The OPEC Fund for International De-

velopment (OFID) is the development

finance institution established by the

Member States of OPEC in 1976 as a

collective channel of aid to the devel-

oping countries. OFID works in coop-

eration with developing country part-

ners and the international donor com-

munity to stimulate economic growth

and alleviate poverty in all disadvan-

taged regions of the world. It does this

by providing financing to build essential

infrastructure, strengthen social ser-

vices delivery and promote productivi-

ty, competitiveness and trade. OFID’s

work is people-centred, focusing on

projects that meet basic needs - such

as food, energy, clean water and sanita-

tion, healthcare and education – with

the aim of encouraging self-reliance

and inspiring hope for the future.

From 2001 through 2011, OFID suc-

cessfully transformed her Information

Technology support operations from a

decentralized organization to an effi-

cient centralized unit through the stra-

tegic and visionary support of its pio-

neering leader Dr Deyaa Alkhateeb.

OFID IT has risen to the management

challenge of supporting continuous

business improvement by envisioning a

compatible IT strategy that supports

institutional reform. As the transfor-

mation effort continued in 2012, the

SAP Phase III system blueprint identi-

fied OFID treasury as the remaining

frontier in its Financial Operations

department, which had hitherto relied

on manual and non-integrated business

processes for its operations.

TREASURY TRANFORMA-

TIONAL OBJECTIVES

· Eliminate manual procedures

and optimize treasury business pro-

cesses, thereby fulfilling operational

and accounting compliance for financial

(Continued on page 2) A decade of transformation: OFID ten years

on; published June 2013 as revised in March

transactions.

Centralize and standardize treasury-

specific business processes in order

to achieve alignment and synergies

across the organization, thereby

eliminating multiple systems and ex-

cel sheets.

Increase position and exposure fore-

cast transparency, providing insights

into available cash to optimize the

utilization of working capital.

Utilize treasury employees more

effectively and efficiently, thereby

eliminating error-prone, time-

consuming and labour-intensive man-

ual activities.

Enable more effective decision mak-

ing and reduce costs over the long

term through standardization and

automated approval workflows.

In order to meet - and surpass the

above expectations –the decision mak-

ers in treasury decision wanted greater

transparency and control over complex

business processes related to managing

and streamlining of payments, cash, li-

quidity and risk management. At all

times, physical cash had to be accounted

for: where and when it WAS needed,

and what and who needed it? It was

therefore necessary for the treasury

team to better understand and manage

potential challenges with liquidity, coun-

terparties and exotic currencies. As a

strategic and go-to sup-

The core guiding principles of the

transformation project were:

Simplification: - Analyse oppor-

tunities to simplify and re-engineer

core business processes under a

common architecture and use

common components wherever

possible to enable transparency,

visibility and auditability.

Reusability: - Leverage existing IT

investments where possible and

“buy against built” IT strategy,

since OFID is not a software

house.

Automation: - Automate repeti-

tive and complex activities with

due regards to workflows, govern-

ance, risk and compliance require-

ments.

Integration: - Integrate core busi-

ness within existing system, there-

by guaranteeing a single source of

business truth.

Information: - Provide a founda-

tion for OFID business intelligence

using an appropriate business

warehouse solution and centralize

SAP TRM Solution Overview

SAP software for treasury and risk man-

agement is natively integrated into SAP

ECC for increased transparency and

control. It provides a single source of

information and automates many critical

treasury based business processes, thus

eliminating extensive manual data gather-

ing and rekeying, duplication of efforts,

reconciliation and human errors. The

system promises to be more inclusive of

coordination and visibility by:

Reducing treasury management

costs, transactional cycle times and

resource demands.

Enhancing decision making and re-

ducing unnecessary bank charges,

overdrafts or borrowing

Streamlining payment processes and

ensuring reporting/compliance

Improving efficiency and automation

by using straight-through processing

Optimizing operating capital to fund

operations with robust cash and li-

quidity.

SAP TRM offers comprehensive suites of

functions for the management of treas-

ury and financial risk to enhance insight,

control and compatibility with manage-

ment’s digital transformational drive;

hence its adoption.

“Treasury organizations

evolve from local to regional

centres and global depart-

ments using technology and

processes to enable in-

house banks, payment

factories and centralization

of activities as FX trading,

investment and funding.

The use of SAP treasury

applications facilitate these

challenging tasks to our

customers”

– ConVista Consulting,

Project Implementation

Partner

Transforming Treasury Operations

It is the core task of the OFID treasury

department to ensure liquidity and to

manage portfolios and exposure to fi-

nancial risk. To do this effectively and

efficiently, the Treasurer uses analyses

of the current liquidity and risk situation

to make decisions about future invest-

ments and undertakings, taking into ac-

count the conditions of the financial

markets. After deal capture and settle-

ment, the transfer of all relevant infor-

mation into financial accounting has to

be ensured. Managing positions in terms

of controlling interest or cash payments,

execution of corporate actions etc. had

to be covered by the new system.

Key Business Benefits

Automation of all treasury-based

business processes for managing

financial transactions.

Integration and ease of operational

and accounting compliance moni-

toring and reporting.

Real-time reporting and manage-

ment of foreign exchange, interest

rate and counterparty risks.

