THECORPORATETREASURER.COM32 CORPORATE TREASURER DECEMBER 2015 / JANUARY 2016 THECORPORATETREASURER.COMCORPORATE TREASURER DECEMBER 2015 / JANUARY 2016

How Microsoft visualises its data Financial controller Simon Hardman talks to The Corporate Treasurer about turning raw data into insightful report-ing for � nancial analysis, forecasting, and decision making Ann Shi reports

I t’s not often we get the chance to quote a world famous detective, but in the words of Sherlock Holmes: “It is a capital mistake to theorise before one has data.

Insensibly, one begins to twist the facts to suit theories instead of theories to suit facts.”

For business, the power of data lies in the non-biased analytics that can support decision making.

Pulling useful information from multiple sources, all speaking different languages, makes this objective challenging.

In the case of Microsoft, fi nancial analysts spent as much as 75% of their time collecting, compiling and reconciling data, according to Simon Hardman, fi nancial controller of the tech giant’s Australian operations.

He was referring to a time when Microsoft had no shared centralised platform and no ability to pull information when required.

This is partly due to the fact Microsoft’s core business divisions run independently of each other, operating under division-specifi c processes and relying heavily on reporting tools to serve specifi c purposes.Over 350 silo reporting tools and systems

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FINANCIAL PLANNING & ANALYSIS

“Years back, our close would have taken maybe 10 days; today it takes less than three”

(BI) tools, specifically its own cloud-hosted Power BI. This has delivered a live view of key data, which in Hardman’s case, needs to include P&L.

The P&L report is presented in a dynamic graphic way – its data elements all run in real-time, giving Hardman a view of potential changes to budgeting or forecasting based on changes to Microsoft’s financials.

Using Core Finance programme’s IT infrastructure concept, Microsoft plugs the central database’s connectivity into Power BI’s dashboard, which is the end-user’s interface.

“The true power within Power BI is, [if I] select one data field within a chart, the other charts will dynamically alter to isolate relevance of the selected field,” said Hardman.

For example, by clicking on the country data field, Hardman can see the country’s performance based not only on financials and variance to budget (VTB) in absolute dollar revenue terms, but also the country’s performance by its pricing level and product performance.

“This helps to give deeper insights to where the performance is coming from, and whilst it has the best VTB performance, I can see that in fact the country is missing its new revenue budget, which is a concern for growth and new annuity streams of revenue.”

Microsoft started to use the service for Microsoft employees as far back as five years ago. Broad adoption across the group happened over the past two years, said Hardman. The finance team in Australia started to use the BI tool in 2012.

THE FUTURE Along with the three ongoing initiatives, Hardman believes the future of “turning data into business insight” will evolve with advances in machine learning, and natural-language query capabilities.

On this front, Power BI already has a built-in Q&A function. Hardman can make written and spoken queries on it and get answers in the form ranging from simple numerical values (“revenue for the last quarter”), charts (“number of opportunities by team”) or maps (“average cost of goods sold in Australia by city”).

Whether this means Hardman, and people like him, will be replaced in the future by artificial intelligence is another matter, but if it means even less time crunching raw data, that’s no problem. n

were used across the group as a result – and as much as $30 million was spent annually using software for preparing customised reports.

Microsoft knew it had to change. Ten years ago, it took the decision, in Hardman’s words, to transition the finance role from custodians of information to business partners for decision making.

The process requires three critical steps for success, Hardman explained.

STEP 1: OUTSOURCE THE RAW DATAAnalysts should no longer need to spend any time on data collection and reporting generation.

In 2005, Microsoft kicked off an initiative called One Finance, and entered into a business process outsourcing (BPO) partnership with Accenture in early 2007, with an initial seven-year agreement covering 90 countries.

Three areas of finance were shipped out: accounts payable (AP), procurement, and general accounting, which includes statutory reports and tax as a subset.

Microsoft gives Accenture levels of access authority to the sets of relevant data, such as supplier records, credit notes, invoices, and prepayments for AP reports generation – for example, from Microsoft’s own software and systems. Accenture can then collect and reconcile that data to generate reports that come back to Microsoft.

Financial analysts at Microsoft were subsequently able to slash the work hours spent on data collection to less than 40%, from 75% previously. This number keeps getting smaller, as financial controllers like Hardman continuously look at new outsourcing models. In fact, the 2007 Accenture BPO deal was extended to 2018.

STEP 2: STANDARDISE THE DATAOne of the biggest problems Microsoft faced was the lack of a single taxonomy for financial information across the group. Consequently, financial controllers were unable to accurately benchmark the business performance of one subsidiary to another.

To tackle this issue, Microsoft started an initiative called Core Finance. It has two main goals:

● To establish a group-level data taxonomy system, ensuring that data metrics are consistent across all subsidiaries.

● To build a single master data warehouse in a central repository, where data can be stored and taken from company’s various source systems (such as MS Sales for revenue), and non-Microsoft data sources, such as server shipments, or survey data.

This was no easy process, but in short, Microsoft set a multi-tier reporting framework and identified the basic sets of reports core to each reporting tier.

It is a top-down approach. At the company level, the highest reporting tier within Microsoft, the core reports include executive P&L, revenue, and headcount reports. Metrics used in these core reports remain consistent with those used in lower tiers, which focus on the business group and unit levels.

This consistency helps Hardman to identify performance trends and find growth opportunities for his subsidiary. Finally, when finance teams need to access reports, they only need to log on to one database.

In Hardman’s case, he assesses P&L when closing a month, for which he needs sales and operation expenditure (opex) information to generate net revenue, gross margin, and contribution margin.

The standard reports in the central data warehouse contain built-in drill-down capabilities that are connected to other databases, and Hardman only needs to pull the functional data (sales, opex, etc.) from the warehouse for P&L and scenario analysis. “Years back, our close would have taken maybe 10 days, today it takes less than three.”

STEP 3: DATA VISUALISATION The final challenge is the presentation of the reports. Microsoft uses data visualisation with business intelligence

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