 1 FTE over 36 months 780k.

SyWay:  Saving from simplifying existing process possible with Treasury Operations within the one S4HANA System.  (estimate:  Wrief design, build, test, deploy, support.   6 months of 1 FTE equivalent activity ) = 144k 

Option D: Transition from Quantum to S/4HANA  as part of the ERP Rebuild project - Increased scope for value adding items 

Describe the option in sufficient detail for a reader familiar with the subject matter to understand it properly

Treasury Operations will transition to S/4HANA as part of the SyWay project. 

The scope will consider additional business requirements in addition to what is already within Quantum.

S/4HANA can meet the Treasury business requirements with mostly standard design.  Minimal custom development may be required.

Result in significant simplification of design and integration. 

Accuracy and automation level will increase.

This option has a higher implementation cost, but comes with more tangible improvements and also higher level of future proofing. 

Estimated Implementation Cost: Euro: 4.1m 

Additional budget required for the SyWay project: 3.3m 

Increase Scope will result in an increase in cost.  This additional scope cost is similar in magnitude to the cost to improve Quantum.

SyWay Project: Change request will be required to bring this scope into the SyWay project

SyWay Project Cost:  Estimate of 4.5  FTEs  (Lead, Functional Consultants, Technical Consultant, Data Consultant, testing, cut-over) over 36 months = 3.5m.  (This cost will be confirmed once the implementation approach is devised).

SyWay: Temporary Integration with Quantum for any transition period : WRIEF design, build, unit test, integration testing, UAT, Data, Regression Test, cut-over, support) + TRM IC Loans:  Estimate: 1 FTE over 36 months 780k.

SyWay:  Saving from simplifying existing process possible with Treasury Operation  within the one S4HANA System.  (estimate:  Wrief design, build, test, deploy, support.   6 months of 1 FTE equivalent activity ) = 144k  

Total Cost of Ownership

Evaluation

Outline why you selected a position. The best format could be a pro/con table (sample below), but is up to you as the author. You must consider complexity, feasibility, cost/effort to implement, but also ongoing operational impact and cost. You must consider the program principles and explain any deviations in detail. This is probably as important as the decision itself.

