The St Jacob Foundation provides care and services to the elderly in the Dutch South Kennermerland area, aiming to give them control over their own lives for as long as possible.

Quality of life is key to home care concepts, as St Jacob showed in their business case which was presented in March 2012. The traditional ‘old people’s home’ has given way to a totally different form of care for the elderly. “Most of our premises stem from the early 1970s,” says Rob van der Hulst, program director of Real Estate and Development at the St Jacob Foundation. “With the type of client we have nowadays this is not sustainable. When the premises were built our target client base was the over 65s who liked to be cared for. In the prosperous areas of Haarlem and the surrounding areas there were often no health issues but rather a preference for a worry-free existence coupled with keeping the luxury they were used to. The domestic assistant sometimes moved with them, for example to an attic in the same building.”

External partners

The foundation’s history goes back a long way, as far as the Middle Ages. The current St Jacob arose from the merger of a number of independent residential and care homes in the Haarlem, Heemstede, and Bloemendaal areas. The latest amalgamation dates from early 2000 and today the foundation has nine premises. Anita Louwers has been the director of the St Jacob’s board of trustees since 2006, when they took their first steps towards a marketing approach to care. “From that time on, care and nursing of the elderly has become faster, more intense and more complicated,” she says. “For that reason, we have opted to find partners to deal with everything which is not directly connected to that complex care, such as help within the home and cleaning, but also the expertise we need in the areas of finance and property. We are becoming a leaner organization: in-depth care with a thin layer of overhead for the relevant support personnel.”

This is a significant difference between St Jacob and other institutions in the country, many of which are more autonomous. Van der Hulst adds: “As an organization we want to stay close to our core function; we are good at intramural and extramural complex care, but other parties are better at what has to be done on the sidelines. The target group has changed considerably over the past few years. The senior citizens, those above 65 years, still live at home, travel and play golf twice a week. Those who now occupy our premises are the over-85s, who are also less mobile, but even in this age group we are noticing changes and, with support, a number of them can still live at home. This group of ‘light clients’ no longer use intramural care facilities, so only the clients who require dedicated nursing remain. “And this group is increasing constantly. People are getting older and the numbers with dementia are increasing as well. We are focused on this growth, but also on recovery and revalidation of the aged,” says Van der Hulst.

Living career

The fact that the aged are requiring more complex care has consequences for the employees of care agencies. “We used to be able to employ semi-skilled people but nowadays care is no longer so lightweight,” says Louwers. “Last year we retrained 500 employees to a higher level of competence. Today, employees have to have specific knowledge about various illnesses and they have more to do with psychiatric problems. Also, care at home is much better organized; people who have had treatment in a geriatric revalidation center go home far earlier and doctors and physiotherapists can also provide care at home.” The trend towards more specialized care was already evident to the foundation in 2007.

Louwers explains: “Since then we already started thinking in terms of housing ladders for our clients. Renovations are often more expensive than new buildings so we began to look at properties more as investors; the properties had to keep their value, we had to build to fulfill market demands and we didn’t want to run any risk. We want to own all properties geared for specialized care, whereas for homes with their own care facilities we want to find investors or co-operate with housing corporations.” These objectives were set out in the Strategic Property Plan which was written in 2007 but which has been modified in certain areas in the meantime. All types of accommodation have to be flexible so that if one target group declines in number another group can live in the same building.

Business case

Between 2007 and 2010, St Jacob developed a multiyear management model in which all future income, property transitions and care programs were covered, from the current to the new situation. Following the real estate plan, St Jacob decided to (re)develop several locations for revalidation care, small-scale group housing and care flats. For the benefit of the financing application, the foundation also prepared a detailed business case which was completed at the beginning of 2012. In the meantime, the foundation started looking for an external expert. “A recommendation and a number of positive references led us to Zanders,” says Louwers.

We already have quite good financial know-how in-house for presenting a business case, but they (Zanders) were able to fine-tune it.

Anita Louwers, Director of the St Jacob’s board of trustees

According to Zanders consultant Hendrik Pons, St Jacob’s business case was convincing. “And above all it was explained very clearly by the foundation. Together this immediately gave the banks a positive impression,” he says. Van der Hulst adds: “Zanders reviewed the multiyear management model and sat down with us round the table during discussions with financial institutions. I am convinced this helped considerably and of course being safely in the black helped as well. We own almost all of the properties and were also able to sell one at quite a favorable moment in time. From three banks and the Guarantee Fund we finally got positive reactions.” The Care Guarantee Fund (Wfz) gave us a 100% guarantee on our new application,” added Pons “and that gave us a significant interest advantage.”

Differentiation

The financing application resulted in St Jacob obtaining a loan of €30 million. Louwers says: “This is rather unusual at the moment for a turnover of €60 million. And it is fantastic since we need property for new clients – often those with severe dementia – to be housed in a way that best suits them.”

Financing is agreed and will be used in 2014. A number of building plans are ready, including Overbos and a building with room for 100 clients with dementia and a revalidation center. Van der Hulst explains: “We are spread over three different towns and that means that we have to have different types of facilities available. With homes where people pay their own living costs they can start working on their own housing ladder earlier and can stay in their own home if their need for care increases. A good example is Nieuw Overbos, which will be opened in a year’s time. Here there are lovely flats for people aged 75 and above. There are many care facilities, such as a doctor and round-the-clock services. But we are here for all senior citizens; on the Aziëweg we are building a complex for council rental.”

By separating housing and care there is a lot more differentiation, according to Louwers. “Many people are prepared to pay for what they want. The Netherlands is a country where the AWBZ (National Act on Exceptional Medical Expenses) is too general and uniform in its coverage and this doesn’t suit everyone. I think it’s good we are a forerunner in the developments.”

More efficient

Louwers also thinks that this new approach will mean resources are used more efficiently. “We started the transition phase with a turnover of €60 million for a large category of quite easy clients. When we are finished we will have a turnover of just under €50 million for a group of difficult clients and we will have €10 million left over for care at home – which is quite a lot. Someone who lives at home is still responsible for the accommodation component and that makes long-term care more affordable.”

So the St Jacob Foundation is becoming more like a company, adapting to and playing on the market forces we are experiencing. However, St Jacob is suffering from the consequences of governmental intervention and the health insurers’ shortsighted policies. Louwers adds: “You can’t really talk about market forces because they are controlled by legislators and insurers. However, if we function well as a care provider by adapting to the needs of our client base, then our buildings will fill up of their own accord.”

How did Zanders work with the St Jacob Foundation?

• Help in preparing the business case
• Participation in talks with the banks and the Care Guarantee Fund (Wfz)
• Various memos on internal decision making
• Continuous treasury support in the form of a service subscription from early 2013; preparation of the annual treasury plan, participation in the treasury committee (strategic), participation in the monthly treasury meeting, treasury tools (loan module, liquidity forecast model).

In 2012, FrieslandCampina was given an honorable mention at the internationally renowned Adam Smith Awards for its bank relationship management. The global dairy company was recognized for its successful refinancing program. This article looks at how ‘wallet distribution’ and strategic bank relationship management allowed the company to maneuver with agility during the financial crisis.

In January 2009, Friesland Foods and Campina, the two largest dairy cooperatives in the Netherlands, merged under the name Royal FrieslandCampina N.V. and Dairy Cooperative FrieslandCampina U.A. The company’s stock is owned by nearly 20,000 members of the merged dairy cooperative – dairy farmers in the Netherlands, Belgium, and Germany. The company is located in 28 countries worldwide, and FrieslandCampina’s dairy products are exported, particularly from the Netherlands, to more than 100 countries.

Growing markets

Several international brands are owned by the dairy cooperative. The biggest Dutch brand, Campina, is the cooperative’s fifth-largest brand. FrieslandCampina’s impressive turnover and growth is particularly noticeable in Asia and Africa. The biggest brands in these continents are Frisian Flag in Indonesia, followed by Peak in Nigeria, Dutch Lady in Vietnam and Malaysia, and Friso – the fastest-growing brand – which is sold in China, Malaysia, and Vietnam, as well as other countries. Next to Peak, the Friso brand recently started selling baby and children’s food in Nigeria, where the number of babies born equals the total in Europe, making it an extremely attractive market.

This year, FrieslandCampina acquired a majority interest in Alaska Milk Corporation, one of the largest dairy cooperatives in the Philippines, with a turnover of EUR 250 million. In the Philippines, too, where the economy and the population continue to grow, the dairy cooperative intends to sell baby and children’s food. These are mouthwatering prospects as far as investors are concerned. FrieslandCampina’s figures also confirm the security that dairy produce offers: turnover grew from EUR 8.3 billion to EUR 10.3 billion during the first four years of their existence.

Visible banking services

However, the merger began at a time when insecurity reigned supreme. The merger between the two dairy producers entailed a change of control situation that called for refinancing: the existing bank financing needed a make-over. This was quite a challenge, coming straight after the fall of Lehman Brothers and the start of the financial crisis. The banks weren’t exactly lining up to offer refinancing of this kind. For this reason, FrieslandCampina started negotiations with a wide selection of banks.

“The size of our wallet was important to the banks,” says Klaas Springer, FrieslandCampina’s director of corporate treasury. “They were perfectly happy to join FrieslandCampina’s group of financiers and commit themselves to our balance sheet, but they also wanted to earn money from the services that our internationally operating business needed. That was when we made a clear commitment: if you come on board, we’ll have a ‘best efforts’ obligation to reward you proportionally. After all, one bank’s service is better than another’s. If you finance 100 out of the 1,000 as a bank, it doesn’t necessarily follow that you will always get 10% of the wallet; the only guarantee that you have is that you will get the opportunity. A bank that has slightly more to offer FrieslandCampina, for instance, may get 12%, but if you’re offering less, then you may only get 8%.”