Online, real-time and 360 degree

view on cash position and facilitat-

ing better investment and financial

decisions.

Reduction of operating cost

through better financial and debt

management.

Optimization of working capital

with the help of improved liquidity

forecasts and reporting.

Payment and Bank Communica-

tion Services

The system provides an integrated pay-

ment and bank communication platform

that centralizes and optimizes all pay-

ment processes, thus reducing cycle

times and costs, while helping to ensure

compliance. For a global institution such

as OFID, international payments and

transactions amongst its numerous gov-

ernments, companies and beneficiaries

(as well as the gathering and reconciling

of data from multiple financial institu-

tions) should not be “business as usual”

Also, a payment approval workflow that

is automated and rules-based stream-

lines routing and provides -as additional

benefit - intuitive status monitoring,

which supports visibility in the payment

lifecycle. Bank communication is provi-

sioned with more seamless integration

with spreadsheet standards including

support for multibank gateway codes

from the SWIFT to help minimize exotic

currency risk. Streamlined payment pro-

cesses reduce cycle times and costs,

while helping to ensure compliance.

However, multiple point-to-point elec-

tronic interfaces, payment standards,

and data formats can increase support

costs and resource demands, as was the

case before Phase III. Treasury depart-

ments within multinational organizations

face the additional challenge of complex

business operations on a global scale.

Cross-border payments and transac-

tions among companies, as well as the

gathering and reconciling of data from

multiple financial institutions, are

“business as usual.” SAP software for

payments and bank communications can

help you meet these challenges head on.

Cash and Liquidity Management

Services

Cash and liquidity management is one of

the most critical treasury functions. Yet,

forecasting liquidity is complicated by the

amount of data that must be gathered.

SAP software for cash and liquidity man-

agement addresses this challenge with

features such as comprehensive and,

timely insight into global sources and

uses of cash – as well as the reporting of

internal cash positions. This system max-

imizes and automates cash flow visibility,

imports cash balances from all house

banks, and combines them with real-time

financial data from accounts receivable

and payable online from all operational

areas. Added to this are comprehensive

reporting and analytics capabilities for

even more effective cash management

decisions in “Business Warehouse”.

Cash Management Deliverables

Restructuring of all planning levels and

bank clearing accounts determination in

line with account receivables and ac-

count payables

Update of payment methods regarding

SWIFT integration

Integrated memo records to improve

the quality of the cash position reports

Integration of the new movements’

types from treasury and other product

types into the cash & liquidity position

forecasting.

Financial Risk Management Ser-

vices

The financial risk management compo-

nent of SAP TRM provides financial risk

analytics which assist treasury officers

manage market-based risks with greater

accuracy; -they can conduct real-time

reviews of cash positions, risks, com-

modity price changes, and currency con-

version rates with the incorporation of

dashboards and other visualizations, de-

cision makers can quickly calculate expo-

sures and identify risks.

Financial risk analytics can help deter-

mine in real-time the effects of market

risks – including interest rate, foreign

exchange, and commodity price fluctua-

tions on revenue streams, input costs,

and cash flows. Also, decision makers

can pinpoint counterparty risk exposure

to cash balances across global bank ac-

counts.

Risk mitigation strategies can therefore

be strategized to improve the quality of

hedge transactions and structure deals.

This approach enables the acceleration

of transactions and notifications to the

business. In addition, the creation of an

audit trail helps ensure that every hedg-

ing transaction is recorded and accu-

rately reported.

Key features of our digitized Treas-

ury

Automation of Foreign Exchange

(FX), Listed and Over-The-Counter

(OTC) derivatives management ser-

vices

Up to the minute money and market

risk analysis results

Business partner and credit risk anal-

ysis reporting

Investment portfolio analysis in line

with institutional policies and proce-

dures

Centralized exposure and limit man-

agement services

Hedge management and hedge ac-

counting services

Integration into SAP Funds Manage-

ment for budgeting and availability

control tools

“The OPEC Fund is an institution that has

been evolving continuously since its incep-

tion 39 years ago. The OPEC Fund you see

today bears little resemblance to the insti-

tution of 20 years ago or even of 10 years ago. This has been partly by necessity - the

development arena is constantly shifting -

and partly by design”

Suleiman J. Al-Herbish

Director General, OFID

Mr Jacobs Edo

Email: j.edo@ofid.org

www.ofid.org

SAP Systems Coordinator at OFID and also doubles as the Phase III Project Manager. He is also certified by SAP and the University of Ap-

plied Sciences and Arts North-western, Switzer-land’s Business Transformation Academy as a

Transformation—Lessons Learnt

Identify key internal change champi-

on

Secure senior management buy-in

and support

Understanding key business pro-

cesses and process re-engineering

Stakeholder management is skill is a

MUST!

Deep technological and innovation

knowledge

Excellent communication skills

Conclusion

When completed, the SAP Phase III

treasury project will further leverage the

OFID digital transformation exercise. It

will also complete the provisioning of the

requisite integrated technological infra-

structure and services required to sup-

port the OFID stakeholders’ community

– Member Countries, Beneficiar-

ies/Borrowers, Employees, and Suppliers

- and significantly improve execution of