Sap Bank Communication Management

SAP Bank Communication Management

Overview and Strategy

Christian MnichSuite Solution ManagementBusiness Suite Technology GroupSAP AG

© SAP AG 2009. All rights reserved. / © SAP AG 2009. All rights reserved. / Page 2

1. Trends & Challenges2. Solution Offering

2.1. Introduction – Treasury Applications from SAP2.2. SAP Bank Communication Management2.3. SAP Integration Package for SWIFT

3. Benefits & Summary4. Wrap-up

Agenda

© SAP AG 2009. All rights reserved. /

Market Trends and Key Challenges in Cash Management

Key Challenges

Increase cash flow transparency and visibility of working capital across the whole groupManaging counter party risksAbility to communicate with multiple cash management banks through a single channelGaining reliable and timely information from business unitsStandardize formats, technologies and processes

Corporate Cash Managers need to reconcile cash flows across multiplebanks to determine the group’s cash position in short time

© SAP 2008 / Page 3

Market Trends

Global Financial Crisis and the importance of transparencyIncreasing centralization of Treasury and managing cash on a global basisCost savingsCash flow forecasting as an increasingly important area for corporatesRegulations and standards, such as Single Euro Payments Area (SEPA) or ISO20022 payment formats


Multiple Formats & “Standards”

Corporate client Banks

AccountsPayable

AccountsReceivable

Treasury

Other

e-banking

Host to Host

Domestic

MT101 and SEPA CT

Edifact

IDOC

ISO20022

SAP Integration Package for

SWIFT

SAP NetWeaver

PI


Challenges Compliance, Security & Efficiency Issues

High Maintenance Costs For Communication InterfacesCorporates typically deploy several different bank communication interfaces that each use various technologies and file formats Over EUR 25,000 and more per year for each proprietary interface

Cumbersome Interfaces Hinder Compliance EffortsPayment data is highly sensitive in nature and requires sophisticated security processes to meet ever-increasing regulatory mandates

Process InefficienciesHigh levels of manual processing, productivity losses, excessive exception handling, and an overall lack of transparency into payment flows Missing straight-through processing and separate handling of payment orders or bank statements for each bank

© SAP AG 2009. All rights reserved. / © SAP AG 2009. All rights reserved. / Page 6© SAP 2008 / Page 6

Challenges Increased Costs, Dependencies & Lack of Transparency

Cost of Working CapitalErrors in payment orders are identified too lateCertain level of liquidity must be kept on transaction accounts due to lack of informationNeed for global visibility to cash

Security IssuesSecurity gaps during payment file transfer (authorization, signature, and encryption often not part of the solution)

Dependency on House BanksProprietary interfaces create dependency on single bank due to cost of changing bank relationship During the financial crisis the Counterparty Risk Management becomes more important

Lack of Payment Transaction TransparencyMost proprietary interface applications cannot process incoming status messages from banks


SEPA promise end-to-end interoperability. SAP is on both sides

New Message Standards…Based in UNIFI (ISO 20022) XMLMessage standards available for complete end-to-end communication

Ordering Customer Beneficiary Customer

Ordering Customer’s

Financial Institution

Beneficiary Customer’s Financial Institution

XML Payment initiation&FIN MT 101

XML Bulk payments & FIN Category 1 & 2

XML Cash management &

FIN Category 9

R E P O R T I N G

R E P O R T I N G

I N I T I A T I O N

R E P O R T I N G

(I N T E R B A N K) P A Y M E N T S

XML Portfolio

FIN Portfolio


SEPA – Single Euro Payments Area Update 2009

SEPA Credit Transfer is live in Europe since Jan 28th 2008, SEPA Direct Debit planned for Q4/2009Volume for SEPA transactions currently pretty low – only about 4% of the total credit transfer volumeThere is currently no official end date for national credit transfers and direct debit schemes officially announced SEPA is just a European initiative – more challenges to be expected in order to allign a global ISO20022 format

* Source ECB - http://www.ecb.int/paym/sepa/timeline/use/


SEPA Package from SAP

SAP appreciates and supports the SEPA framework of the European Payment Council, improving straight-through processing and allowing increased transparency into payment flowsSAP’s Business Suite is already enabled to help customers to benefit from the new regulatoryA dedicated SEPA package for the SAP Business Suite is available since the end of 2007. SAP’s SEPA Package is available for all SAP customers with maintenance contract free of charge (R/3 Enterprise onwards)

Support of new payment formats and instruments in SAP ERPXML enablement of the new standard European SEPA payment formatsSEPA Credit Transfer based on EPC Rulebook 3.2SEPA Direct Debit based on EPC Rulebook 2.3. Management of SEPA direct debit mandatesSupport of IBAN and BICSEPA Support of MT940 Bank Statements