To be able to prove what the bank and FrieslandCampina had to offer each other, the relationship needed to be quantified. This is a considerable challenge given the various banking services that the organization needs – from ordinary payment traffic to cash management services, to setting aside deposits, foreign currency transactions, interest rate derivatives, and advice about acquisitions.

In order to make this complicated set-up more transparent, we looked for a model, an approach that we could ultimately manage properly ourselves. This is how we ended up with Zanders in 2010.

Klaas Springer, Director of Corporate Treasury at FrieslandCampina.

Wallet Distribution

An important part of the financing is done through private placements, including insurers in the United States. “In addition to this, we need bank financing to be the ‘flexible shell’ in our financing set-up,” says Springer. “We need the availability of large sums to deploy flexibly as working capital, for acquisitions or investments – i.e., for general corporate purposes. We try to cover virtually all our needs with this banking group that has provided us with EUR 1 billion. This doesn’t work with banks that only want to give you money but have nothing extra to offer."

“As a business, you have key relationships: the banks that you see as trusted advisors and that you are in touch with on an almost daily basis. Besides this, we also want a diverse group of banks that have a moral commitment to one another. They must all be prepared to stick their necks out so that it all goes well in the long term.”

With Zanders, it was down to the Wallet-Distribution model when FrieslandCampina divided their portfolio across the banks they had selected. “That model was workable for us,” Springer says. “We were looking for a reliable Golf, not a Rolls Royce. We had to get the model up and running before entering all the data. Some banks are quick to give you insight into what they’ve done for you, and are quite open about it. But others are not so easy or flexible. Large international banks, for instance, don’t always have insight into what they’re doing for FrieslandCampina worldwide.”

Sander van Tol, partner at Zanders, adds: “They can’t consolidate all the internal information the way you want it, for example. Besides that, they don’t have sufficient insight into the overall portfolio of banking services that you use as a company. As far as that goes, to them, it’s like a game to see how they feature in the overall picture.”

FrieslandCampina used its own data for those banks that couldn’t supply the necessary information. Once everything had been processed in the model, it showed how much they were each entitled to on the basis of their contribution. Logically, some banks were happier with the results than others, but for most of them, expectations were met.

Open attitude

At the beginning of 2011, before the refinancing took place, FrieslandCampina approached its banks to discuss the results. Springer says: “At the time we said to our key partners: ‘This is how we see our relationship, how do you see it?’ The banks really appreciated this open attitude. They proposed the following: ‘We think we have X percentage of your FX management, is that correct?’ We didn’t give them an exact answer to that question – it’s all about the big picture, after all. The point of our story was that they would have to be happy with the information we shared with them and that FrieslandCampina had stuck to its side of the bargain. Apart from one or two, all the banks were satisfied. And we were able to explain to those few where the problem lay. To give an example: when we looked at cash management in the US, some of the banks fell by the wayside because cash management wasn’t part of their package – there was no point in inviting them. In this case, it’s not the Friesland Bank, but Citi, RBS, or HSBC who are invited. And that’s when there’s a winner. If a bank keeps missing the boat, then they get less than their share, proportionally. We say that something is not quite right: in the breadth, they simply don’t have enough to offer.”

Renewal

Shortly after the feedback from the banks, financial markets came under pressure once again in the summer of 2011, this time through the Greek debt crisis. In August, financing was discussed once more: the then EUR 1 billion facility was due to expire in 2013. “We approached the banks again and told them we wanted to refinance or renew the existing financing – but this time at a better rate.”

The banks recognized that they could benefit from a well-balanced cooperative relationship with the international dairy enterprise: the price wasn’t a major stumbling block for them. “It was more a question of timing, making an offer in a volatile market. All the big banks but one were with us in this respect. For us, renewing the financing until 2015 was better than new financing. We suggested that one bank join the rest. In the interim, we had two dark horses: banks that were keen to join the group. But, in the end, one bank agreed to the proposal.”

Apart from removing insecurity, the renewal proved to be a good solution from a cost point of view as well. Springer notes: “In 2009, we had to pay fairly high fees; it was a difficult market. By renewing now, we spread the costs that we incurred then over several years. In retrospect, the financing turned out to be cheaper than expected.” It won’t be possible to renew again, though. The firm will have to make a new deal. “A disadvantage of this is that you have to include all the costs that you incurred in the old transaction in your profit and loss account in one go,” Springer explains.

Highly commended

Every year, Klaas Springer sees the Adam Smith Awards announced in trade magazine Treasury Today. “And that’s when you think: have we got anything special to contribute this time round? This time we had a combination: throw the spotlight on portfolio management as a banking service and managing a refinancing project under very difficult market conditions. We decided to compete: we didn’t quite win, but we got a ‘highly commended’. The silver medal – enough to put us on the list of honors.”

An even better example is FrieslandCampina’s member bonds. “This is a financial instrument that is counted as stockholders’ equity from an accounting point of view. We pay interest on it that’s tax-deductible and it gives our members registered bonds that they can trade with one another. It gives a good return and has been accepted. We have now issued more than a billion, but it seems that the demand is greater than the supply – it’s an extremely successful instrument. Other cooperatives are asking us for advice on how these bonds are issued.”

Corporate treasury is not alone in feeling proud of the honorable mention; the corporation as a whole is, too. Springer sums it up, saying: “Wallet sizing put the ball in our court. We used it to get the signatures we needed for the refinancing. We managed to achieve something that doesn’t happen very often in the current market.” In 2012, FrieslandCampina passed the EUR 10 billion turnover mark. “We’re playing in the Champions League, our CEO is now saying. We’re no longer low-profile; we can’t hide anymore.”

The Dutch cabinet is implementing three transitions in the social domain: the introduction of the Participatiewet (the participation act); the transition of youth care; and the migration of the AWBZ (the general act for extraordinary sickness costs) and personal care to the WMO (the social support act). The integrated approach that the cabinet has in mind will ensure that professionals from different agencies coordinate their provision of social support for individuals and families. Dutch municipalities are preparing for the crucial role they will play in all this. And that includes the municipalities of Hardenberg and Ommen, which, through a joint department known as the Ommen-Hardenberg administrative service, are working on the implementation of these transitions.

Coherence

Annette Wittich has a financial background and is department head of the Maatschappelijk or ‘social’ Domain (known as MD) at the administrative department (‘Bestuursdienst’). “The challenge we faced was how we as municipalities could realize budgetary benefits and efficiency gains by taking a different view of the existing problems,” she says. “We are responsible for huge amounts of money and are expected to hit major targets, so the choices we have to make cannot be based solely on experience. In what is essentially a politically sensitive environment there is a pressing need for good-quality, well-founded decision-making, with sound coherence between the various policy areas.” It’s difficult to keep track of a lot of what this involves for the municipalities, particularly in financial terms. “That’s why we were looking for an instrument that will enable us to provide good support for the two municipalities in our policy choices,” she adds.

Wittich was familiar with Zanders’ services and she recognized the affinity between the models that Zanders works with and the financial repercussions of the transitions. So she contacted consultant Charles Zondag to sound him out on the financial challenges and the possibilities of applying a calculation model to the transitions taking place in the social domain.

These transitions are difficult for municipalities to quantify, there was a need for something new, something outside the ‘old’ box.

Charles Zondag, Business Associate at Zanders.

Together with fellow consultant, Sylvia Temminck, Zondag discussed the matter with Wittich and her colleagues. Plans for constructing a model capable of mapping the whole complex situation started taking shape.

Better informed decisions

As a councillor of the municipality of Hardenberg, René de Vent embraced the MD’s ideas. “These social domain transitions will mean that municipalities will have a lot on their hands,” he cautions. “We want to know exactly what and who we are talking about, which is why we decided to tackle it with this social domain transition project. Using a form of social database we want to establish the various areas and how they correlate with each other. This will then make it clear which policy-influencing ‘knobs’ we can adjust and what the consequences will be.” It will enable both municipalities to make better-informed decisions. Ommen councillor Ko Scheele was also quick to see the potential of the initiative: “The transitions will give municipalities more room for their own interpretation of the policy. To a much greater extent than before, we’ll have to know exactly what we’re talking about. We’re now taking stock of the complete situation so we can make more informed decisions. Measures pertaining to the social domain often affect one another; if you remove something in one place it pops up in another form somewhere else. We want the calculation model to make things clear so we can define a well-thought-out policy for our citizens.”

De Vent adds: “We don’t just want to do things well; we also want to do the right things. This is important because it concerns policy that affects people very directly and often vulnerable groups too. It has to be handled carefully. If we organize the information properly, we’ll be optimally placed to define the policy so that we can exploit the opportunities and possibilities that these transitions offer municipalities. We’ll then be in a position to steer them more effectively.” Both municipalities mainly want a model they can adjust to their own needs and one that will help them make informed decisions without requiring specific external knowledge.

New approaches

The next step is for the model to map out the financial repercussions in several policy areas for a change in one of them. “A cut in education spending, for example, could lead to more youth unemployment and thus higher costs in benefits and allowances,” explains Temminck. In other words, a saving in one area can mean having to spend more in another. Zondag says: “Developing this kind of dynamic calls for a combination of substantive knowledge of the relevant policy areas and technical modeling. That’s the cool thing about this project: it bridges two often-contrasting disciplines that are rarely associated with one another. For both the municipalities and for Zanders this project goes far beyond ‘taking a peek in the neighbor’s kitchen’.”

