Customer story
DONG Energy
The journey to financial
process transformation
DONG Energy
The journey to financial process transformation
DONG Energy was created from a merger of six companies in 2006,
each with its own procedures, systems and bank relationships.
Bringing its finance processes into alignment would be a huge
undertaking – but one that would be vital to the company’s success.
Anne Heidemann and Kim Japp have
been on the front lines of transforming
the organisation’s finance processes.
Heidemann heads treasury front office and
is responsible for optimising funding across
the group, including cash management,
hedging and risk. Japp heads DONG
Energy’s shared services centre, with a
mission to deliver reliable processes and
continuous improvement in efficiency.
They remember first hand the scale of the
task involved in managing payments to the
company’s subsidiaries and joint ventures –
more than 200 legal entities in total – and
how the decentralised structure made it
impossible to get a complete view of the
company’s funding and liquidity.
“Merging multiple companies is always
a struggle, and we knew it would take
some years to align payment terms
and contracts, to integrate systems
and to merge departments,” says Japp.
“We started with totally decentralised
accounting and finance functions in each
business unit. It was only in 2011 that we
formed our shared services centre and
centralised payments, by which point we
were in a position to look ahead at how
we could optimise our transactions and
payments.”
“For our part, in the treasury,” adds
Heidemann, “we knew that establishing a
single group treasury was an important first
step in 2006, but we were still dependent
on local processes – such as payment terms
– being aligned so that we could achieve
our goals.”
Approach
DONG Energy embarked on an ambitious
multi-year program of activities to optimise
its finance processes, with the vision of
establishing an internal bank and payment
factory and a completely centralised
treasury. This would involve a broad range
of process and operational transformations,
new IT systems (such as modules from SAP
and a treasury management system from
SunGard), and changes to its legal, banking
and commercial relationships.
FURTHER
INFORMATION
To find out how Nordea
can help your business
manage its cash, visit
NORDEA.COM/CM
SHORTCUTS
Learn what Global
Cash Pool can do for
you at
NORDEA.COM/GCP
Discover eGateway’s
features at
NORDEA.COM/EGATEWAY
“While a lot of the work would be internal,
we knew that our banking partners would
play a key role. We’ve been engaged in a
very close dialogue with Nordea for some
years,” says Japp. Nordea has been one
of DONG Energy’s main banks since the
merger in 2006, and the two companies
have formed a close relationship.
“We have a lot of transactions so it’s
essential that our systems work and that we
get the right support when we need it,” says
Japp. “That’s what we get from Nordea. We
see it as a partnership, not just a suppliercustomer relationship.”
DONG FACTS
Conducting major
finance transformation
Adopted Nordea
Global Cash Pool and
eGateway
Improved process
efficiency and cash
management
The value of this partnership was revealed
in two recent projects.
nordea.com
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Global Cash Pool: increased visibility of liquidity
across the group
DONG Energy’s treasury needed better visibility of credit
facilities and liquidity across the group’s accounts in order to
tighten credit lines and manage risk. The treasury department
instituted a new banking strategy at the time of the merger in
2006, finding the two best cash management banks among
the group’s 13 banks, one of which was Nordea. But that
was not enough to tame the complexity: the nature of DONG
Energy’s business means that each new energy project – for
instance, a wind farm development – involves creating a new
joint venture or legal company with new bank accounts and
company codes that need managing.
Nordea had worked with DONG Energy in the cash
management area for some years, and understood the
intricacies of its operations. In fact, Nordea already
provided some notional cash pooling, which gave DONG
Energy the ability to manage liquidity across multiple
accounts. Nordea proposed its new Global Cash Pool
solution, which promised even greater visibility across
countries, currencies and accounts.
Implementing a cash pooling solution is always a complex
project. Nordea worked closely with DONG Energy to
define the rollout phases, with the first step being taken
across Denmark, Norway and Sweden in January 2012.
DONG Energy and Nordea legal teams set about analysing
the account structure and legal agreements. The solution
went live in November 2012, with the company’s numerous
UK accounts added to the pool in October 2013. During
2014, Nordea also extended DONG Energy’s cash pooling
solution to handle internal balance transfers to support the
company’s new internal bank model.
“
It’s essential
that we get the
right support
when we need
it. We see
Nordea as a
partner, not
just a suppliercustomer
relationship.
Kim Japp
Director, Financial Shared Service Center
Group Finance & Services, DONG Energy
eGateway: simplifying payments
In the wake of setting up a shared services centre, and
with ambitions for instituting an internal bank and payment
factory, DONG Energy had a pressing need to revisit
its payment processes. It was looking for a solution that
would enable payments to and from all subsidiaries to be
centrally approved directly within its SAP system as this
would mean greater efficiency, and would provide the
treasury department with enhanced liquidity management.
Nordea proposed migrating to its eGateway solution. The
project began in December 2013 with the development
of file exchange formats and processes and the testing of
payments in Denmark, Norway, Sweden and the UK.
nordea.com
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With DONG Energy’s complex business structure, which
includes many companies and joint ventures that require
specific payment processes and handling, there were some
challenges to overcome. Furthermore, the project had a
series of ambitious milestones and deadlines that needed
to be met.
Nordea recognised the importance of the task and
assigned a project organisation with a dedicated manager
to keep stakeholders informed and solve problems. “We
didn’t just contact a service desk,” says Heidemann. “That
helped a lot. Of course there were hiccups, but what was
important was that everyone collaborated and focused on
solving them quickly.”
Results
The new payment platform was live by the end of September
2014, and the cash pooling solution has gone from strength
to strength. These solutions are fully integrated into DONG
Energy’s SAP and treasury management solution, and into
its shared services and treasury processes. “These have
been two major projects,” says Japp. “And the implementation
has been a complete success. Now DONG Energy has
truly updated, modernised and enhanced its core finance
processes, producing tangible results.”
In the shared services centre, Japp reports a noticeable
impact on payment effectiveness in terms of on-time
payments, reduced errors, improved quality and cost savings.
From the viewpoint of the treasury, Heidemann says that the
cash pooling solution has not only reduced idle cash, but
produced daily savings in time spent on cash management.
Conclusion
Heidemann and Japp have clear recommendations for other
businesses going through the same journey. “You need a
really solid test phase,” cautions Japp. “When it comes to
payments, even small problems can have a big impact, and
you can’t just pause finance processes after things go live.”
Heidemann notes the importance of communications. “Keep
the stakeholders informed in advance – otherwise when you
make changes to their processes and systems, you’ll get a
lot of time-consuming questions to answer.”
No fundamental business change is easy, but the results are
often worth the complex transition phase. “The collaboration
between DONG Energy and Nordea has produced real
benefits in cash management,” says Japp. “We have much
more solid payment processes, and that’s saving us money
as well as reducing operational risk. It’s hard to overstate the
value that delivers to the business.”
“
The collaboration
with Nordea
is saving us
money as well
as reducing
operational
risk. It’s hard to
overstate the value
that delivers to the
business.
Kim Japp
Director, Financial Shared Service Center
Group Finance & Services, DONG Energy
About DONG Energy
DONG Energy is one of
the leading energy groups
in Northern Europe. It is
headquartered in Denmark.
Around 6,500 employees
are involved in areas such
as oil and natural gas
exploration and production,
the generation of electricity
and heat from offshore wind
farms and power stations,
and supplying energy to
residential and business
customers.
With thanks to:
Anne Heidemann
Director, Treasury Front
Office
Group Finance & Services
Kim Japp
Director, Financial Shared
Service Center
Group Finance & Services
Photos: DONG Energy A/S
www.dongenergy.com
nordea.com
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