4-page Case Study - Posted 10/8/2007
Views: 2571
Rate This Evidence:
Microsoft Sharpens its Forecasting with Office PerformancePoint Server 2007.
Corporate forecasting can be a daunting challenge for a mega corporation with subsidiaries around the world using distributed processes and tools to build its projections. Until recently, this was the case with Microsoft.
Microsoft produces a financial performance forecast nine times a year, with three quarterly forecasts looking at revenue, profit/loss, headcount, with the rest focusing only on revenue. The quarterly forecasts are especially critical, since Microsoft uses these as a basis for its CFO reports to Wall Street.To bring together the required data, Microsoft’s various business groups submit their forecasts quarterly, while the subsidiaries submit a monthly forecast. Each month, Microsoft’s corporate office must consolidate more than 300 Microsoft Office Excel spreadsheets received from more than 80 forecasting subsidiaries, as well as from all of the company’s business groups. The spreadsheets are imported and combined into a custom-developed, legacy forecasting application. From there, the data must be transferred to a reporting system.
“The process is time-consuming, yet the forecast cycle is really short,” says Jeff Sargent, Microsoft’s Director of Solutions Delivery for Finance. “The first two weeks of any given cycle is when we need to prepare all the information and reports required to complete the process, including making adjustments. At the end of those two weeks during the quarterly forecast cycle, the results have to go to our CFO, Chris Liddell.”
Martha DeAmicis, Senior Product Manager for Microsoft’s Finance Group, says the current system also raises concerns around the potential for inconsistent timing and definitions of data. “With the company having almost 800 users around the world entering data, policies need to be enforced to ensure data freshness and consistency of definitions.
Furthermore, timeliness of data consolidation for reporting is highly critical. “The time it took to report out of our legacy tool could potentially hamper our finance managers’ ability to make better decisions about their business,” she adds. “During the forecasting cycle, subsidiaries had to negotiate whether they were going to take more revenue or decrease expenses. In addition, controllers at Corporate needed to make similar decisions and were also dependent on data from the subsidiaries. So to make better decisions, it’s imperative to have the consolidated data sooner rather than later to give decision makers more time to analyze the subsidiary and aggregate data.”
Microsoft reached the time where they needed to consider alternatives to its legacy forecasting system and the timing was right for the new performance management solution under development. Towards the end of 2006, its corporate finance team decided to build a forecasting solution based on Microsoft® Office PerformancePoint™ Server 2007.
Greater structure and control
PerformancePoint Server 2007 is an integrated performance management application with comprehensive capabilities that include monitoring, analysis, planning, budgeting, and forecasting. It offers the scalability and data management security of Microsoft SQL Server 2005 on which PerformancePoint Server 2007 is based, as well as the familiarity of Microsoft Office applications such as Excel 2007 and Microsoft Office SharePoint Server 2007.
Helmut Lutz, Microsoft’s General Manager of Finance, Planning, and Analysis, says PerformancePoint Server 2007 will provide a more structured framework for gathering and analyzing complex financial data, and give finance users greater control over the corporate forecasting process. Consequently, both the process and its results will be significantly enhanced, which in turn will boost business performance, he adds. Utilizing the familiar Microsoft Office Excel front end, approximately 300 users were able to quickly enter their target information into PerformancePoint Server 2007, replacing the old system of creating standalone Excel spreadsheets and circulating them by email.
“The current Excel-based process provided us with a lot of flexibility, but very little structure from a corporate forecasting perspective, especially around the process of consolidating data from numerous sources,” says Lutz. “With PerformancePoint Server 2007, data consolidation is streamlined so that subsidiaries and business groups can submit their numbers directly into the system. Then, the corporate finance team can access the data and create reports right away.”
As part of a larger scheme to build a comprehensive performance management solution for finance, Microsoft focused first on resolving its monthly revenue forecast issues, and will later expand the solution to include quarterly revenue and profit/loss data. It will then move to address the annual target setting and budgeting processes.
“The revenue forecast was the first step,” says B.J. Moore, General Manager of Financial Solutions Delivery at Microsoft. “The ultimate plan is to have an integrated forecasting and planning process. We’re moving ourselves out of the legacy planning process we currently have to a common platform, toolset and process.”
One of the greatest advantages with PerformancePoint Server 2007 is that subsidiary and business group users enter their forecast data directly into an Excel form, an interface they’re already very familiar with. The information they enter is saved and managed in a secure central server rather than being emailed to various people, providing for greater data integrity.
With the previous process it could take up to a day to import data from Excel to the central forecasting application where data could be extracted for reports. With PerformancePoint Server 2007, corporate finance users will be able to access data and pull reports immediately using Excel or SQL Server Reporting Services, the latter being a key component of SQL Server 2005.
Additionally, calculations and business rules that are associated with the data are locked down within the server, thus providing greater accuracy since users are unable to make any modifications. As well, Lutz and his team can control core data to ensure that all users worldwide stay within consistent parameters – such as starting and ending dates for particular reporting periods – when entering their data.
“For example, when I roll out the actual information, I can make sure it’s at the end of the month and that no new information from the current month is entered,” says Lutz.
He points to another key feature and benefit of PerformancePoint 2007: enhanced security. “Security is something you cannot underestimate,” says Lutz. “With PerformancePoint Server 2007, I have far greater control over what access I give to users. They can really slice and dice the information, but only the information they are allowed to view. Instead of just assigning levels of access, I can pick and choose which information each user is allowed to access. For example, I can say that a specific subsidiary user will only have access to revenue data for a particular region.”
Lutz also likes that the new solution will be able to track every change made by each user. “With Excel tightly integrated with the solution, PerformancePoint Server 2007 will provide a good audit mechanism to see who touched the data and when the data was touched,” he says.
Benefits that go beyond forecasting
Moore sees other possibilities beyond forecasting and planning that will provide strong value. In the near future, he envisions further expanding this performance management solution to include other Business Intelligence scenarios.
“That’s another advantage of PerformancePoint Server 2007 – because it runs on SQL Server, it has the ability to scale according to our needs,” says Moore.
Lutz says the decision to go with PerformancePoint Server 2007 was based in part on a corporate master plan to transform Microsoft’s internal technology infrastructure into a unified, Microsoft-branded architecture.
“As a global technology company, we wanted to demonstrate to our customers what we can accomplish internally with solutions based on our own technology,” he says.
“Ultimately, PerformancePoint Server 2007 will drive business performance at Microsoft by significantly accelerating the speed at which finance users can translate huge amounts of financial data into information, and information into insight,” says Lutz.
“In finance, the time to market in terms of providing information is highly critical,” he says. “How fast can you translate data into information and information into insight? With PerformancePoint Server 2007, our users can easily compile and access information and transform this into insight that will drive our business to greater success.”