	Option A Continue Treasury Operations activities in Quantum, "As-Is"	Option B Continue Treasury Operations activities in Quantum, but set-up a project to improve the functionality	Option C Transition from Quantum to S/4HANA  as part of the ERP Rebuild project - "like for like" Scope	Option D Transition from Quantum to S/4HANA  as part of the ERP Rebuild project - Increased scope for value adding items	Option A	Option B	Option C	Option D
Front Office: Instruments Level of System Functionality matching business needs	High frequency instruments are working well in Quantum  Medium & low frequency instruments are not set-up in Quantum	High frequency instruments are working well in Quantum Additional instruments may be considered and  configured in Quantum	S/4HANA can effectively cover the existing scope (that is configured in Quantum). Additional business requirements will not be covered in this Option.	S/4HANA can effectively cover the existing scope (that is configured in Quantum). Additional scope to be considered with this option, on as case by case basis.	Medium	High	Medium	High
Front Office: Placing Deals Level of Ease to place deals Integration level	Deals are placed in 360T and Bloomberg Effectively integrated with Quantum	Deals placed in 360T and Bloomberg Effectively integrated with Quantum	Deals con continue to be placed in 360T and Bloomberg S4\HANA has TPI (API) integration in place with 360T and Bloomberg.	Deals con continue to be placed in 360T and Bloomberg S4/HANA has TPI (API) integration in place with 360T and Bloomberg.	High	High	High	High
Middle Office: Reporting Coverage Accuracy level	Base level reports are in place. Analysis often performed in Excel Developing additional reports is difficult Spread analysis is performed outside of Quantum	Additional reporting capabilities can be assessed and implemented where possible.  Limitation of being in a separate system will continue Spread analysis is performed outside of Quantum	S4/HANA standard reports can be utilized to meet the business reporting requirements Spread Analysis will likely continue outside of the system	S4/HANA standard reports can be utilized to meet the business reporting requirements Spread Analysis will likely continue outside of the system	Medium	Medium	High	High
Back Office: Confirmations Automation Level	Confirmation are automated Matching is performed in a separate \ non-Quantum system called Mysis,  at an additional cost.	Confirmation are automated   Matching is performed in a separate \ non-Quantum system called Mysis Finastra, at an additional cost.	Confirmations matching can be automated in S/4HANA (Correspondence Framework).   Further analysis is required as part of Detailed Design. However,  connectivity to the banks can be via SWIFT.  Hence no need for Misys, saving on the license costs. Connection to SWIFT is already in place.	Confirmations matching can be automated in S/4HANA (Correspondence Framework).   Further analysis is required as part of Detailed Design. However,  connectivity to the banks can be via SWIFT.  Hence no need for Misys, saving on the license costs. Connection to SWIFT is already in place.	Medium	Medium	High	High
Back Office: Accounting Accuracy Level Integration Level Simplicity Level	Interfaces required to move data between systems in order to complete accounting entries.  Interfaces required, increasing complexity.    Some accounting entries are manual	Interfaces required to move data between systems in order to complete accounting entries.  Interfaces required, increasing complexity.  Existing manual entries can be reviewed with the aim to automate.	All accounting entries are manage by standard automatic postings Hedge accounting possible, although implementation requires additional effort All transactions are within the one S/4HANA system, no need for interfaces, lowering complexity.	All accounting entries are manage by standard automatic postings Hedge accounting possible, although implementation requires additional effort All transactions are within the one S/4HANA system, no need for interfaces, lowering complexity.	Low	Medium	High	High
Cash Management 1) Cash Position 2) Short to Medium term liquidity forecast. Meeting Business Requirement Accuracy level Simplicity level	Cash position in being managed today, and treasury are able to fund the immediate term +2 days. Short to medium term liquidity forecast is not being performed at present. Integration with AP & AR items is not in place. The volume of data was not worth interfacing as accuracy level were low.   Low level of simplification in the large data needs to be interfaced from SAP to Quantum.	Effort may be placed on improving short-medium term liquidity forecast in Quantum Improving the accuracy level will continue to be a challenge with Quantum being a separate system to S/4HANA.  Integration with AP & AR items will still introduce complexity with the huge data to be interfaced from S/4HANA to Quantum.	Cash Management module can effectively meet the business requirements. It can also achieve an improvement to the existing level of effectiveness. This Option will only focus on the Cash Position Bank Fee analysis is possible, however this will require additional implementation effort, which can be manage via accounts in scope for this analysis Significant simplification opportunity, as all transactions are within the one S/4HANA system	Cash Management module can effectively meet the business requirements. It can also achieve an improvement to the existing level of effectiveness. This Option will only focus on the Cash Position & Short-Medium term liquidity forecast Bank Fee analysis is possible, however this will require additional implementation effort, which can be manage via accounts in scope for this analysis Significant simplification opportunity, as all transactions are within the one S/4HANA system	Low	Low	Medium	High
Market Data Coverage Level Integration Level	Market data automatically interfaced via Refinitiv Icon The interface is a non-standard custom development Complexity in replicating market data into multiple systems (Quantum & S4)	Market data automatically interfaced via Refinitiv Icon The interface is a non-standard custom development Complexity in replicating market data into multiple systems (Quantum & S4)	Market data can be automatically integrated into S4. SAP provides a standard integration as apposed to a custom built interface Simplification by having one input into S4 that can be utilized for all system requirements, for Treasury and non-treasury processes. SAP MRM (Market Rates Management) comes with a license cost. SAP MRM Limitation - it only provides end of day rates	Market data can be automatically interfaced into S4. SAP provides a standard integration as apposed to a custom built interface.  SAP MRM (Market Rates Management) comes with a license cost Simplification by having one input into S4 that can be utilized for all system requirements, for Treasury and non-treasury processes. SAP MRM (Market Rates Management) comes with a license cost. SAP MRM Limitation - it only provides end of day rates	Medium	Medium	High	High
