The Hewlett Packard Enterprise Company (HPE) is a multinational enterprise information technology company based in San Jose, California. The firm was formed in 2015 as part of the restructuring of the Hewlett-Packard Company, where Hewlett-Packard was renamed HP retaining the personal computer and printing business, while HPE was spun off to focus on enterprise offerings (servers, storage, networking, consulting and support) and financial services. 

HPE further spun off its enterprise business to CSC (now DXC) and software business to Microfocus in 2017. HPE reported revenues of $30 billion in 2018.

The Challenge

Since the reorganization in 2015, HPE has been evaluating solutions to transform its treasury architecture which was becoming sub-optimal due to the changing treasury and banking landscape, and restructuring activities over the years.

Operating up to four entities in each of its 15 Asia Pacific markets, HPE was having to manage over 200 banking accounts it held with 20-plus banking partners. That meant costs to maintain the sheer volume of bank accounts. The vast infrastructure was also running on multiple legacy systems that were ingrained with manual processes. Even though HPE has had an efficient pooling structure in place across key markets like Singapore, Hong Kong, Japan, Australia and New Zealand, it desired further optimization of in-country balances in the other more restrictive markets across Asia Pacific.

After HPE spun off its two subsidiaries in 2015, the company refocused efforts on overhauling its treasury operations. It sought a comprehensive cash management solution to fulfil three objectives: to simplify its banking and bank account structure, enhance liquidity consolidation and yields on idle funds, and improve efficiencies in processes through automation.

As HPE was also upgrading its internal ERP and TMS systems, it needed a treasury solution that would integrate with its systems and as well as one that’s innovative and scalable to support the future growth of the business. 

The J.P. Morgan Solution

After years of partnership with banking partner J.P. Morgan and discussing best practices across various banking requirements, HPE in 2018 issued a global banking review and awarded the mandate in 2019, and are now implementing the comprehensive cash management solution for its Asia Pacific operations with J.P. Morgan.

In an extensive exercise to reduce the number of banking partners, HPE consolidated its transactional flows to a handful of core banking partners, reducing the total number of banks it dealt with. Through a phased approach starting in Singapore which involved the consolidation of banking partners and processes, coupled with the implementation of the J.P. Morgan’s Virtual Account Management (VAM) solution to decrease the number of bank accounts, HPE expects to reduce the number of bank accounts it manages by up to 40%.

In addition to the notional pooling structure in Singapore supported by J.P. Morgan which serves as a cornerstone to consolidate balances automatically from five key unrestricted markets including Hong Kong SAR, Japan, Australia and New Zealand, HPE wanted to expand the scope for better optimization and consolidation of funds in the restrictive markets across the region. As such, it mapped out specific solutions for each of the remaining markets through J.P. Morgan’s Unitized Time Deposits that automates investments and enhances yields on operating balances in accounts. The solutions consolidated funds across HPE’s entities in each market, as required or from individual entities, which are then automatically swept into investment vehicles to gain yields on the balances.

Finally, to optimize its treasury processes, HPE will utilize J.P. Morgan’s Virtual Branch solution, completely digitizing the documentation processes required in tax and cross-border payments, improving efficiency, freeing up manual resource and reducing human error. The Virtual Branch solution, which is rolled out across five markets including India, China, Indonesia, Thailand and the Philippines and due to launch in Vietnam and Malaysia, will be deployed for HPE as per the ongoing implementation. HPE is also actively looking into emerging technologies to further enhance its processes including J.P. Morgan’s smart receivables solution in Korea which automatically matches payments received to invoices, and a cloud-based invoice reconciliation solution in India to address similar problems.

The VAM, Virtual Branch, and pooling solutions are fully integrated into HPE’s internal ERP and TMS systems, ensuring full visibility of cash and transactions.

The Result

The fully implemented solutions will enable HPE to:

  • Reduce the number of banking partners and decrease the number of bank accounts by up to 40 percent (currently 200-plus).
  • Improve liquidity consolidation and enhance yields on balances in restrictive markets.
  • Fully automate its treasury processes.
  • Seamlessly migrate to the new structure by leveraging existing setup and documentation already in place with J.P. Morgan, reducing the requirement for additional resource to provide legal and technical support as examples.
  • Generate significant cost savings from the consolidation of banking relationships, reduction in banking fees and higher yields on balances.

“We took a long-term view to transform our treasury and keep up with the evolving business landscape, and we’re pleased to extend our partnership with J.P. Morgan to roll out a series of innovative regional and local cash management solutions. We expect the fully automated solutions to improve process efficiencies and generate significant cost savings for HPE.” 

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    Hewlett Packard Enterprises is a highly commended winner of the Treasury Today 2019 Adam Smith Awards Asia in the category of Best Cash Management Solution.

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