The model will eventually have to accommodate a total of 20 different areas of social services. During special workshops policy staff will provide input for the calculation model, both for their own and related disciplines. Then as it fleshes out it will grow in complexity, and be extended to other areas. This summer saw the development of the model’s ninth area. The end result cannot yet be exactly predicted.

“However, the results so far are already making a positive contribution to the solution for the problem,” says Wittich. “The framework has been put in place, we liaise on a regular basis and there is already a first spinoff: we’re getting questions from all sorts of new perspectives. I think this has everything to do with the workshop approach. We’re taking smaller steps and paying attention to details that a municipality sometimes misses. Thanks to this modeled approach employees are being confronted by the repercussions of their own activities - and thinking about them differently.” This last factor, according to Jaap van Middelkoop, who leads the social domain transitions project on behalf of the administrative service, is exactly what differentiates it from all previous initiatives carried out within the municipalities. “Many municipalities are looking in this direction so as to get a good all-round picture,” he says, “but this working method helps us stand out. We’re going into specific detail and talking to our people to learn about their work. They, in turn, get a keener sense that they are part of a larger whole and that their work is not isolated. This is a big help in finding links between the different parts and defining an integrated policy.” Moreover, rather than focusing exclusively on cuts, the project tries to apply policy changes as intelligently as possible, given a tighter budget. “Employees are enthusiastic about this innovative approach to extrapolating changes,” says Middelkoop. “They are more committed and, what’s more, they don’t just focus on their own expertise, but come up with ideas and new approaches for all the transitions.”

In terms of interpreting the model, Wittich sees it as an advantage that Zondag and Temminck, as external advisers, are relatively unfamiliar with council work. “It draws you further out of your comfort zone and enables you to make more reasoned and objective assessments. We are often asked surprising questions that really get us thinking.”

Act quickly

The model’s various areas differ from one another in depth and complexity. “Before investigating a particular area, there’s no way of knowing how deep it might go,” says Temminck. “You don’t know how many links there will be either, although it does become clearer with time.” Examples of the areas concerned include minimum-income policy, debt counseling, and transport. Van Middelkoop notes: “Transport is a good example of an area that pops up across the board. We treat it as a connecting area. Areas like WMO and WSW (the sheltered employment act) each have their own transport component. The aim is to work more effectively and make substantial collective savings on all transport components.”

“With an area like transport it’s important that you can see the connections because relevant measures need to be taken quickly,” adds Wittich. The transitions will start in 2015, but we must take a number of measures in 2014. From January 1, 2015, municipalities will assume responsibility for all transport, with the exception of patient transport that is, because the government has decided we can do it better and cheaper. But we’ll need to act quickly because ongoing contracts with external parties are affected and they will have to be checked and acted on in a timely manner. Later in the year we want to use the calculation model to demonstrate to municipal bodies how we see the transitions, along with their associated cross-linkages.”

The link between social databanks and the calculation model will also become clearer. “We’ll be able to correlate the model’s results with the social databanks, even at district level. It fits in well with what we need to know in that area,” says Ingrid Schepers, an employee working on the social domain transitions project.

Dialogue with other municipalities

One of the problems the administrative service anticipates is how to achieve a nuanced focus on the deluge of decisions that will have to be taken if austerity targets are to be met. A municipality has to contend with administrative elements to a far greater degree than a company does, for example. Finances, in conjunction with legislation, are what define the constraints. “But it’s not just a matter of dealing with constraints,” insists Wittich. “Investing in one project can also make other projects more efficient, and now policy makers will actually be able to demonstrate this.”

In Wittich’s view, working with the model will also help in other areas of decision-making. “It will enable the council to present proposals in different, more transparent ways."Fwitii

Annette Wittich, department head of the Maatschappelijk.

With policy proposals, for example, ones that are substantiated on the basis of all sorts of variables, drawn from different scenarios. Whereas it used to be mainly down to the policy makers, executive employees are now much more involved. Policy makers still come up with the ideas, but now their financial repercussions are tested.” So thanks to the model, councillors will be able to take more-informed decisions. Wittich adds: “Councillors’ choices are based on their political leanings. Obviously, this will affect the available budget because it could mean you’d no longer be able to finance other important things. Now, thanks to the model, they will be confronted with those financial repercussions.”

This is why she feels it would be a good idea if other municipalities also used it. “The Dutch Home Office is actually a proponent of entering into dialogue with other municipalities about this. The formation of the Ommen-Hardenberg administrative service means that the MD department is working for two municipalities, each with its own political standpoints and preferences. By using this model, we are comparing two municipalities with each other in terms of implementation and standpoints. In conjunction with the social databases, the calculation model gives us a sounder and more objective basis for policy development.

In the Netherlands of the eighteenth century, a diverse range of regional funds was set up to reduce the risk of setbacks in certain professions or in vulnerable regions. Two national life insurance companies, De Nederlanden van 1845 and Nationale Levensverzekering-Bank, over the course of the nineteenth and twentieth centuries, took over many of these funds. In 1963, these two large insurance companies merged, creating Nationale-Nederlanden. Due to the strong financial position acquired by this new company, it continued to grow abroad, particularly in the United States. As of last year, the products supplied by the Dutch insurance company RVS, which was acquired in 1984, also form part of the Nationale-Nederlanden brand. Nationale-Nederlanden now has over five million private and commercial customers who are using a broad package of financial products and services, such as pension plans, life insurance, non-life insurance, and income insurance. Nationale-Nederlanden has recently also started offering bank savings products and mortgages.

Uncoupled

The idea of starting up a bank arose in response to market trends observed in recent years: the life insurance market continued to shrink, while the bank savings market, on the contrary, was expanding. Prior to this, Dutch insurance companies had been able to offer tax-related and wealth creation products for years. In 2008, a new legislative proposal eliminated the monopoly held by insurance companies on such products. This opened up a very lucrative market for banks. At the same time, Nationale-Nederlanden, which formed part of the huge ING enterprise, did not have the independence required to provide such bank savings products. Then the European Commission ruled that ING, with its government support, was required to uncouple its insurance business from its banking operations. This meant that offering bank savings products became an attractive possibility. At the same time, it made it possible to offset the increasingly contracting life insurance portfolio with the new bank savings portfolio.

“While we had a financial background as an insurance company, we did not have a banking background,” says Peter Verberne, CFRO of the Nationale-Nederlanden Bank. “Banking is completely different from insuring. The complexity associated with banking requires proper management. This is why we asked Zanders to advise and guide us in this area. For example, when the time came for us to apply for permits from De Nederlandsche Bank (DNB), after we had developed our bank savings products. “The earning model for a bank requires you to have sufficient size in order to be viable and operate with a profit.”

The consultants [from Zanders] developed the bank’s risk management system for us. This made the complex risk management subject matter very transparent and tangible without detracting from its complexity.

Peter Verberne, CFRO of the Nationale-Nederlanden Bank

Volume Ahead of Profit

The collaboration with Zanders started approximately two years ago. In June 2011, DNB granted Nationale-Nederlanden permission to start up a bank. Finally, after making provisions for the legislated capital requirements, the company opened up its banking savings products counter in the third quarter of 2011. The new bank commenced by offering golden handshake-related products and products for the annuity market.

At that point, Nationale-Nederlanden, as a bank, was also required to start offering credit products on the Dutch market. This resulted in the creation of the Nationale-Nederlanden Bank’s mortgage arm in the first half of 2012.

Verberne says: “This is an entirely different discipline from collecting savings. We therefore prepared a number of acceptance criteria and adjusted the risk management system to incorporate the risks that apply to the granting of loans. The program that emerged from this has been used for providing mortgages since the third quarter of 2012.” The management of the core mortgage lending processes was contracted out to a third party.

“However, as an entity, you must look after the risk management process in-house,” Verberne continues. “The financial risk management, the credit risk management, the operational risk management, compliance – we outsource as much as possible, but the core functions are carried out within the bank, including risk management in its broadest sense.”

When we took our first steps on the banking market, volume was a key factor. “The earning model for a bank requires you to have sufficient size in order to be viable and operate with a profit,” Verberne explains. “This is why we wanted to offer regular savings in addition to bank savings, and this is why we will be introducing two additional regular savings products in the near future. Zanders also designed the risk management systems here. The volumes that the Nationale-Nederlanden Bank is aiming to achieve with these savings products are significantly higher than with bank savings. We are aiming to become a serious player on the savings market within a short period of time. The basic principle remains that we will continue to offer simple banking products. In other words, straightforward banking with what-you-see-is-what-you-get products.”

Transparent Products

What is the situation with respect to the new competitive position in relation to ING? Verberne explains: “Our mortgages and savings products mean that we already compete with ING. We pursue an independent pricing policy in this respect. Furthermore, Nationale-Nederlanden is one of the best-known and strongest financial brands that is simply offering a far more extensive range of services.” “By leaving out the bells and whistles, we can offer a more competitive rate.”

“In addition, there is currently also a trend for increasingly simple products,” says Yvonne Sijm, a Zanders consultant. “Especially private customers opting for wealth creation products, for example for their pension, can now obtain such products not only from their insurance company, but also from their bank. At a bank, this is far more transparent because, in contrast to an insurance company, you do not pay a risk premium. Private customers opt for these transparent products, and this is why you are now seeing a shift to more straightforward banking products.”

