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Transforming treasury in the face of divestment: Hitachi Energy’s strategic evolution

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The journey of treasury transformation at Hitachi Energy underscores a strategic pivot in managing financial operations amidst significant corporate restructuring and the challenges of rapid globalisation. 

In the ever-evolving world of global treasury operations, the strategic adoption of shared services has become a key factor for treasury teams aiming for enhanced efficiency, scalability, and innovative solutions. This transition was significantly propelled forward by Hitachi’s completion of the acquisition process for ABB’s Power Grids business, leading to the formation of the Hitachi Energy joint venture. This event marked the initiation of a comprehensive transformation phase for Hitachi Energy, now 100% owned by the Hitachi Group

Guiding this pivotal transition were George Terziev, Vice President and Head of Group Treasury at Hitachi Energy, alongside Barna Gergely, Global Head of Treasury Operations. During their panel discussion at the 2023 EuroFinance International Treasury Management conference, they offered a deep dive into the intricacies of establishing a new treasury infrastructure from the ground up, sharing the challenges they faced and the successful strategies they employed throughout this complex journey.

Embracing shared services

The inception of shared services at Hitachi Energy was precipitated by a transformative period in the company’s history. Carved out from ABB, a conglomerate known for its robust treasury operations, Hitachi Energy embarked on a mission to establish a treasury infrastructure that not only supported its immediate operational needs but was also scalable and aligned with its long-term strategic vision. This undertaking was set against the backdrop of the pandemic, adding layers of complexity to the initiative but also providing a unique impetus for innovation and rapid transformation.

Central to this model was operational efficiency, achieved through the consolidation of a large part of treasury operations and trade finance into shared services centres located strategically in Poland and India. This not only streamlined processes and standardised procedures but also optimised resource allocation and achieved cost efficiencies by leveraging economies of scale and competitive cost structures in these regions. Beyond mere operational tasks, the model incorporated strategic value-adding activities, enabling the treasury team to engage in higher-level analysis, risk management, and advisory services, thus playing a pivotal role in business decisions and contributing to the company’s growth strategy.

Furthermore, the geographical optimisation allowed for a continuous global treasury operation that capitalised on the time zone differences, ensuring responsiveness and agility. For the model to succeed, it was imperative that it integrated seamlessly within the broader organisational and cultural fabric of Hitachi Energy. This was achieved by fostering a culture of collaboration and service excellence, positioning the shared services not just as back-office functions but as integral components of the financial strategy, thereby securing organisation-wide buy-in.

The backbone of this effective implementation was the strategic use of technology. Hitachi Energy invested in advanced treasury management systems (TMS) and utilised digital tools to enhance operational visibility, control, and efficiency, which was crucial for managing complex global operations and ensuring compliance.

Navigating challenges and leveraging technology

In undertaking this initiative, the treasury team encountered various obstacles, including the logistical challenges of consolidating disparate treasury operations into global shared services centres and the cultural and communication barriers that can impede smooth collaboration. Through the application of technology and innovative strategies, the treasury team effectively addressed these challenges, transforming them into opportunities for improved efficiency and the creation of strategic value.

One of the primary hurdles was the logistical complexity of integrating and standardising treasury operations across shared services centres located in different geographical regions. Each centre had to deal with local regulatory requirements, diverse banking environments, and distinct business practices, all while striving to maintain a cohesive operational framework that aligned with the company’s global treasury objectives. Compounding these logistical challenges were the cultural nuances and communication barriers that can naturally arise in a global operation. Overcoming these issues required a deliberate focus on cultural integration, fostering an organisational culture that valued inclusion, diversity, open communication, and mutual respect across all levels and locations.

Technology played a pivotal role in Hitachi Energy’s strategy to navigate these challenges. As the company invested in an advanced TMS that provided the technological backbone for both operational efficiency and strategic decision-making, its shared services centres had access to real-time data, automated transaction processing capabilities, and sophisticated risk management tools. Moreover, the treasury team embraced digital communication and collaboration platforms that bridged the geographical and cultural gaps between its teams, facilitating seamless interaction and knowledge sharing across the global treasury function.

Beyond the initial technology integration, the treasury team committed to ongoing process optimisation and continuous improvement. Utilising data analytics and business intelligence gleaned from their TMS, the team regularly reviewed and refined its treasury operations to identify bottlenecks, streamline workflows, and enhance efficiency. This iterative approach allowed Hitachi Energy to adapt swiftly to changing market conditions, regulatory landscapes, and business needs, ensuring that its treasury operations remained agile and responsive.

Recognising that technology alone is not a panacea, the treasury team also focused on talent development, equipping its personnel with the skills needed to leverage these advanced tools effectively. This encompassed not only technical training but also initiatives to enhance strategic thinking, risk analysis, and decision-making capabilities among its treasury staff. By investing in its people, the treasury team ensured that its workforce could harness the full potential of its technological infrastructure, driving value creation and supporting the company’s broader strategic goals.

Looking ahead, the strategic function of the treasury within Hitachi Energy is in a state of continuous evolution. The establishment of a solid treasury infrastructure serves as a basis for future strategic endeavours, such as the enhanced incorporation of technology and analytics into treasury processes. The ongoing treasury transformation at Hitachi Energy underscores the significance of adaptability, strategic foresight, and the benefits of shared services in managing the intricacies of the global business environment.