Jumping Into Treasury At the Deep End with Steffen Diel

Foreign to this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each and every week I talk to treasurers about how they've built their careers, where they are now, where they see both themselves and the treasury profession. Going to next in this week's show, delighted to be joined by Stefan Diehl, the Senior Vice President, head of Global treasury at SAP se. Now SAP, everyone knows this in finance, it's one of the world's leading producers of software for management of building business processes, developing solutions across organizations and information flow and everything else. And we'll get into that a little bit later with Stefan. But the company and the group was actually founded back in 1972. It was abbreviated to SAP, so I'm not going to say all the details there, but it's grown from five people back in 72, as Stefan just explained, to 110,000 employees globally. Great story, but as always with the show, I'm going to hand over the microphone to Stefan. Maybe if you would, Stefan, take us back to your, you know, the beginning of your career and how you first ever started. Like many of my guests, you started in banking and then discovered the wonderful world of Treasury. But back to you, sir.

Yeah, thank you very much Mike and thank you for having me in the show. I'm excited to be here. When I look back quite a few decades now to the beginning, I would say that my, my interest in, in financial markets really started in the last few years of my school career. And then I really decided to, to start an apprenticeship as a bank clerk with Deutsche bank, just to test whether this is something for a more sustainable career later on. Learned a lot during those two years was also a sign it was the 1990 coming down of the Iron Curtain. So I was assigned to the eastern part of Germany which was a great experience at that age. But it was very clear that I would like to go further with studying business administration. And after those two years I indeed started International Business Administration to get a university degree. But I was still working for Deutsche bank which, which gave me a decent salary at the time and that helped a lot I can tell you. And then towards the end on the last phase of my studies, I really got strong interest in treasury topics and I decided to do my master thesis for a mid sized company on their FX hedging strategy, which was very interesting topic at the time. After my studies I returned to Deutsche Bank. I worked as a deputy branch manager and a relationship manager for business and private clients. But it was kind of clear that I Would like to change from a bank to a corporate environment. At the time I really wanted to work on the, let's say original problem in the business rather than providing tools, providing different products to solve the problem problem. I, I, I really wanted to work in the original business problem environment.

So to say you had this exposure to treasury, which is actually quite unusual. I think we've recently done a series of podcasts with the guys at Corporate Treasury 101 and about people saying how do they get into treasury as a graduate, you know, things like that. Now you sort of came across it or was it part of the course? Again that's quite unusual because then it gave you that interest level or was that more from the banking side? Where did that come from then?

Yeah, as I said, I think it kind of developed during the apprenticeship at Deutsche bank and also during the studies where I was most interested in the finance topics. I think it really gradually developed over time. But then when I really started my career after the finalization of my studies, there was a clear ambition to go into Treasury. So that was a passion, I would say very early in my career, joined.

A company that this is before SAP and everything else and became head of treasury there. Can you give us a bit of a background to that, what, what that role was like before you then joined the size of the company of SAP, what was that like?

And talk us through that was an, actually an interesting start at that company. I mean I did apply for quite some jobs in treasury during that time. Was a bit of a difficult economic environment back then and the labor market was tight. But fortunately I got this Head of Treasury position at IWKA at the time. Now it's called Kuka. Actually it was a one man show. There was not much of a outlined function for that, but there was a treasurer as my predecessor and when I arrived, my predecessor told me, well look, I will be there for, for another two days and then you are left on your own. You can imagine being only nine months out of university, I was really shocked about this statement but it turned out to be really a great opportunity. So there was a bit of process description, there was a bit of rules for the treasury function, but it was really something scattered and more, let's say combined with accounting topics and everything. So I really had the chance to shape the treasury function, to describe and define processes, to describe and define interfaces to accounting to the planning areas. I wrote, let's say, my own treasury guideline based on the knowledge I had and of course a lot of, a lot of interactions with other treasurers, got into contact in the first one or two years. At the end of the day was a great start because I was also forced to learn to swim very quickly, take my own decisions, build a team step by step, which also helped me as a young professional in that role to really push that up to a professional function, to recruit people step by step to find the right place also for the strategic aspects of the function at Kuka. So that was a great start and once in a lifetime opportunity to, you know, to being able to shape the whole function.