The insurers of pension and life insurance products are most affected by this trend. The non-life and term life insurance sectors still have a clear raison d’être. A financial institution is required to provide transparency and to be straightforward, but at the same time, the customer wants security. What the customer is prepared to pay for the risks the company takes therefore also comes into play. “This is a difficult issue,” says Verberne. “You have to offer customers an interest-rate refixing period, which affects your own interest rate risk. This also applies to mortgages. While you can add a lot of bells and whistles to these products, they all carry risk, and these risks come at a price. On the other hand, by leaving out these bells and whistles, we can offer a more competitive rate.”

Risk Horizon

With the help of the Nationale-Nederlanden’s strong name, the bank must take its planned powerful steps into the banking market. Life insurance policies were traditionally primarily sold via intermediaries. This also applies to bank savings and mortgages, which, in part due to the fiscal aspects of these products, are true financial advice products. In terms of the regular savings products, Nationale-Nederlanden will primarily focus on direct channels.

“The targeted bank savings customers include all Dutch citizens involved in wealth creation,” says Verberne. “For example, these customers may have a maturing annuity policy or want to terminate this policy, but it can also include customers who received a golden handshake when they were dismissed and who want to put it aside or convert it into a payment stream. In terms of the mortgages, this includes all Dutch citizens who are referred to us via their mortgage broker. And for the regular savings products, it can be anyone who wants to save.”

According to Verberne, Zanders has supplied the tools needed to ensure the new entity will work in practice. “This sometimes entailed very practical matters that are the same in the insurance world, but that have been given a different name in the banking world. In addition, the risk horizon considered by an insurer is longer than that of a banker. This can cause misunderstandings, but I think that we have taken a solid step in this area.” The basis for this will be established later this year through a merger with a key component of the Westland-Utrecht Bank. As such, the banking market will have one more player, with a well-known name and a competitive capacity, no matter what happens.

Caring for the environment has, for many years, no longer conjured up a vision of living an alternative lifestyle; it’s become an accepted fact of international business life. Our current sustainable mindset owes a great deal to the awareness campaigns carried out by environmental organizations such as Greenpeace. This movement has, for decades, crusaded against commercial and governmental activities that are harmful to the environment and brought ecological anomalies to the attention of the press and the public.

It all started in 1971, on an old trawler. It was manned by a handful of Americans and Canadians who set course for a location off the coast of Alaska to protest US plans to carry out above-ground atomic tests. They failed to reach their destination but succeeded in their campaign, generating so much publicity that the US called off the tests. The trawler was renamed ‘Greenpeace,’ and from then on its popularity grew, thanks largely to its protests against hunting young seals for fur. Demonstrations against whaling, nuclear energy, and chemical discharges quickly strengthened Greenpeace’s influence. In the years that followed, dependencies sprouted up in more and more countries. Then Greenpeace International was founded, first in London, and for pragmatic reasons, its headquarters were moved to Amsterdam, as it wanted to operate from a liberal, progressively minded country.

Too slow

Great strides towards adopting more sustainable solutions have been taken in recent years in various sectors, such as the electronics industry and energy. “But it’s still all moving far too slowly for our liking,” says Radboud van Delft, organization director of Greenpeace International, the umbrella organization of nationally active Greenpeace branches. “We worked out energy scenarios for migrating to fully sustainable energy years ago, scientifically verified by country or continent. What’s more, we’ve already shown that it’s all technically feasible—something which was often disputed in the past. But governmental policies also have to be accommodating. Unfortunately, little is accomplished through climate summits, so we find ourselves having to focus on individual energy companies and governments. Even in Europe, it’s difficult to quickly adopt significant policy changes. Poland, for example, still depends heavily on coal, while France refuses to play ball when it comes to nuclear energy. European policy is very slow and cumbersome, and with certain species facing extinction and people suffering from the consequences of climate change, nature and people need change to happen now.”

Greenpeace can be characterized as an ambitious, action-oriented organization. Its approach is valued throughout the world, as evidenced by its millions of donors and many thousands of volunteers can all bear witness to.

We were looking for a bank that was safe and one we could be sure was investing
our donors’ money responsibly, financing the solutions too.

Radboud van Delft, organization director of Greenpeace International.

Cleaning up

As an organization, Greenpeace prides itself on its use of independent, non-violent, creative confrontation. “We seek neither political nor commercial links, and we have no permanent enemies or allies,” says Van Delft. “We don’t accept money from companies or governments; financial dependence or obligation would make it difficult to be critical, so we avoid such situations. We seek common cause through our work with governments and, of course, our work with companies, like Coca-Cola and McDonald’s, to promote sustainable business. However, while we applaud them for doing the right thing, we never endorse them. We are more than willing to work with any party that shares our objective: protecting the environment. Take Dutch energy supplier Nuon, for example. We are exploring ways with them of producing cleaner energy that will represent a significant step forward in sustainability while maintaining commercial viability.”

Taken in a global context, the situation becomes more complex. As climate summits have shown, it’s the big countries, the ones that use the most energy, that erect the biggest obstacles to far-reaching international agreements. “China is a very interesting example,” says Van Delft. “There’s just so much going on there. Here in the Netherlands, we’ve campaigned strongly against plans to construct five new coal-fired power stations, spread over a period of a few years. In China, they build five such power stations every month. That said, the Chinese government knows it has a lot to do when it comes to the environment; the national government actually uses our reports to put pressure on provincial governments to get things done. Demand for energy is growing very rapidly there, but no other country invests as much in clean energy as China.”

So, given that Greenpeace cannot take action in China, does that mean an increased emphasis on lobbying? “We are a campaign-oriented organization, and there are different ways of campaigning. Over the years, we’ve broadened our campaigning base. We’ve embraced scientific research, for example, and in recent years we’ve become very active on social media, with up to 24 million people who like, share, tweet, sign up, and campaign with us. These efforts have led to wins such as getting Apple to adopt green energy and major fashion brands to drop toxic chemicals from their production processes.”

Green and healthy

During the 1970s and 1980s, Greenpeace gained a lot of brand awareness and donors. Those followers are still faithful, but people in today’s younger generation in the West are more difficult to connect with, which is a problem many other organizations also face. Despite the aging of its donor base, Greenpeace has many supporters worldwide, and in Asia and Latin America, it is growing particularly strongly.

“Our donors make it possible for us to campaign all over the world,” continues Van Delft. Local branches in 40 countries contribute financially to Greenpeace International, which is responsible for worldwide strategy and coordination. Over the past few decades, its worldwide income has grown to approximately EUR 240 million, some EUR 60 million of which is channeled to Greenpeace International. “The money is used to fund global campaigns, our ships, worldwide IT systems, and to pay international employees. We set aside part of our cash reserves for future campaigns and investments. But we want to prevent these reserves from being invested in activities that we typically oppose, such as those of oil and nuclear energy companies. Most mainstream banks do invest in activities like these.”

Greenpeace has, for a while now, used green banks such as Triodos and ASN, but on a very limited scale. Most of their assets have been held by what were considered reliable mainstream banks. The Greenpeace International board was recently looking for a suitable bank and was spurred by a growing need for security. However, it was unfamiliar with the relatively small, Dutch green banks. Van Delft says: “First and foremost, our money had to be secure, and with the smaller banks, it wasn’t clear how secure they were. In a nutshell, we were looking for a bank that was safe and one we could be sure was investing our donors’ money responsibly, financing the solutions too.”

If a bank wants to stay financially sound it must invest in government bonds, but not one government can claim to have a perfect, sustainable energy policy.

Radboud van Delft, organization director of Greenpeace International.

Greenpeace had a few financial institutions in mind, but unfortunately, the smaller banks hadn’t been assessed by the big rating agencies. So, the board decided to have the candidates that showed potential assessed externally, and Van Delft went in search of an independent advisor to help them make a well-founded choice. “Which brought us to Zanders and Sustainalytics.”

Sustainalytics: Sustainalytics is a global provider of environmental, social, governance (ESG) research and analysis. Provided by Sustainalytics, ESG research and analysis enable organizations to assess the potential influence ESG issues will have on the risk and return of their investment portfolios and funds. You can find more information about Sustainalytics on: sustainalytics.com.

Looking further

Coincidentally, these two were already on the same wavelength, and so began a collaboration in which banks could be assessed on both creditworthiness and sustainability. Zanders had experience in financial ratings, for which it had already developed models, such as Eagle, while Sustainalytics had experience in assessing companies on their sustainability.

Zanders and Sustainalytics started by whittling down a long list compiled by Greenpeace into a shortlist. Based on their initial ratings, it was possible to eliminate all candidates outside Western Europe and the US. When further scrutinized for sustainability, even many Western banks failed to meet Greenpeace’s exacting criteria.

“We can easily verify a bank’s creditworthiness,” says Zanders consultant Hans Visser, explaining that over 30,000 banks worldwide can be allocated a credit rating through the Zanders bank risk-rating model.

But Greenpeace wanted to look further than that; they wanted to see where a bank invested its money. We were aware of the need for sustainable investment products, but in this respect, we had to check out the bank as a whole."

The question that had to be linked to the creditworthiness factor was what criteria had to be applied to a sustainability rating. Van Delft adds: "It’s not enough for a bank not to invest in activities that could be detrimental to the environment," he explains. "Investments in the defense industry, for example, or those that rely on child labor are also unacceptable. Sustainability criteria are, of course, very specific, the others are more generic. You can quickly ascertain that a bank doesn’t directly finance dubious activities, but it’s much more difficult to establish exactly what happens to the investments it actually makes."

