Asea Brown Boveri Limited (ABB), one of the world’s leading power and automation technology groups, is as global as companies can get. The group maintains close to 300 subsidiaries, operates in around 100 countries, and employs some 135,000 people worldwide. Trade finance instruments and project financing play an important role for ABB, since they must support orders and projects carried out by the company all over the globe.
As a truly global company, ABB required a corporate trade finance system offering “the best of both worlds” – centralized limit management and overview of bank guarantees across the organization on the one hand, and decentralized local guarantee handling on the other. That’s why the Zurich-based headquarters of ABB turned to Surecomp’s COR-TF®.
“Each of our subsidiaries had its own process for handling guarantees,” said Brigitte Brüngger, ABB Assistant Vice President, Head of Guarantees. “We realized that to effectively manage the guarantee process, we have to get everyone on the same page. That means finding a system providing us with a centralized overview of all of our guarantees worldwide, while still giving subsidiaries control over their own guarantee-handling process.”
“COR-TF offered the greatest amount of functionality among the various available solutions, and the system was found to be secure, reliable and very professional.”
Beating Out the Competition
A thorough review of the market did clearly indicate to ABB that COR-TF, Surecomp’s leading corporate trade finance system, best fit ABB’s requirements. “COR-TF offered the greatest amount of functionality among the various available solutions, and the system was found to be secure, reliable and very professional,” Brüngger said.
Another significant factor in ABB’s decision was that COR-TF integrates seamlessly with Bolero. “We appreciate the value in carrying out electronic communications among our multi-bank network. As a result, COR-TF’s ability to connect with the Bolero channel is very important to us,” said Peter Gisler, ABB Group Vice President, Head Export and Trade Finance.
Customizing a Complex Project
ABB began rolling out COR-TF in 2008 via a 4-month live pilot project in which a central server in Germany linked the group’s Swiss and German offices and three European banks. Handling the guarantee process among some 50 users, the new system was branded under the name Trade Finance Link (TFL). The system underwent continuous customization during the period, as ABB and Surecomp made adjustments until successfully meeting all customer requirements. At the same time, the highly complex project required extensive training of users, along with migration of all existing/legacy guarantee data and a certain amount of restructuring of global guarantee agreements with banks.
Following the pilot’s completion, ABB continued the rollout, connecting most of its subsidiaries throughout Europe and North America by the end of 2011. “After going live, we continuously had Surecomp add functionalities in order to improve the application,” Brüngger said. “Many of the improvements were based on comments and requirements from our users. We improved limit management, and added functionality to handle corporate guarantees. We also created a user-friendly client structure, developed a display of ABB’s reporting parameters, and added a ‘tip of the day’ and warning pop-up functionality, in addition to a number of other changes. All of these new features have driven the standard COR-TF product much further,” Brüngger continued.
“In January 2012, we upgraded to the recently released COR-TF 5.0. Unlike previous versions, this one will serve as a permanent base solution. Therefore, any new requirements will be add-ons to the system, which should further streamline matters as we continue to expand its usage.”
In addition to providing greater stability, the latest version also includes ABB’s customized version for letter of credit (L/C) management. “In light of the global financial crisis, we’ve added letters of credit as an ancillary business,” Gisler said. “COR-TF provides us with a flexible platform required to move into this area.”
One of the main improvements of the 5.0 release is an advanced workflow enabling project managers to become involved in the guarantee-handling process. “Until now, most system users were finance personnel at the local level such as the CFO and finance department staffers,” Gisler said. “The new workflow opens the system up to project managers who can communicate with their colleagues in finance to facilitate guarantee handling across the organization.”
Spreading Across the World
Currently set up with more than 70 banks – including 21 banks connected by means of electronic communications – in 37 countries, and accessed by 400 users, the system is being installed across ABB’s Middle Eastern subsidiaries in 2012, to be followed by India, China and Brazil. The rollout process is set to be completed in 2013. All told, the system will be accessible to over 1,000 users in 80 countries, covering the lion’s share of ABB’s trade finance processes worldwide. The company’s one-stop portal for trade finance activity, COR-TF currently hosts more than 17,000 guarantees. Once most subsidiaries are on board, the ABB portfolio will total more than 36,000 guarantees (including parent guarantees), as well as all of the company’s commercial L/Cs.
Such increased activity, however, doesn’t mean that ABB will have to add more banks to the system. In fact, the opposite is true. “COR-TF does much more than just improve performance on an IT level,” Gisler said. “In addition to enabling us to centrally manage our global credit line while giving subsidiaries local control over their guarantees, the system significantly improves global bank management. Before implementing the system, we were working with 150 to 200 banks. We’ve cut that number down to approximately 100, of which about 20 are core global banks and the rest local, thereby providing us with the right global/local mix.”
“COR-TF streamlines our processes, increases our efficiency, and boosts our bargaining power with banks, which leads to lower costs.”
Delivering Multiple Benefits & Rapid ROI
Supported by a team, headed by Brüngger, of five staffers located in Switzerland and Poland, the COR-TF system delivers multiple benefits to ABB. “By providing a centralized overview at the global level and decentralized handling at the local level, COR-TF streamlines our processes, increases our efficiency, and boosts our bargaining power with banks, which leads to lower costs,” Brüngger said. And in terms of ROI, the system has provided ABB with high returns in a short period of time, according to Gisler.
ABB also has been pleased with Surecomp’s support since embarking on the project four years ago. “At first we maintained an intensive daily dialogue with Surecomp to get what we needed,” Brüngger said. “Since then, their cooperation has been very professional. Surecomp is very flexible and responsive to our suggestions, and tries to make whatever we need happen.”
“Surecomp is very flexible and responsive to our suggestions, and tries to make whatever we need happen.”
And given that the COR-TF system is an important part of ABB’s strategy, the partnership between the two companies should only get stronger over time. “As a global group, it is essential for us to control what’s going on,” Gisler said. “We live in a dynamic world, and we must understand how we’re exposed. COR-TF provides us with a platform that improves our control and risk management, and we plan to create further synergies with the system down the road.”
As one of the world’s leading engineering companies, ABB helps its customers to use electrical power effectively and to increase industrial productivity in a sustainable way. The ABB Group of companies operates in around 100 countries and employs about 135,000 people. For more information, visit their website.