It's an interesting point you make there. There's a guy who's a regular listener to the show. You'll know who he is. I won't name check him here. He stepped into a very similar situation with the UK private listed or privately held company. They will list at some stage later but smaller group and things. But he was, you know, had experience as a Treasury manager. He went in there as head of treasury of, of a one man band, you know, treasury. And that was not a criticism but he was like, he came back to me and said, oh, have you got a bit of an ebook maybe of some of the things about, you know, the checklist that you can come in now, as you said, you went in there and made up your own guidelines. You created them from going out to different peers and colleagues. If someone's in that similar situation, how would you suggest they do it? Because I know that we meet up regularly. We're going to meet up at conferences soon. Did you go and meet those guys or did you go back to your books or what was the sort of guiding light, if you like, for you in those early days?

Yeah, I think it's really a variety of tools and activities that you can use to get speed on the treasury topics. Of course there was some dedicated knowledge from my university time. There was some interactions, as I said, with fellow treasurers that I met at conferences. Of course there is the association of German Treasurers which provided some, some guidance on the topic and it's really reading articles in magazines that, that focus on such topics. So it's really a variety of information sources that, that I used and I, I would actually recommend that because only relying on one or two sources gives you not the full picture. And I like to have as much information as, as possible to really have very comprehensive view of the topic and then I can make a decent decision on, on what to focus on.

And one of the reasons he's actually recently moved on because he said he did all that and he got it to a decent state but he then wanted more, you know, he wanted, you know, mentor and he was looking for mentors outside of the function because he wanted someone to guide him. Now you've then made that transition from a smaller group to a larger group and the global leadership position as well. What was that like for you? Was that one of the things you were maybe searching for at the time, would you say? Or did it just. Actually it was just the next, next time to move. What influenced that, if you like?

That of course is an interesting question. And have been with Kuka for eight years. Then at the end of the day when I moved to SAP, I mean by the time it was really a lot of things going on in the company itself. We, we have, we had to deal with the first shareholder activist in Germany. There was a lot of rebuilding within the company, a lot of finance support needed for M and A transactions as well as divesting activities. So there was a lot to learn and a lot to to do. It was a small headquarter with only 60 people covering all functions. So you really could learn a lot beyond Treasury. But at the end of the day, some stage the learning curve becomes flatter, becomes more not so exciting anymore. And then I think that was the, the driver behind something else. Of course I had also the, the ambition to lead a larger team in a more professional organization at the SAP. Opportunity came along at, at the very best point in time. But those were the triggers I think for moving on from Kuka.

And you joined SAP. Can you. Everyone in finance I think has heard of the group and everything else. But pretend we haven't just gone off your spaceship and you're explaining what the company does, who you are and things like that. Maybe you could explain that from a basic point of view and then we'll sort of explore a bit more about when you joined them, what it was like. So obviously there was a number of years ago now 16 odd years ago I think we said before, wow, talk us through that if you would.

Yeah. As you said at the beginning, SAP is the market leader in enterprise application software. We help our clients which have all sizes and work in all indust to become intelligent and sustainable enterprises. I mean we started with ERP, with our one ERP product back then, 50 years ago and that turned out to be a very big advantage because by providing that product we could accompany our customers along the value chain. And when you look at the situation today, still 77% of the global transaction revenue touch an SAP system in some way. Or another. And this gives us the unique opportunity to really help all of those customers in their business transformation, in their digital transformation, irrespective of the industry they work in. So this is what SAP is all about. In the meantime, it's a company of more than 110,000 employees. Last year we had a total revenue of roughly 28 billion euro. And we offer our products to all of the company constituents, not only the ERP, which is now based on our S4HANA database, the real time view on all of the financial and other data. We provide a comprehensive HR solution. We help our customers in terms of intelligence, spend and the business network. So procurement, travel and expense contingent workforce and the business network itself, customer experience applications that we offer. And we have our business technology platform that kind of plays a special role in our portfolio since it is foundation as well as a platform for partners and customers to extend the standard solutions with their customized needs. And so I think we are still very close to the customer and in a phase where every company in a very volatile environment has to transform. SAP is an excellent partner.

