DC Dysfunction and Tax Reform, Surviving a Cyber Attack and Keys to Transformation Success
Thank you to all the attendees of the AT30 2017 H2 Meeting in Palo Alto last week and to the team from HP for hosting us! Day 1 started with a joint session with NeuGroup’s FX Managers’ Peer Group 2 (FXMPG2). Here are some highlights and key takeaways from the event, sponsored by HSBC.
What GOP strife means for tax reform. HSBC’s Kevin Fromer presented the combined groups with a reality check of how dissension among Republicans is undermining President Trump’s ability to score legislative victories, despite the party’s hold on the presidency, the House and the Senate. But here’s the key takeaway for treasury: HSBC remains bullish on tax reform, asserting it’s going to get done, in part because it’s a “must accomplish” priority, noting Trump plans to visit 13 states in the next couple months to push tax overhaul. The bank argues tax law change can happen in 2018 despite skepticism about passing legislation during an election year, saying most tax reform bills have passed in even years. The bank also challenges claims the GOP will lose Congressional control in the midterm elections because of Trump’s below-50% approval rating; HSBC argues Democrats face long odds in achieving the gains they need.
• Takeaway: Don’t stop planning for tax change. Treasury needs to keep planning for tax reform, including the implications for repatriation of foreign profits, despite the ongoing level of uncertainty in Washington and the dysfunction of the GOP.
How to prepare for the inevitable cybersecurity attack. An AT30 member captured the attention of everyone in the room with the harrowing tale of what a cyber attack on the company’s computer network meant in practical terms for treasury and its employees. The magnitude of the disruption from losing all access to computers provided a sobering lesson, even for a department that had planned and practiced for attacks.
The experience provides a real-life example of why members who have traditionally focused on preventing hacks also need to plan and prepare for the aftermath of security breaches and malware attacks, some involving phishing emails that encrypt data and demand ransom. This story underscores the need for treasury to take some basic steps like: having paper copies of critical information, including employee contact information; developing a communication plan that may rely on cellphones and personal computers; and establishing access to computers that are not connected to the damaged network.
• Takeaway: Treasury must prepare for what happens after a cyber attack. Cybersecurity is not an issue that treasury can afford to relegate to the IT department — and it’s not all about preventing attacks. Preparing for the disruption to business following an attack is part of prudent planning for every department. That means having a paper trail of critical data and contact information and developing alternatives to communicate when the network is out of commission and all the computers connected to it are essentially useless.
Winning formula for treasury transformation. Another member walked the group through the company’s award-winning initiative to automate a standard process for cash forecasting, improve risk management and eliminate risks from outdated treasury technology. He described “pain points” under the old system, including poor visibility to global cash balances and transactions. NeuGroup research suggests many members are still feeling the pain. While 60 percent have recently completed or are close to completing a treasury transformation project, 44% of respondents say they are not happy with their treasury transformation decisions post-deployment and are not seeing the planned benefits.
How can this story lead to happier outcomes with members? For starters, a clear action plan with specific goals that’s supported by senior management is needed. Achieving the corporation’s vision took more than three years and involved creating an integrated system with components including Reval for cash management, forecasting and accounting, and FiServ’s tool for tracking global banks. In other words, it’s not all about the technology vendors you bring in from the outside. Far more important is the inside job of communicating with all stakeholders and getting dedicated support from business units and IT.
• Takeaway: A carefully designed plan and clear communication is critical to the success of a treasury transformation project. Their success at meeting its goals reflected a disciplined and deliberate process of setting goals, securing buy in from senior management and finding vendors with experience at delivering the results called for in the blueprint. No wonder this transformation won the Adam Smith Award for Harnessing the Power of Technology.
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