Tal Ullmann and Joris Laseur were responsible for the assessments of banks on their sustainability performance on behalf of Sustainalytics. "To begin with, we assessed a dozen or so banks on Greenpeace’s sustainability criteria," says Ullmann. "You have to realize that no bank can comply fully, so we weighted each criterion with a number of points that were awarded to banks, and in this way, we came to a ranking." The resulting shortlist was then further analyzed and assessed. "We then checked out the banks that scored the most points on Sustainalytics’ more generic sustainability indicators," adds Laseur. "These included indicators in the area of corporate governance, and those pertaining to policies and environmental and societal programs."

Usually, banks that have high ratings are the ones that have clients with high ratings. And the fact that scores for sustainability criteria will never be 10 out of 10 is quite logical, explains Van Delft: "If a bank wants to stay financially sound, it must invest in government bonds, but here’s the thing: there’s not one government that can claim to have a perfect, sustainable energy policy. And that’s just one of the aspects that have to be taken into account."

Other Organizations

The collaboration between the three parties was excellent, assures Van Delft. "I was particularly pleased with the way both Zanders and Sustainalytics were willing to invest in the development of these tools and adapt them to our specific requirements. Their joint expertise was efficiently exploited and it created a lot of synergies. I believe that this cooperative effort between business and society demonstrates how many of the complex problems we face in the world today can be jointly tackled. To the best of my knowledge, rating the combination of a bank’s financial soundness and sustainability in this way is quite unique. Wouldn’t it be great if it could be done by a lot of other organizations too? Not just NGOs but organizations that are active in both the public and private sectors — in fact, everyone who wants to support a newer, greener economy."

The assessment criteria could be adapted to the values and objectives of the relevant organization. "But at the same time, we have to keep following the criteria used for Greenpeace," insists Visser, "it’s a snapshot and, of course, everything changes." Even the collaboration itself is sustainable: it will be followed up by a Monitoring Service, with which bank ratings can be continuously monitored.

In Van Delft’s opinion, their choice of bank indirectly sends a signal to all banks. "Our motivation to use this combination was mainly for internal use, but it certainly contains useful elements that could influence clients’ behavior. The way we have now invested our money complies with our procurement policy and, for example, the construction of our new ship, Rainbow Warrior III. This too must meet the highest possible sustainability requirements and be safe for all those who sail with her."

If you want to know more about rating the combination of sustainability and financial soundness, contact us.

When one of the world’s biggest tobacco companies decided to bring all its entities onto the same enterprise resource planning system, there were some challenges along the way. Zanders brought its expertise to bear, to help design, test and go live with the chosen system - and ultimately make the SAP implementation a success.

British American Tobacco (BAT) was founded in 1902 as a joint venture between the UK’s Imperial Tobacco and the American Tobacco Company. In its 110 years of business, BAT has grown considerably through acquisition to become the world’s second largest tobacco firm and a top 10 FTSE 100 company with 183 companies around the world. One of the biggest acquisitions of recent years was the purchase of Rothmans International in 1998. Its biggest brands include Lucky Strike, Pall Mall, Dunhill and Kent cigarettes.

Gavin O’Dowd was the Project Lead for the Treasury part of the SAP implementation project based at BAT’s London headquarters. He says: “Until now, BAT had never integrated their business cohesively into a single model within our financial operating system. We therefore decided to launch two programs to achieve this.” The first of these programs was to roll out a single ‘Target Operating Model’ (called project ‘TOM’), while at the same time supporting this with a single SAP system across the company (called project ‘One SAP’). BAT treasury has been using SAP since 1999, but different business units were using different versions of the application. These two projects were combined and became a single global program called TaO (Tom And One SAP). Tao is the Chinese word for ‘path’ or ‘way’ - which is apt since China is BAT’s biggest single market, and has 40 percent of the world’s smokers.

As a system becomes more bespoke, it also becomes more complicated to update and maintain

Gavin O’Dowd - (BAT - Project Lead for the Treasury implementation)

Designing project TaO

The aim of project TaO was to create a template for all of BAT’s operations. It was a complex, multi-pronged project involving several departments across the group, not just treasury. The other departments involved in the project included financing, operations, and marketing. BAT’s Dutch entity had been a Zanders client for several years prior to project TaO, so the consultancy was asked to join and began working on the design phase of TaO in April 2011. While the TaO project involved a company-wide SAP implementation, the Zanders team worked exclusively on the SAP Treasury & Risk Management, Bank Communication Management (BCM), and In-house Cash elements of the project. Judith Wissink is a Zanders consultant who managed the implementation of the SAP Treasury & Risk Management module and worked closely with the BAT treasury team throughout the project. She says that the team had to work quickly to understand what was needed: “One of the biggest challenges was that BAT had been thinking about the new system and how they wanted to work for 18 months before the actual project started. So we had to get up to speed quickly. We needed to fully understand BAT’s requirements before we could begin designing the system.”

Zanders worked with BAT on designing the future software architecture for all of BAT’s entities. First of all they created the templates for this. BAT’s O’Dowd says: “The first challenge was to define the overall goal of the project. What did treasury want to achieve? We had to consider the structure of our treasury, as BAT has some huge foreign currency exposures because we function in pound-sterling, although we make relatively little profit in our operations in the UK.” He adds: “The next thing was to be clear on the benefits for treasury and to always make decisions with that in mind. All the benefits were quantified and were considered in terms of risk reduction.”

Creating a bespoke but balanced system

While SAP was BAT’s chosen system, it didn’t provide all the functionality that the group required. Some custom development and design were therefore needed. O’Dowd explains: “The second challenge was that SAP did not give us all the capabilities that we needed and so we had to create some bespoke functionality. We needed to strike the right balance though - as a system becomes more bespoke, it also becomes more complicated to update and maintain.”

There were several enhancements to be made during the implementation project. One of these was the part of the system called Deal Optimiser. Zanders was responsible for the system design of the bespoke elements of the system and it collaborated with developers on the realization of that part of the project. BAT had a very specific vision of what it wanted to achieve through the TaO project and this made certain aspects of realizing the project quite challenging. The build phase began in September 2011 and involved customizing the standard SAP system and building the bespoke part. This also posed a challenge because treasury was part of the bigger company-wide project. At various stages during the build phase, this required close alignment between the treasury workstream and the other ‘workstreams’ within the TaO project, as a lot of processes were interdependent. As well as the Treasury Module, SAP In-house Cash and BCM also needed to be customized. The customization of In-house Cash and BCM was managed by Zanders’ Mark van Ommen. Both Deal Optimiser and In-house Cash had a large geographical spread and the latter has now been completely rolled out across the company. Deal Optimiser is also live across 90 percent of its target end users.

The ‘fit-gap’ analysis

The treasury system template was designed to fit the needs of global treasury in which most of BAT’s treasury activities take place. To make sure the template also fitted the end market’s requirements, BAT Malaysia was chosen as a pilot company. Once the template design was complete, the template needed to be evaluated against the exact needs of the Malaysian company, one of BAT’s top 10 end markets. This phase of the project was referred to as the ‘fit-gap’ phase and its aim was to see if the template would meet the company’s specific needs and if any changes to the template would be necessary. Wissink explains: “After the fit-gap analysis we started to actually build the system for the entities in scope. This was our first proof of concept for the designed template.”

Ironing out the bugs

Both the design and the testing phase were key stages of the project. Once the system had been designed, customized and built, three rigorous testing cycles were carried out. These consisted of an initial technical test cycle carried out by Zanders consultants (unit testing); an integration test cycle conducted by the consultants and BAT’s staff; and the user acceptance testing stage with BAT’s key users testing by themselves.

O’Dowd says: “During the testing phases we got rid of a lot of bugs - to the point where there were none.” BAT’s key users were the group’s central treasury and central accounting departments based in London, the Romanian shared service center, the treasury and shared service center in Malaysia, as well as other end markets. After these testing cycles, the design and build of the system was signed off.

At each stage of the project, there was a strong focus on documentation and support. Wissink explains: “During each phase, we documented all the settings that we made, and explained the logic behind the settings for the future support team to be able to maintain the system. We also produced training material and user manuals.”

Team work

The go-live date was the third of September 2012. O’Dowd notes that there were no major issues with the SAP systems after go-live (during the after care phase): “We had done so much testing that this went smoothly.” However, there were other challenges during the pre-go-live phase for treasury in Malaysia. O’Dowd explains: “It was a challenge to get bank connectivity ironed out in Malaysia. In the end, the banks resolved any problems in a satisfactory way.”

A team of 14 Zanders consultants worked on the project, while BAT had a team of 25 in place for the testing phases of the projects. Deepak Aggarwal was the overall project manager for Zanders and both Judith Wissink (who managed the SAP Treasury & Risk Management implementation) and Mark van Ommen (the In-house Cash and Bank Communication Management modules) and their teams reported to him. O’Dowd says: “Zanders were a young and dynamic team. Deepak Aggarwal had some fantastic experience, which really boosted the design process. Judith van Paassen, partner at Zanders, was also involved and was able to influence at a high level at BAT, which helped us enormously. All the consultants showed great expertise in the areas of In-house Cash, bank connectivity, and the SAP Treasury module.”

Ambitious plans

BAT is ambitious for the future implementation of the TaO program. Over the next three years, it intends to roll out the SAP system to more than 120 countries. The In-house Cash module has already been rolled out to 62 countries and is now processing 60,000 transactions per month. Deal Optimiser is live in 25 countries.

O’Dowd says: “Overall, the program has been a roaring success. The smoothness of the go-live was second to none. The attention to detail during the design, testing, and pilot cycles really paid off, so I would really emphasize this to people starting out on a similar project.”