If we then go back to the beginning of your role when you joined the group a number of years ago, what was SAP treasury like at that time and how has it evolved over time? I would have was going to make it, you know, the, oh, we are the global Treasury. You're just looking after all this money and growth. But there's been a series of different challenges throughout that time as you and I have talked about what was it like when you started and what's it been like as you've grown through that role, if you like.

Yeah, that's also very interesting because when I arrived at SAP, the treasury function was not a global one. Why was that? We had of course centralized all of the core processes in our headquarter in Waldorf, but we still had, let's say, local people in the finance environment also caring for treasury topics alongside accounting and controlling topics, for example. So it was a very centralized function and this changed a few years later when we embarked on our shared service delivery model. Then we really moved into a global function with treasury employees in different locations around the world. Of course, the centralized setup for treasury at SAP at the time in 2006 was a very professional one. So I started as the head of Treasury Finance, mainly responsible for all of the internal financing, for all of the external funding questions, and there were almost none at the time. And then of course the bank relationship management and all of the financial risk management topics. So that was my first role. We Started at the time with 10 to 15 employees and since then we have grown a lot. But with today's 45 employees, I would still say that we are quite an efficient and a lean organization.

How was the structure of SAP Treasury? Again, I'm asking this more if someone is looking at you guys because then you've grown with it and things like that. How has it changed structurally? I know that one of my clients I spoke to recently, they've relocated from Belgium to another country, they've centralized everything. They've got the, the pillars of treasury, if you know, here's the core pillars. But one of the things that fascinated me was how they'd then lit out some of the activity and how it evolved as well with you guys. Have you seen that over time or has it just been driven by, or not just been driven by technology? What's the situation?

Yeah, of course in the last 16 years, SAP treasury developed a lot. I mentioned the number of employees working dedicated in a dedicated form for the treasury function. So of course we grew quite a lot. And as I said, we build out our treasury hubs outside of the headquarter and really dedicated to solve local treasury problems. So the organizational setup changed quite a bit. But that was only one part of what really developed over time. I think what is unique about SAP treasury is that we are very closely connected and even embedded in what I called innovate to sell cycle. So what does that mean? SAP sells its own treasury and cash management solutions and my organization is fully embedded in the development process. So we have a regular alignment with our analytics, our development colleagues, we come up with our own ideas on new products or functionality enhancement. We are of course the first pilot customer for those new applications. And then on the other side of the value chain, we also support our sales colleagues at conferences, in customer meetings. And over time we established a real structure for that, an agile structure. So we have, for example, two product owners for different parts of our solution portfolio and they really have the objective to enhance the product portfolio to come up with new ideas. And our Treasury Dashboard, which is part of our SAP Digital Boardroom, is only one example of an innovation that we drove as a functional part of finance, which then turns step by step into an offering for our customers. So it's now a standard solution that we offer our treasury customers. And that's, I think, unique about my organization. That of course also developed over time. And I think we, with this shared service delivery notion and the whole framework behind it, we also separated more, more and more, let's say Repetitive tasks that are done in certain areas and then let's say concentrate on the complex or the more complex topics that arised over time. I mean, we had a lot of acquisitions and it actually started in 2007 when I just started at SAP. We started a big acquisition sequence and of course we had to concentrate then on those major projects and, and to be very efficient on the standardized end to end processes.