Agenda


Financial Excellence with Treasury Applications from SAP

Treasury applications from SAP

SAP Treasury and Risk ManagementRisk Analyzers

Transaction ManagerMoney Market Money Market

Foreign Exchange Foreign

ExchangeSecu- rities Secu- rities

Com- modities

Com- modities

Deri- vatives

Deri- vatives

Debt Mgmt Debt Mgmt

Manage Global Financial Risks

Optimize Debt and Investment Strategies

Manage Cash and Liquidity

SAP Cash and Liquidity ManagementCash Management Liquidity Planning

Optimize Payments and Bank Communication

SAP In-House Cash


Exposure Management Hedge Management

Credit Risk Analyzer Credit Risk Analyzer Market Risk AnalyzerMarket Risk Analyzer Portfolio AnalyzerPortfolio Analyzer


End-to-end integration of processes in Finance

Banks

Customers Suppliers

Treasury

Physical Supply Chain

Credit2Cash

Financial Supply Chain

Invoice2PayCheck Credit eInvoice Resolve

disputesCollectcash

Approve Payments

Transmit Payments

MonitorPayments

Manage cash

Manage Risk

Accounts Receivable Accounts Payable

Manage Invoices


What’s The Topic? Optimize Payments and Bank Communication

SAP In-House CashSAP In-House Cash is a solution for global operating companies to manage their intra-group and external payment transactions more efficientlyThe In-House Cash Center is a virtual bank set up at the group headquarter where subsidiaries have current accountsSAP In-House Cash allows companies to minimize the actual flow of cash and therefore reduce the number of bank accounts and save bank fees

SAP Bank Communication ManagementSAP Bank Communication Management enables customers to track the entire payment life cycle, and significantly improve straight-through processing rates and internal complianceSAP Bank Communication Management enables corporate customers connecting via SAP NetWeaver® Process Integration to the SWIFT Net InterfaceSAP Bank Communication Management includes SAP Integration Package for SWIFT and is available since SAP ERP 6.0, Enhancement Package 2

Update status

monitor

Initiate payments

Batch & Approve

payments

Process Bank

Statements

Create payment

media

Processing by In- House Bank

Send payment

media





Agenda


Streamline Payments and Bank Communications

Streamlined Payments and Bank Communications

SAP ERP Financials

Approval Workflow

Improved Cash Transparency

Open Interfaces and Standards

Status Monitoring

Compliance


Payment Solution provided by SAP New since SAP ERP 6.0, Enhancement Package 2

Status Monitor

SAP ERP

GL

Payroll

Treasury

In house cash

SAP Integration Package for

SWIFT

Aggregate Payments

Approval Workflow

Digital Signatures

Transmit Payment

Workflow

Receive Status Report

Payment Medium

Workbench

Payment Run



Ban

k

Situation without SAP Bank Communication Management

ExecutePaymentProgram

CreatePayment

Order

ImportBank

Statement

Post/Processingand

Clearing

Collect Bank Statement

3rd Party SystemSAP ERP

FileServer

Upload File

Security: Authorization

EncryptionDigital Signature

Send Payment Order to Bank

Security

DownloadFile


Process Flow with SAP Bank Communication Management

ExecutePaymentProgram

CreatePayment

Order

ImportBank

Statement

Post/Processingand

Clearing

SAP Integration Package for SWIFT

SWIFT Alliance Access / Gateway

SAP NetWeaver Process Integration

SAP Bank Communication

ManagementSAP ERP

Create Batch

Payment Approval Work List

Receive Status Messages

Bank Statement

Routing

Mapping

SecurityEncryption

Digital Signature

ResourceAdapter

SWIFTNet

Security(Approval Workflow, Authorization, Digital

signature)


Features: Batching & Exception Handling

Batching of paymentsLogical structuring of payment filesFlexible batching rules that can be enhancedAutomatic creation of unique identifiers

Exception handling Visibility of errors in payment status monitorAutomatic generation of alert workflow items


Features: Compliance

Increased complianceMulti-eye release procedures for payment approvals

Personal digital signatures for outgoing payments for internal audit

Release of individual payments or entire batches

Flexible approval rules (low-value payments = only one approver, for example)

Approval, rejection, or resubmission of payments

Flexible sorting and structuring of approval work list


Features: Integration to SWIFT and Banks & Transparency

Integration to SWIFT and banksReal-time integration with SWIFT via SAP Integration Package for SWIFTOptional integration with banks with the adapters in SAP NetWeaverProcess Integration on a project basis