The regulatory changes in the healthcare sector have put smaller establishments with specific care functions in a tight corner. Audiological centers, such as those run by Pento, are among them. In audiological care, the outlay precedes the benefits, yet the bank is setting more stringent financing conditions. How is Pento dealing with this?

The causes of hearing loss are many and varied, from congenital to ‘acquired’ or even psychogenic. Fortunately, thanks to audiological care, there are also many solutions that enable people with hearing impediments to participate in society. The first audiological initiatives in this regard originated in the Netherlands, in the 1960s, when the measurement of hearing using scientific - and therefore reliable - methods became a specialist field in itself. Developments and support in the sphere of language and speech soon followed, because these are closely associated with hearing.

Tensions

In 2007, five audiological centers (AC) decided to merge to form Pento. ‘Penta’ refers to the Greek word for five. There are now six centers and a hearing support service, all located in the central, eastern, and northern areas of the country. Following a referral by a doctor, an AC advises the audiological patient on the appropriate hearing aids and other solutions.

The AC itself does not provide any medical treatment and only employs paramedical staff. Working according to a multidisciplinary approach—which often also involves speech therapy, psychology, and social work—its staff ascertains and analyzes the possible cause of the hearing problem and what can be done about it or offers assistance with the initial use of a hearing aid. The techniques are improving, and hearing impairment is becoming less of a taboo subject.

However, audiological centers too are feeling the effects of the major changes affecting healthcare sector budgets. A free-market system has been introduced along with a new funding system, bringing with it a whole host of changes to the billing process. There are around 30 audiological centers in the Netherlands, a market worth approximately 40 million euros. This means that the audiological sector accounts for less than one percent of the entire healthcare sector. “This is reflected in the tensions that arise whenever you are faced with new government regulations or new policies introduced by health insurers,” explains Jeroen Taalman, director at Pento. “Less account is taken of you. They don’t want to make exceptions to their policies for a small player.” Pento represents a market share of roughly 20% of the audiological sector, making it a big fish in what is a small pond relative to the healthcare sector as a whole. “Consequently, the outside world looks at you differently; people sometimes expect more professionalism in our internal operations than we were able to offer.” The same can be said of Pento’s position and its role as a model within FENAC, the Federation of Dutch Audiological Centers, which represents the centers’ interests. “

In the early years, we took a ‘sticking plaster’ approach to most of our financial decisions,” says Taalman. “So we were often closing the stable door after the horse had bolted, and that was unsustainable. Now, all the necessary arrangements are in place and the structure is clear. We have appointed a financial manager, and an audit committee has been formed, made up of members of the supervisory board. All of which is positive, but our approach remains pragmatic; there are few organizational layers, and we deal with situations as and when they arise. And we are aware that there is a lot more scope for development.”

No capital

What we needed was scenario thinking: what scenarios can we develop for the future and how can we create a future-proof financing structure?

Jeroen Taalman, Director at Pento

The new laws and regulations in the healthcare sector created a quagmire of uncertainties for Pento, chiefly due to the changes in the funding system. “In the space of six months, it all mounted up to such an extent that we felt the ground was slipping away beneath us,” says Taalman. “There were still no contracts in place with health insurers, the fees for each consultation weren’t transparent, and yet we had to calculate the number of consultations we had to reach from a cost perspective. In other words: both the price and the volume were under scrutiny.”

As regards the volume it can achieve, Pento is largely reliant on the referrers, although the law stipulates that various treatments may only be provided by an AC. At the same time, the purchasing ceiling for health insurers means that Pento is only allowed to carry out a maximum number of treatments for a specific fee. Taalman says: “Health insurers are now recognizing that the only way to be able to estimate volume is to form a partnership. The healthcare sector is riddled with inter-dependencies and mutual responsibilities. If we were to suddenly stop or refuse AC care, we would create problems for the health insurer.”

Meanwhile, Pento was contending with another serious financing problem because, until the end of 2011, it was not allowed to build up any equity capital. Under the original funding system, ACs did not generate any profits or losses. Taalman adds: “Being ‘budget-funded’, we had to post a nil result. And if we didn’t, we had to offset the surplus or shortfall against fees the following year. So we were faced with a plethora of rules but weren’t allowed to form any buffers.” This system was dropped in its entirety with effect from 1 January 2012.

Scenario thinking

Back in 2004, FENAC had already warned that if an AC got into financial difficulties, there would be no funds in the coffers to get them out of trouble. Moreover, under the new funding and billing system, ACs would have to finance around half of their annual turnover in advance. Taalman notes: “For a lot of long-term, and therefore expensive, treatments, you can’t send a bill until a year after the first patient visit. So the introduction of a free-market system meant that our bank was also faced with all kinds of uncertainties. As a result, it adopted a very commercially-driven view of us, introducing financial ratios and subjecting them to critical review. A bank expects a certain amount of equity, an order portfolio, and contracts with health insurers. All of which were uncertain factors for us.”

In the spring of 2012, health insurers were locked in negotiations chiefly with the large hospitals. The ACs would follow later. Says Taalman: “They were in no hurry, so we had to ask the bank to keep us afloat. But the bank wasn’t going to readily agree. The bank placed Pento under ‘special management’, setting special, stricter requirements with regard to the provision of information and increasing its risk premiums. We had our backs up against the wall.” Pento felt this problem was becoming too big for it to solve alone. “What we needed was scenario thinking: what scenarios can we develop for the future and how can we create a future-proof financing structure? To do this, you need to bring in outsiders who can think fast and develop models. That’s how we began working with Zanders. It bought us some time with the bank.”

A cure for financial ailments

“Continuity was a very real problem; there were doom scenarios of having to shut down certain Pento centers or services,” says Taalman. “When we were up to our neck in problems, we consciously sought media contact through the newspapers. We were taking a risk, but it opened the health insurers’ eyes. They felt a responsibility to help us.”

During that period, Zanders analyzed the situation and created various scenarios for the financing structure. This went hand in hand with an analysis of internal management and the viability of the Pento organization. The bank then had a clear picture of Pento’s prospects and financing risks. At the same time, Pento was able to conclude contracts with insurers, including a generous advance for the care provided in 2012. These developments earned Pento more time from the bank and led to constructive talks about provisional financing arrangements.

“We were able to work out the impact of the fees and volumes from the contracts on Pento’s liquidity position. Things were soon looking up. In the end, our financial ailments only lasted six months,” Taalman continues. “We now have good arrangements in place with the bank, including regarding the anticipated definitive amount of a residual expense that has to be met in connection with the end of the budget-based funding system, with its adjusted fees. We’re talking a huge sum of money, hardly an amount we can readily afford, so it’s very reassuring that we are now discussing the situation with the bank. It means we can start focusing more on care again, which is our raison d’être.”

Billing for 2012 couldn’t even start until January 2013—a problem affecting the whole of the healthcare sector. Because a new funding and billing system has been introduced, the turnaround times for both healthcare providers and health insurers are even longer. “Billing takes place retrospectively, and yet, historically, Pento has not been able to form any buffers. And that puts huge pressure on your working capital,” explains Zanders’ consultant Marlous Pleijte. “Consequently, agreements have been reached with the bank and the health insurers so that Pento can maintain its working capital at a reasonable level.”

Quality improvements

The agreements have worked for 2012, but the whole palaver is starting again for 2013, says Taalman. “According to the Ministry of Health, Welfare and Sport’s macro-management instrument, from 2010 onwards, the healthcare sector is allowed to grow by a maximum of 2.5% above inflation. The expectation is that we will remain within that limit in 2013, because of the internal budget targets we have set and the highly critical review we have undertaken of our investment policy. Moreover, from 2012 onwards, Pento can build equity capital.”

A number of measures have been taken to enable it to satisfy the bank’s requirements. Pleijte explains: “In the end, we set up a financing structure with a loan portfolio and repayment schedules that work well for Pento, with a clear distinction between working capital and long-term loans. Zanders has also designed some practical tools for managing cash flows and long-term financial planning. Taalman concludes: “This gives us a much better overall picture and, by extension, greater clarity, so we are also better equipped to fulfill our obligations, both internally and vis-à-vis the bank. The result has been a huge improvement in quality. We are now in better shape than ever; business was good last year, and the outlook is healthy. All of which is in stark contrast to the situation a year ago.”

TP Vision was founded on the combined assets and skills of two prominent players in the TV business: based in Amsterdam, it is 70% owned by TPV and 30% by Royal Philips Electronics. TP Vision is the exclusive brand licensee of Philips TV in Europe, Russia, Middle East, Brazil, Argentina, Uruguay, Paraguay, and selected countries in Asia-Pacific, excluding China, India, and North America. It is now engaged in developing, manufacturing, and marketing Philips branded TV sets.

“TP Vision is creating a profitable and focused TV company by combining the design expertise and innovative Philips TV heritage with the operational excellence, flexibility, and speed of TPV,” explains Simon Karregat, head of treasury and credit & risk management at TP Vision. Having worked for Philips as head of the dealing room, Karregat really understands the new company’s TV business, which was previously part of Philips Consumer Lifestyle.

He continues: “As fierce competition in the TV market put pressure on margins, TVs were an unprofitable business over the last couple of years. We intend to change this by creating a lean and agile company that is solely focused on TVs.”

Separate entity

To make TP Vision successful and profitable, the company needs to go through a comprehensive transformation process, which had already started long before the official birth of the joint venture on 2nd April, 2012. “In preparation of the joint venture, we separated the TV business from Philips Consumer Lifestyle first. From 1st January, 2012 we reported ‘TV’ as a separate entity,” Karregat says. “It is important for treasury activities that such a fundamental change takes place in a smooth and controllable way. The early measures ensured a hassle-free transition when TP Vision finally took over the TV business from Philips and operated as an independent stand-alone company as of 1st April, 2012.”