You're in that large global Treasury. How do you, and I'll qualify this, you know, approach those problems? I've got, we've got listeners today who are in Treasuries with, you know, like you earlier in decree two or three people, you're a global treasury and things like that. Is it a case of you sit down at the end, at the beginning, end of a year and say, right, this is where we're going to go next year. Or how do you deal with knowing that there's, you know, we've had a series of crises come along, we had pandemic, then went into, you know, Ukrainian conflict. You've got lots of different things coming at you. As a treasurer, you know, how do you set out, how do you then deal with that? Because again, this is. Some of the other listeners will be. More senior treasurers are going, oh yeah, be interesting to see how Stefan deals with that and how they maybe deal with that. How does it work, would you say?

Yeah, I think when you sit down at the point in time when the crisis had already kicked in, it's definitely too late. I mean we of course we do our planning not only for the next 12 months, but also for the medium term. What are the projects that we take a closer look in terms of financing, in terms of risk management, in terms of our payment factory and of course on the product side that I just described. But I think when you look at the challenges companies and also of course the treasury function has to face based on the crisis that we saw in the last few years, I would say when you look at the treasury function, it's probably three different elements that you have to work on. So the first one is a really stable and resilient treasury setup. So it's really about stable automated and harmonized processes that you can deliver irrespective of the volatility in the environment, not only financial market volatility, but also the industry the company works in. So that's important. And combined with those stable processes, you need a real time data insight to really know what is the liquidity in which country do we have enough liquidity for our planned cash outflow. So this is the absolute basis. And then the second element is, I would call it a high end value contribution. And that of course depends on the, on the size of the treasury function. But of course you need an effective and efficient payment infrastructure. You need a very much tailored financial risk management approach. So not every company of course needs every depth of a financial risk management approach. But depending on, on the size you have to tailor your approach. And then it's really about the advisory role that treasury plays in for example capital allocation or capital structure discussions, also moving treasury more towards the business itself. So we all know that business models are changing quickly and you search for monetization options for those new business models and there treasury should have a seat at the table very early on. So that's the value contribution. And then of course looking more to the future, it's about a digital and agile transformation that we look at. It's about a digital mindset. I would say to be able to connect certain financing problems with a potential technology solution. And this is, I would say this is not only necessary for a software company like SAP, but in all finance organizations and in all treasury organizations you, you have to focus more and more on that topic. And of course the, the organization itself will also change in the future with new work elements, less hierarchies, more important, more empowerment, agile working modes. So this is probably the last element which focuses on making the treasury function ready for the future.

More of a recruitment related question. Often we don't do these on this, but it's more of a human related question I suppose in a smaller treasury and you worked in those yourself, but also other people will be listening and they're in the smaller group. They might have, you know, you might be in that, it might be a wider position. You do a number of different areas. You might do capital markets, cash, you might do lots of different things and FX and everything being thrown at you. Obviously in a larger group like an SAP again in the past I've seen people join like the likes of a Shell. You know, people have said, you know, I've said wow, it's a big, big treasury and things like that. And you have a smaller role, more specialist role sometimes. How would you though, when you attract staff or when you're looking to people, how would you say that? Why would they come and join SAP now? You know, it's great track record as a company but you know, what are they going to learn in treasury or what is it that you've got to offer that over those Other roles. What's your sort of your hook, if you like, if that's the right way to put it.

Well, first of all, I would say treasury is an excellent starting point or a wider and more comprehensive finance career or a career altogether because it gives you a variety of topics, not only treasury topics, but you have to deal with tax controlling, investor relations, you have to do planning exercises and at the same time you have already an external exposure to other stakeholders like banks and rating agencies, for example, in a global organization. So I think that is the starting point that this offers great opportunity to start with. And then of course it's about looking for people that of course have a solid, let's say foundation with a university degree and probably combined with interesting and diverse internships. But what is probably even more important is to find candidates with a passion for treasury and the passion for finance in combination with a high interest for technology. And I think if you are such a personality, SAP offers great environment to work in because with SAP it's all about customer centricity, it's all about innovation, it's about being flexible to changing tasks, to changing environments. Even if you would say, well, there is a global organization in treasury, you start in, let's say the financing and financial risk management area. This is something that we change step by step. So we give our colleagues in treasury the opportunity to work in different areas within treasury, give them a very comprehensive overview of all of the activities from the start and to really show them the big picture at a very early stage and try to offer them opportunities in working in different projects with different kinds of treasury related questions. So I would say we welcome such personalities who have an interest in moving to the next interesting project quite quickly based on a passion to learn and to gather solid foundation of expertise.