Increased payment-flow transparencyPayment status monitor with full status historyProcessing of new ISO20022 payment status report and other status messages (ACK/NACK)Drill-down to documents and master dataDisplay of generated payment formats


Enhancing SAP Bank Communication Management with Central In-House Bank and Payment Factory

Corporate Client

Payments

Compliance

SWIFTNet

Subsidiary

Subsidiary

SAP Bank

Communication Management

SAP In-House Cash

Accounts Payable

Accounts Receivable

Treasury

SWIFTNet Interface

HCM

SAP Integration Package for SWIFT

SAP NetWeaver PI

SAP ERPSubsidiary

© SAP AG 2009. All rights reserved. / Page 22

© SAP AG 2009. All rights reserved. / © SAP AG 2009. All rights reserved. / Page 23© SAP 2008 / Page 23

Quick Facts –SAP In-House Cash

SAP In-House Cash provides payment-related services for a group of affiliated companies

FeaturesCentral dispatching, routing, and processing of payments

Creation of account statements to account holders

Tracking of payment statuses

Support of various corporate group structures

Routing of payment orders to local subsidiaries to replace cross-border payments

Internal bank accounts in any currency

Flexible condition and limit concept

Full integration with SAP Cash Management and SAP Treasury and Risk Management


Business Benefits

Reduce physical cash transfers by internal netting

Reduce number of bank accounts

Reduce administrative overhead

Minimize netting process times

Save bank fees for bank accounts and payment transactions

Avoid cost for external cross-border payments

Reduce float and value date losses

Gain more interest keeping cash within the group

Reduce hedging cost using economies of scale

Improve competitive position in external money markets

Lower internal

cost

Lower external

cost





Agenda


What is SWIFT?

SWIFT stands for Society for Worldwide Interbank Financial Telecommunications

A co-operative organization serving the financial industryA provider of highly secure financial messaging servicesThe financial standardization body2.5 billion messages/year8,830 financial institutions209 countriesMore than 400 corporatesconnectedLatest peak day: 16.5 m messages

(Status from 06/2009)

Country coverage


Integration to SWIFTNet with SAP Bank Communication Management

Business Strategy & Initiatives

Bank Communication Yesterday Bank Communication Today

SimplificationReduce the number of proprietary payment standards and bank-specific e-banking products and setting up a single communication channel to SWIFTNet

Cost ReductionReduce maintenance cost by communicating with all the banking partners through this one channel

ComplianceEnhance straight-through-processing (STP) rates and ensure traceability of the whole business process


Status — Corporates on SWIFT

282

402441

108

Registered corporates

181

Profile

Geographic spreadEMEA, Americas, Asia

Traffic The Americas is the leading generator

Increasing numberOf smaller and medium size corporationsWith fewer banking relationships (even 1)Using SWIFT for domestic transactions

2006 2007 2008 1Q2009 2Q2009

181

282

402

441471


Features: SWIFT Integration and ISO 20022 support

SWIFTNet integrationInbound and outbound support of FileAct and FINIntegration with SWIFT architecture (SWIFTAlliance Access and Alliance Gateway)Management of local authentication and integrity between SAP NetWeaver Process Integration and SWIFTAlliance access and gateway

Standard mappings in SAP NetWeaver Process Integration for ISO20022 messages

Customer credit transfer initiationCustomer direct debit transfer initiationPayment status reportCash Management StatementCash Management Advice

Tight integration with SAP softwareAvailable for SAP R/3 4.6C and above (SAP Integration Package for SWIFT only)*Easy adoption of mapping possible to support various of status messages in conjunction with SAP Bank Communication Management (prerequisite: SAP ERP 6.0)

*SAP NetWeaver PI required


SWIFT Connectivity Options





Agenda


SAP Bank Communication Management / SAP Integration Package for SWIFT – Benefits

Improved communication between corporates and banksSAP Bank Communication Management helps increase efficiency, lower costs, and streamline processesSingle communication channel to SWIFTNetStandardized and uniform Payment Gateway

More cash flow transparency and visibility of working capitalEnhanced straight-through processing (STP) ratesCompanies get accurate and real-time view of their payment transactions

Enhanced security and complianceTransparent management of outgoing payments with no breaches on internal controls

Reduced maintenance costs by using global payment standardsIndependency from proprietary payment standards and bank-specifice-banking productsReadiness for SEPA and UNIFI/ISO20022 standard



Adolf Würth GmbH & Co. KG Streamlines Bank Communication with SAP ERP

QUICK FACTS

CompanyName: Adolf Würth GmbH & Co. KG

Location: Künzelsau, Germany

Industry: Global trade

Products and services: Fastening and assembly technology

Revenue: € 814 million in 2006

Employees: 4.500 (Germany)

Web site: www.wuerth.com

SAP® solution and services: SAP Ramp-Up program, SAP enhancement package for SAP ERP 6.0

Implementation partner: SAP Consulting

“SAP Bank Communication Management and the SAP Integration Package for SWIFT have streamlined our banking communications into a single, efficient channel that makes payments and deposits to our accounts simple and direct.”