Decoupling from a big corporate like Philips was, and still is, a complex process for TP Vision. The disentanglement of the TV business from Philips was a tough challenge because it had been fully integrated into the Philips Consumer Lifestyle business all over the world. This applied to all areas including sales, finance, and IT. One of the most important constraints in the disentanglement was that the operation had to be realized within a very short time frame but with strict cost management. From the beginning of the joint venture, the top priority was cost efficiency and continuing to reduce the breakeven point of the global company. Additionally, achieving Philips’ target gross margin had to be achieved in a highly competitive TV market. This was done by closely managing product costs while selling an improved mix of products (more high-end and larger screen sizes).

New banking infrastructure

To overcome all the challenges related to finance, TP Vision engaged Zanders to support them in setting up a new treasury organization and separating the television business from Philips’ integrated in-house banking structure. This meant that, in a short time frame, not only did Philips’ treasury have to implement and test a new banking infrastructure, but also a new payment infrastructure and a treasury management system (TMS).

At the beginning, TP Vision could take over some elements from Philips and use them right away, such as production units, IT infrastructure, and distribution centers. Other solutions and systems needed to be set up from scratch. “Because of the time pressure, the complexity of the process, and the kernel versions in the original system, we decided to retain the Philips kernel for the time being and to migrate to the leaner TPV kernel later,” Karregat explains. The kernel is the main component of most computer operating systems and thus builds the backbone of most business and finance applications. Karregat continues: “We couldn’t copy the treasury system from Philips because the payment infrastructure of TPV is different.” The company selected IT2 as their TMS. In some countries, however, certain processes (e.g., invoice booking, entering payment proposals, reporting) are outsourced to third parties, such as Infosys. Karregat adds: “We were fully aware that such a complex migration process would cause some initial difficulties as people had to get used to a completely new way of working. This took some time and required a lot of training.”

Bank selection

The selection of a banking partner was another important step in the joint venture’s financial formation process. Karregat says: “After a thorough selection procedure, two banks remained on the list of bank candidates. As we didn’t want to delay our transformation process until the final signing of a contract with one of the two candidates, we started to set up our internal financial structure simultaneously. We created two groups to work on this: one for each of the two banks.”

Karregat had to consider many different factors when building TP Vision’s new treasury, including credit limits and FX limits: “You have to operate differently, with different interfaces and different restrictions for the different countries. We chose Bank of America as our bank because of their global network, and they are providing the necessary limits for us. However, as they do not offer services in all the countries that we operate in, another party sometimes has to be involved. Multiple banks mean multiple sources, whereas with one bank you can use just one banking tool. It all looks standardized but, in reality, it is not: banks have their own policies and procedures, their own formats. Your treasury system must be able to absorb this.”

TP Vision decided to take over the in-house banking concept of Philips. Karregat explains: “With in-house banking you can manage your own internal payments, it provides a better insight into your liquidity, and you can better manage and fund your entities. It is definitely very efficient.”

Zanders assisted Philips in the set up of a stand-alone treasury for the new joint venture. In order to disentangle the treasury and cash management operations for TV, the assistance included:

• The set-up and implementation of a global bank account infrastructure;
• The creation and implementation of a cash management structure;
• Arrangement of local working capital facilities for entities with legal restrictions on setting up cash pools;
• The set-up of an in-house bank;
• The set-up of a cash flow forecasting methodology company-wide;
• Selection and implementation of a TMS;
• The identification and implementation of a hedge strategy;
• The set-up of a proper treasury policy, processes and procedures

Fewer organizational layers

As a big organization, Philips is used to working according to clearly defined standards. However, as they don’t fit TP Vision’s lean treasury structure, the joint venture is now creating its own processes and standards.

“Adequate cash-flow forecasting is essential for our company and we have to manage our treasury exposures thoroughly. The smaller the company, the bigger the risks. We definitely have to trigger a change in employee mindsets. They have to pay more attention to treasury and cash-flow forecasting than before,” says Karregat. In addition, people are more involved in treasury now as there are fewer organizational layers. “For example, we are now much closer to the countries’ treasury. Therefore, treasury has become much more tangible for them. This effect is perceptible throughout the entire organization.”

New IT infrastructure

In parallel, preparations to migrate to a new IT system are in full swing. TP Vision will use the Philips’ IT system for 12 months after the disentanglement and will get its own IT infrastructure in place very soon. This transition will affect both the treasury management system and payment system. “To prepare for this fundamental change, we are running numerous workshops to identify all possible impacts and to find appropriate solutions,” says Karregat.

Karregat concludes: “We have encountered many difficult challenges, but have now reached a phase where many ‘to do’ items have disappeared from the list. While a major renovation was going on in the back of the store, the front needed to remain open and give the impression that there was nothing going on. I believe that we have been successful in achieving this.”

As a bank providing financial services to business enterprises and financial institutions located in North and Sub-Saharan Africa, the Middle East, and the Indian Subcontinent, Banca UBAE relies on accurate and customized credit ratings for its counterparties. While its previous credit rating process didn’t allow for a tailor-made approach, Banca UBAE has recently begun using the EAGLE internal ratings methodology, which gives its credit analysts the transparency and flexibility they need.

The ongoing changes in its markets make counterparty risk assessment more important than ever for Banca UBAE. This Italian bank, headquartered in Rome, has been operating in countries around the Mediterranean and the Middle East since 1972. Trade finance is Banca UBAE’s single most important line of business, and its main products and services include letters of credit, letters of guarantee, discounting, and forfaiting.

In April 2012, the bank implemented the EAGLE corporate rating model, developed by Zanders and available through the FACT web-based platform, developed by Bureau van Dijk.

Customized Ratings

While an external ratings agency such as Fitch Ratings or Standard & Poor’s has a standard and fixed methodology for calculating a rating, Banca UBAE needed a customizable approach, with a tailor-made and transparent credit rating model for each of its counterparties. This is essential considering the specialized and risk-sensitive nature of the bank’s business.

Fabrizia Calvello, a senior credit analyst at Banca UBAE, explains how the bank’s credit analysts customize the counterparty ratings: “In an internal rating, we evaluate qualitative and quantitative information. The analyst is very well acquainted with the client’s core business and balance sheet, as well as the market within which the client operates, so they can insert qualitative data into the internal ratings model.” An important factor is that data is automatically uploaded from the database into the credit rating model. Calvello adds: “For us as a small bank, it is very important to customize the service to our needs.”

Evert de Vries, one of the two Zanders consultants dedicated to the implementation of EAGLE at Banca UBAE, acknowledges that the need for the customized ratings methodology lies in the nature of the bank’s core business. He says: “The bank is working in a challenging environment, so of course it’s very important for them to be able to calculate specific risks.”

Partnership

Considering the specialized nature of Banca UBAE’s business, there was a need for a customizable ratings methodology. The bank had a long-standing working relationship with Bureau van Dijk, a leading publisher of company information and provider of credit risk management solutions. This relationship developed into a regular and established collaboration when, in 2011, Zanders and Bureau van Dijk joined forces to offer a specialized and flexible credit rating product. The EAGLE ratings methodology is based on Bureau van Dijk’s credit risk management platform, FACT, which integrates information from financial databases such as Amadeus.

Thomas Van der Ghinst, business development manager EMEA at Bureau van Dijk, explains how the project was structured and how the elements led to its success: “Zanders was able to customize the standard EAGLE ratings model and calibrate the model according to specific industry sectors – this is one of their strengths. The combination of the Amadeus database, the FACT platform, and the EAGLE credit ratings model makes this a very competitive solution.” He adds: “For me, EAGLE was a perfect fit for Banca UBAE – it met all the requirements of the project goals.”

Bureau van Dijk’s Van der Ghinst also explains that banks often require customizable credit ratings to be more independent from rating agencies. He says: “Working with EAGLE has helped Banca UBAE to better reflect their risk appetite. Internal ratings also help the bank to provide an instant assessment of new clients – this is the key benefit for Banca UBAE. The added value is that you can rate and evaluate companies that don’t have a rating from a rating agency. You can rate any company in the Amadeus database.”

The combination of the Amadeus database, the FACT platform and the EAGLE credit ratings model makes this a very competitive solution.

Jacopo Ribichini, head of the credit department at Banca UBAE.

Smooth Implementation

Banca UBAE implemented EAGLE in April 2012, and the implementation process took about three weeks. So what benefits has Banca UBAE seen since moving to the EAGLE customizable ratings methodology? Jacopo Ribichini, head of the credit department at Banca UBAE, explains: “The product facilitated and sped up the analysis process. At the same time, it became more transparent and precise. The functionality that allows us to adapt the product score from EAGLE with the specific knowledge Banca UBAE has for each customer allows the correct assessment for the commercial relationship our bank has with each counterparty.”

“Furthermore, the product complies with requirements imposed by EU legislation related to risk analysis. The result is a final assessment that is extremely clear, concise, and exhaustive, offering the best conditions for our deliberating bodies to make business decisions,” he adds.

Overall, Ribichini reports that EAGLE had increased the professionalism and efficiency of his department. The implementation was smooth, and Ribichini sums up his thoughts: “Lastly, thanks to the efficient support offered by the Zanders team, I managed the migration to EAGLE without affecting the regular activities carried out by my department.”