Yeah, and again, it's an interesting one. When we recruited for this client, again, I won't name check them on this, but the way we presented it, the way that if you do go and join and you can have a great role in a team of four, you'll get all this wider experience things. But at the same time there may come a point in three, four years time you want to make that next move up and if it's not available because that person's not moving and, or there isn't that ability to, as you say, you come and join yourselves and you're working in capital markets and then you're going, oh, actually we want you to work on a Treasury service center and you know, you know, doing the cash management over here. There's maybe more opportunity in a larger group, you know, but there are also, it's also because some people want to work in a smaller team and some want to work medium size. It doesn't, you know, want not one size fits all. But I think it's a, an interesting one, which we sometimes touch upon, but don't really cover that much on the podcast. So I thought it was good because, you know, you've been there that many years and everything else. So I think that's a other observation. Would you agree with those sort of, that those positives, if you like?

Yeah, absolutely. And I, I think what is interesting is that I think the, when you look at treasury functions as well as global and very large functions, the profile of the candidates, there are a lot of elements that you would search for both ends of the range and that is this, let's say, ability to grasp new things very quickly because the world is changing faster than 30 years ago or 20 years ago and those elements are the same for irrespective of the size of the function.

Our commutes have changed in this new modern world, more remote working and everything else. But we tend to keep the show to half an hour, 40 minutes, and we're approaching that sort of time. We'll put your LinkedIn details in the show notes and I'm very much looking forward to catching up with you too. But if there are lots of people out there listening today and they're saying, well, what are the takeaways from this guy that's the global treasurer, great role and everything else. But what sort of practical advice to some of the listeners would you give today to sort of wrap up today? So the takeaways, if you like, for us and the rest of the listeners, if you like.

First of all, I would say treasury, when you look also at university education, treasury is still not one of the focus areas. And that is a shame, actually, because as I alluded to earlier, treasury gives you the opportunity to really work on topics that are linked to tax, to legal, to controlling, to investor relations. So it gives you very, very good and promising head start to all kinds of careers. So we should take that in mind and promote the treasury function much as we can. And then career wise, I would say it's important to be curious to learn continuously, to learn as much as you can. Take benefit of mentoring relationships, for example. That was very helpful for my career. I also had quite a few excellent direct managers that helped me a lot. And then it's really about this adaptability to change focus and to grasp new topics. And the last thing is probably about your communication skills. That's of course very important and sometimes underestimated. So I can only advise colleagues to work on the ability to provide well structured and comprehensible summaries for complex topics and to get clear messages across to different audiences. That helps you in a lot of different settings, but that's something I would focus on also in the first years of a career.

Fantastic. Thank you, sir. I think it was, it was great. You've had some very successful years in your current role and I think sort of we got good insights and a lot of that as well. I'll be talking to you in a couple of weeks time when we see each other at a nice conference and there's lots more. Finally we're getting face to face time, which is, which is key. I just want to say thank you for your time, much appreciated and look forward to the future. We'll put your LinkedIn deeds in the show notes and look forward to catching up soon.

Okay, thank you very much, Mike. Thank you for having me.

Pleasure. Hello, it's Mike here again. I hope you enjoyed this week's show. If you did, then maybe you want to follow the show or subscribe, depending on where you listen, whether that's itunes, Spotify or another great place to listen to the show from. It's totally free and means that you'll be the first to see each and every week when we release a new show show. And maybe whilst you're there you could even leave a quick review. Reviews and ratings are among the most important metrics for a podcast to effectively rank. And as you can probably appreciate, the podcast is a lot of hard work to produce. Every week it'd be amazing. Just take say 20 seconds, leave a quick review of my amazing guests and their great career stories. We'd really appreciate it. Thanks very much and I can't wait to see you. You.