Claus Wild Project Manager Financials Adolf Würth GmbH & Co. KG

Challenges and OpportunitiesStandardization and automation ofCorporate to Bank communicationOptimization of processes andincreased payment flow transparency through status monitoring

ObjectivesFewer bank connections and enhanced straight-through processing rates with end-to-end SWIFTNet integrationSupport systematic tracking during the whole payment life cycle

Implementation HighlightsFull implementation within 6 monthsincluding SWIFT infrastructureComplete support from SAPConsulting in deploying the new functionality throughout the organization

Why SAP?End-to-end integration paradigmMost relevant functionality available on the marketHigh attention and support due to ramp-up programEase of integration with existing SAP software

BenefitsEnhanced straight-through processing (STP) ratesMore cash flow transparency and visibility of working capitalReduced maintenance costs by using global payment standardsIncreased security and complianceReadiness for SEPA andUNIFI/ISO20022 standard


Current Release Enhancement Package 4 for SAP ERP 6.0

Improved Service Enabling

Enhanced ISO20022 / SEPA support

ENTERPRISE SOA

Capability to assign additional approval users for dual control

Enhanced encryption capabilities

Security

Indicate urgent payments in the payment monitor

Automated triggering of follow up activities

Simplification

Enhanced reporting capabilities

Integration to Cash Management

Functional


Outlook Enhancements planned for 2010 and beyondPayment Formats and Instruments

SEPA Credit TransferUpdate according to EPC Rulebook 3.2 (see SAP Note 1305012)

SEPA Direct DebitUpdate to EPC Rulebook 3.3 (Core) and 1.2 (B2B)

IDOC EnhancementsEnhance PEXR200x with new segment for SEPA related fields

In-House Cash – SEPA Enablement

Evaluation of global ISO20022 shipment for payment initiation based on pilot customers / banks feedback

Focus countries outside EURO zone Enhanced support of CAMT messages

Evaluate direct import of XML messages to SAP ERPEvaluation of additional ISO20022 message services such as

Electronic Bank Account Management - EBAMSEPA E-Mandates


Outlook - Current Output of Portfolio Planning In-House Cash and Bank Communication Management

Initiate payments

Batch & Approve

payments

Process Bank

Statements

Send payment media and

Update Status Monitor

Create payment

media

Web Channel Strategy

Processing by

In-House Bank

Management of Bank Account

Signatures

Import payment files from external systems

Support of

ISO20022 standards

Enhanced monitoring capabilities

Support of IDOC payment

format

Reversal Postings

on payment rejection

SEPASupport

Integration of non-SAP

systems, support of MT

messages

Bank connectivity

w/o SAP NetWeaver

Process Integration

Improve security

capabilities





Agenda


7 Key Points to Take Home

Treasury applications from SAP are an integrated part of SAP ERP Financials

SAP provides comprehensive applications to manage your payment and cash processes

Using an integrated treasury solution supports the overall IT trend of harmonizing the system landscape and the application variety

The application SAP Bank Communication Management helps streamline payment processing, strengthen compliance, and achieve straight-through processing across multiple banks.

It enables the standardization and automation of corporate-to-bank communication and helps increase payment flow transparency through status monitoring

You can reduce maintenance costs by using global payment standards and if the application is ready for SEPA and ISO20022

Implementing SAP’s treasury applications leverages your overall SAP investments you have made


Further Information

SAP Public Webhttp://www.sap.com/treasury

SAP Service Marketplace (log-on required)https://service.sap.com/erp-treasury

Enterprise Services WIKI (BCM)http://wiki.sdn.sap.com/wiki/display/ESpackages

Documentation on SAP Help Portalhttp://help.sap.com(SAP ERP >> SAP ERP Central Component >> SAP ERP Enhancement Packages)

Training / SAP Educationhttp://www.sap.com/education

User Groupshttp://www.dsag.de

http://www.sap.com/communities/usergroups.epx for more

ContactYour SAP Account and Consulting Engagement Manager

http://www.sap.com/treasury

https://service.sap.com/erp-treasury

http://wiki.sdn.sap.com/wiki/display/ESpackages/Bank+Communication+Management

http://help.sap.com/


Thank you!


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Sap Bank Communication Management

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