Favorable License Cost  Favorable in regards to number of users per license	100k per annum License limits the number of users	100k per annum License limits the number of users	20k per annum (no additional License cost as TRM is required with all options).	20k per annum (no additional License cost as TRM is required with all options).	Low	Low	High	High
Support Level	FIS Quantum support level in poor There are less resources with Quantum skillset in the market Upgrade delivery is poor and with issues	FIS Quantum support level in poor There are less resources with Quantum skillset in the market Upgrade delivery is poor and with issues	Opportunity to improve support level with Syensqo IT resources	Opportunity to improve support level with Syensqo IT resources	Low	Low	High	High
Favorable Implementation Cost	No Implementation Costs on the Quantum Implementation Cost for the SyWay project to build interfaces and integrate with Quantum	Implementation Costs Required for Quantum.   Implementation Cost for the SyWay project to build interfaces and integrate with Quantum	Implementation Cost Required. Refer to the details and background section . This implementation cost will be lower than the other S4HANA option - Option D	Implementation Cost Required. Refer to the details and background section. This is the highest implementation cost option.	High	Medium	Medium	Low
Reduced Implementation Complexity	Nil complexity as there is no implementation with this option	This option carries a higher level of complexity in regards to the implementation.  If the design and build in changing with Quantum, this will cause challenges for the SyWay to build the integration on a target system that is changing.	Although this option involves new implementation within S4/HANA, having a like for like scope will be easier to manage as there is a design already in place, al-be-it in a new system	Increasing scope will result in  a more complex implementation	High	Low	High	Low
Simplification Level	Current Simplification level is is Medium - Low.  Integration and interfaces are required between SAP and Quantum.  Some integration is automated, some manual postings are still required. Integration for Cash Management is complex Quantum in not operating in a Optimal manner   Interfaces into SAP required to make Treasury payments Integration for IHB will continue to be complex	Even with Additional spend to improve Quantum functional , integration and interfaces are required between SAP and Quantum.  The integration for effective Cash Management would continue to be complex. Integration for IHB will continue to be complex	One of the main advantages of treasury operating in SAP is the full integration with other modules. Standard integration for:  Accounting APM\BCM for payments and statements, and Cash Management Report are also produced on data with the one system Treasury Operations within S/4HANA allow options to reduce to complexity within the existing IHB design.  A reduction in complexity will required less enhancement or less complex enhancement which save on implementation cost and also BAU support.	One of the main advantages of treasury operating in SAP is the full integration with other modules. Standard integration for:  Accounting APM\BCM for payments and statements, and Cash Management Report are also produced on data with the one system Treasury Operations within S/4HANA allow options to reduce to complexity within the existing IHB design.  A reduction in complexity will required less enhancement or less complex enhancement which save on implementation cost and also BAU support.	Low	Low	High	High
Level of Future Proofing	Continuing "as-is" will result in a low level of future proofing the treasury activities.	Investing in Quantum will improve the functionality for the medium term, however FIS is a poor partner and future changes will continue to be a challenge.	Transition to S/4HANA will improve the functionality level and in-house support will be utilized to manage future changes. Having Treasury in the one SAP system removes the integration complexity, which no longer needs to be managed into the future.	Transition to S/4HANA will improve the functionality level and in-house support will be utilized to manage future changes. Having Treasury in the one SAP system removes the integration complexity, which no longer needs to be managed into the future.	Low	Medium	High	High
Automation Level	Automation level is currently at medium\low level in Quantum.	Further automation options may be identified and reviewed for new implementation candidates With Quantum in a separate system to the may ERP system, automation will continue to be compromised.	Further automation of Treasury paraments and deal confirmation possible. Accounting postings are fully automated Increased automation of Treasury payments Increased automation within Cash Management (Cash Position) With all Treasury operations activities along with IHB on the one system, this allows to foundation for further automation, and any AI \ Machine learning possibilities.	Further automation of Treasury paraments and deal confirmation possible. Accounting postings are fully automated Increased automation of Treasury payments Increased automation within Cash Management (Cash Position and Liquidity Forecast) Confirmations can be automated.   Although this will require a non-standard interface, as is the case in Quantum. With all Treasury operations activities along with IHB on the one system, this allows to foundation for further automation, and any AI \ Machine learning possibilities.  Reducing the probability of having to pay late payment penalties.	Low	Medium	High	High
					High (3) Medium (4) Low (7)	High (2) Medium (7) Low (5)	High (11) Medium (3) Low (0)	High (12) Medium (0) Low (2)

See also

Insert links and references to other documents which are relevant when trying to understand this decision and its implications. Other decisions are often impacted, so it's good to list them here with links. Attachments are also possible but dangerous as they are static documents and not updated by their authors.

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