Flexibility and Transparency

Reinoud Lyppens, a consultant at Zanders, works with Evert de Vries on the project and adds that other than providing some independence from ratings agencies, EAGLE has two other main advantages: “It is one single platform that enables you to calculate a credit rating for many different industry sectors and counterparties – and, moreover, it is customizable. These two factors were our prime advantages over our competition. We are very open – the model is well documented and validated every year, so I think that transparency is what really makes EAGLE stand out. The client should always understand the process.”

De Vries adds: “Zanders and Bureau van Dijk worked with Banca UBAE throughout the project, not just during implementation but also at later stages, providing advice and support. This post-implementation service is very important in a project like this – when our customer has a question, we are there to support them. We also did some fine-tuning for the oil & gas and commodities sectors for the model. I think the project went well.”

Van der Ghinst adds: “To date, the project has been a real success. The flexibility and professionalism of the Zanders team have resulted in a very positive outcome, which has been appreciated by the client.”

As Banca UBAE is currently expanding and establishing its presence further afield, in Vietnam and Mozambique (as a result of oil & gas exploration), the flexible and transparent internal ratings methodology will be increasingly important to its business.

About Banca UBAE

Banca UBAE, established in 1972 as ‘Unione delle Banche Arabe ed Europee’, is a banking corporation funded by Italian and Arab capital. Shareholders include major banks such as Libyan Foreign Bank, Banque Centrale Populaire, Banque Marocaine du Commerce Extérieur, UniCredit, Intesa Sanpaolo, and large Italian corporate groups like Eni Group, Sansedoni, and Telecom Italia.

Since 1972, Banca UBAE has acted as a trusted consultant and privileged partner for companies and financial institutions wishing to establish or develop commercial, industrial, financial, and economic relations between Europe and countries in North and Sub-Saharan Africa, the Middle East, and the Indian Subcontinent.

Banca UBAE offers a wide range of services and boasts unique expertise in every form of banking relevant to clients engaged in business on Arab markets, from export financing, letters of credit, and documents for collection to finance, syndications of loans and risks, and on-site professional assistance.

Sulzer is a Swiss company specializing in reliable, sustainable solutions for performance-critical applications, focusing on industrial machinery, surface technology, and rotating equipment maintenance. Active in key markets like oil and gas, power, water, and transportation, Sulzer enhances customer competitiveness through innovation. The company operates over 170 locations worldwide.

Expansion into new markets brings challenges on many levels, not least of all financially. When Sulzer, a leading provider of products and solutions in markets such as oil and gas, power, water, and transportation, decided that it needed best-practice treasury and cash management processes to support the developing business operations, the two-pronged treasury project required some external help. Zanders was able to advise on and facilitate a European cash concentration structure and a TMS implementation project.

Sustainable value creation and profitable growth are the ultimate strategic priorities of the company and the financial side of Sulzer’s organization has to be flexible to keep up with the changing patterns of cash flows, revenue streams, investments, and new risk exposures. Treasury needs to move with the challenging cash management environments in new markets, often in developing countries around the world, and it was decided that treasury processes and structures needed to be updated. In 2008, Sulzer’s treasury team embarked on a dual project to implement a new treasury management system (TMS) as well as a new European cash concentration structure.

“In an ideal world we would be able to monitor all the subsidiaries’ transaction data by having access to a data warehouse”

Jean-Daniel Millasson (Corporate Treasurer at Sulzer)

Need for a treasury realignment

Jean-Daniel Millasson, the corporate treasurer at Sulzer, explains that the company has grown organically but also considerably through acquisitions. Today, it has a production and service network of over 170 locations around the world, while back in 2008 it had about 120. He says: “We have legal entities in many countries and each has its own set of bank accounts, banking relationships, and manages its payments and cash management independently of the treasury center in Switzerland, although we give clear directions and guidelines for their treasury activities. We feel it’s very important to further develop in the area of cash and risk management, hence centralizing business support functions such as treasury is a vital way to achieve higher efficiencies, greater transparency and access to real-time information across a broad geographic area.”

With this in mind, one clear goal of this treasury project was to improve cash management and visibility by implementing a Europe-wide zero-balancing cash pool. Equally important was the selection and implementation of a new TMS. Millasson says: “It was clear for me that we needed external support to realize two projects of this magnitude since we are a small treasury team. We therefore decided to conduct a request for proposals (RFP), after which Zanders was selected.”

Cash pool implementation project

The cash pool implementation involved intense interviewing and liaising with Sulzer’s European subsidiaries. Eric Schwarz, head of the corporate treasury center at Sulzer, explains that this data-collection phase of the project was time-consuming. Zanders consultant Bart Timmerman carried out many of these visits and fact-finding missions with Sulzer or on the company’s behalf.

Schwarz says: “During the cash concentration project, Zanders contributed to the success by taking care of that part of the project that we just didn’t have the resources for. They were able to collect and collate data and meet our subsidiaries. Although we at Sulzer didn’t lack the expertise to go ahead and implement the kind of Europe-wide cash concentration structure that we had in mind, Zanders was able to alleviate an important part of the hard work where we needed support.”

The objectives of the cash concentration project were to increase the centralization of cash, to improve visibility of cash balances and flows in Europe, to improve efficiency of cash management, and to later leverage the platform across the organization in a broad geographical sense covering different time zones. The cash concentration project also included an analysis and redesign of the company’s European banking infrastructure and was successfully concluded in 2009.

Gaining visibility and control

The second phase of Sulzer’s treasury transformation was initiated at the same time as the cash concentration project. In fact, the TMS implementation was partially triggered by the need for a best practice system to manage the transaction data generated by the European cash concentration project.

Millasson explains that the previous TMS was not operating in line with best practice and there were still manual processes involved that prevented automated processing of data: “Having a zero-balancing cash pool created a high number of transactions for us – which meant more work for the back office. With the new TMS in place, we’re able to handle this workload. Previously, we didn’t have straight-through processing (STP) or electronic bank statements through our front or back offices,” he says.

Expert advice was invaluable during the selection of a new TMS provider. Sulzer first of all consulted Judith van Paassen, partner at Zanders, and then worked closely with Zanders consultant Bart Timmerman. Millasson adds: “For the TMS project, Zanders’ expertise was crucial. We were looking for professional support on the evaluation of different systems and also on the implementation at a later stage. Even for an experienced treasury department it is difficult to make a decision on an individual system. It was therefore invaluable to work with experts who have in-depth knowledge of the systems.”

Eventually IT2 was chosen but it couldn’t become fully functional until the cash concentration structure was in place, because of the need to have a clear view of the new bank reporting infrastructure. Although IT2 went live with FX deals and reporting in 2009, the full implementation was completed in 2010. Bart Timmerman worked closely with the Sulzer treasury team on the TMS implementation but was also present for much of the European cash pool project. He says: “The two projects were complementary. It was an opportunity for the company to make better use of its idle cash. However, implementing a cash pool without a TMS would have been impossible.”

Millasson adds: “The benefit of the TMS was also that it enabled us to carry out compliance and reporting. It has made a big difference in terms of improving our processes. Of course, data quality is crucial for risk management, too.”

Continuous improvements

While the new TMS has introduced best practice treasury processes, there are still some areas that could be improved, according to Sulzer’s Millasson. He says: “We try to be in a position to best monitor our entities but what we can monitor is limited. We don’t have a common ERP system in the group, which given our business model is not essential, but makes it more difficult for us to access detailed transaction data. At the moment we have to rely on data sent to us by subsidiaries and their analysis. In an ideal world we would be able to monitor all the subsidiaries’ transaction data by having access to a data warehouse.”

In 2011, the new IT2 accountancy module was added for the company’s new cash pool in Australia. Millasson says: “Thanks to Zanders’ knowledge of TMS, this was a short and smooth project, which was nonetheless very important for us.” Currently, Timmerman and his colleague Tobias Schaad are upgrading IT2 to the latest release, while looking at possible enhancements and extended functionality simultaneously with the treasury staff of Sulzer.

“These projects support internal and external growth by concentrating processes
and increasing efficiency”

Jean-Daniel Millasson (Corporate Treasurer at Sulzer)

Future support for a developing business

As Sulzer continues to develop and grow, both geographically and in terms of its markets and technology innovation, Millasson and Schwarz now feel it is well supported by treasury. Millasson says: “We still want our business to grow, so you need to finance it. These projects support internal and external growth by concentrating processes and increasing efficiency – these contribute to growth.”

And like the operational side of the company, Sulzer’s treasury team is not likely to let the grass grow under its feet. Rather, they are constantly looking for improvements to their financial processes. Millasson says: “The immediate projects and priorities are still efficient, to make better future use of the TMS in certain areas, to make processes even leaner, which means having electronic dealing and electronic data submissions from legal entities through the TMS. We also want to roll out our cash concentration strategy to more countries such as Singapore and China.”

Treasury is also considering doing some work to establish meaningful and effective key performance indicators (KPIs) for the business. Millasson explains: “The benefits of KPIs are twofold: a means for continuous improvement and illustrating Treasury’s contribution to the business’s financial performance, and a prerequisite for being able to benchmark against other treasuries. Furthermore, we continuously assess opportunities to expand our in-house bank activities, for instance, by considering how payment factory solutions in certain regions could add value to Sulzer.”

Timmerman summarizes the overall feeling about Sulzer’s treasury project: “What was interesting was that there was dedication at Sulzer and there was a really strong drive to lift the treasury practice one level higher. As clients, they were open about shortfalls in their processes and supporting systems, and this really contributed to the quality and progress of the project. Taking on both projects together was a real challenge and, ultimately, it went very well.”