EDS Reorganizes for a Value-Added Treasury.

• Author: Ochs, Joyce R.
• Position: Electronic Data Services

When Scott Krenz became treasurer at Electronic Data Services, he saw a burning need to reorganize the function to improve coordination and streamline relationships. A close-up look at the challenges he and his managers faced and the decisions they made.

"Don't automate, obliterate!" was the game plan for Scott Krenz in mid-1998 when he assumed the treasurer's role at Electronic Data Services, the $19 billion provider of consulting and information technology services based in Plano, Texas. An EDS veteran, Krenz had previously served as CFO for Europe, the Middle East, and Africa, where he developed a global perspective and a different, broader philosophy about the role of finance at EDS.

In fact, Krenz's prior experience had involved him in more than finance; he had daily contact with EDS's customers and other functional areas, such as marketing and customer service. This background, plus the planning experience he had logged on the job, was the inspiration on which he developed the framework for a reorganized treasury group at EDS.

Krenz's plans for treasury fit well with the goals of Dick Brown, chairman and CEO, to transform EDS into a more efficient, active and service-oriented company. EDS has more than 9,000 business and governmental clients in 55 countries around the world and, at the time, had more than 130,000 employees. In 1999, the company implemented a $1 billion cost-reduction and productivity improvement plan that included retooling operations, paring business lines from 48 to 4, reorganizing into three geographic regions and focusing on global industry expertise.

At the time of Krenz's appointment, the treasury group at EDS resembled treasury departments at other corporations, with a structure that mirrored EDS's decentralized and geographic lines. It functioned as a traditional treasury -- that is, as a cost center with little day-to-day interaction with other corporate areas.

Domestic treasury operations were handled separately from international treasury activities, which had been delegated to treasury offices overseas. As a result, there was little interaction between domestic and international treasury, even though they were parts of the same organizational entity. A perfect example of this was the fact that EDS had two different treasury workstations from different providers -- one for domestic operations and one for international operations -- that were not linked.

Furthermore, local operations controlled bank accounts and relationships. This created a vast and complex banking network that was costly and difficult to manage. The network had no real structure; banking relationships were driven more by convenience than anything. Treasury was bogged down by the enormous effort required to monitor accounts and collect information across the vast number of banks.

There were several attempts to coordinate policies across business units, but follow-through was difficult and reduced treasury to a small, advisory role. As a result, there were few coordinated efforts, ineffective execution of treasury activities, and unconnected systems.

This changed when Krenz arrived.

First, get the organization right

As he took over the treasury group, Krenz knew he had to jolt the staff out of their old mindset. He...