Photo of Jose Luis Marti, Microsoft, Lesley White, Bank of America Merrill Lynch, Jim Scurlock, Jayna Bundy, David Munier and Anita Prasad from Microsoft.

Our judges felt the Treasury Capital Management (TCM) team at Microsoft demonstrated considerable innovation across a broad spectrum of areas and the impact of the projects delivered by TCM is a true reflection of their sheer hard work and commitment.

As George Zinn, Corporate Vice President and Treasurer, explains, “this submission covers the journey of the team from developing electronic visibility of our global cash to achieving the ability to move money across banks and countries seamlessly. Now we are using this rich, complex electronic data set to drive compelling business intelligence (BI) which has allowed TCM to earn the trust of its partners and grow treasury’s strategic impact.”

The BI solution they developed and deployed is now available to other treasury teams in three forms:

1. The TCM team drove the vision and detailed concept of the solution and Hitachi contributed the software developers to stitch together various offerings from Microsoft to develop a cohesive BI solution.
2. Microsoft’s new Excel 2013 – the BI solution is now available to all Excel users.
3. The team also worked to deploy a similar solution that is now offered as a customised turn-key solution in Strategic Treasurer’s DART offering. This solution provides a simple, dynamic, graphical form to deliver BI from large complex data sets. For example, the team implemented SWIFT XML ISO 20022 for bank statement reporting covering close to 100% of their global cash.

Anita Prasad, General Manager, TCM, explains: “We had a lot of electronic data, yet when our treasurer asked a simple question – ‘How much cash do we have today?’ – the answer was not simple or available at the click of a button. Thus we embarked on a journey to develop an automated solution to address this very important question.”

As they look back, there were three key milestones in this journey from collecting data to delivering BI.

• Electronic visibility over global cash was the first key milestone.

  With over 1,000 bank accounts, more than 100 bank partnerships and operations in more than 250 countries it was critical to have electronic visibility over cash balances and transactions. Microsoft was the first corporate to implement SWIFTNet connectivity in 2006 using its own SWIFT environment. It was a critical first step that allowed treasury to collect daily snapshots of its cash balances in various accounts across the globe. In this phase, it was still using bank-specific VPN connection (data pipe), but the message (format) was SWIFT MT messages. Treasury leveraged Microsoft’s BizTalk Server as the middleware to get the bank statement translated from MT to IDOC format and directly uploaded into the enterprise resource planning (ERP) system. This allowed treasury to address questions such as: how much cash does the company have on any given day; where is the cash located – which bank account and currency; and which particular subsidiary owns the account? With the credit crisis that started in 2007, and the accompanying spike in counterparty risk, it was critical to not only have electronic visibility over the company’s global cash but treasury wanted to be able to move money between banks more easily. Ability to move cash became non-negotiable with ongoing global issues such as the Arab Spring and uncertainty around the future of the euro. With this backdrop treasury worked towards the second key milestone.

• From ‘visibility to mobility’.

  In April 2011 Microsoft became the first corporate to implement XML ISO 20022 v2 for bank statement reporting using PAIN XML messages and using direct SWIFT connectivity to their banks. It no longer relied on individual bank-specific VPNs. The second phase of this project allowed them to migrate payments to XML ISO 20022 v3 format. The benefit was more structured and detailed financial messages that allowed treasury to also do auto-reconciliation and auto-posting for the accounting entries. At this point, Microsoft had achieved visibility to virtually all of its global cash by leveraging SWIFT XML ISO 20022 bank statement reporting. However, having prior day and current day statements for more than 1,000 accounts didn’t automatically translate to a ‘concise view’ of the daily cash position. The constant volatility that is the new normal requires agility to answer the question about ‘where and how much cash’ does Microsoft have within minutes rather than in days.

So when the treasurer asked this question to the treasury team, he received several different answers. These answers included data on cash in bank accounts, total cash in investment portfolio and overall balance sheet cash adjusted for accruals. The time to respond varied from a few hours to two days. This exposed an obvious area for improvement in the team’s ability to report on key financial metrics. They needed a consistent definition of cash and they needed to develop the ability to provide this answer within minutes not hours or days. This started them towards the third key milestone.

• Big Data to BI.

  Jayna Bundy, Group Manager explains the approach, “we quickly set up a cross group team with representation from tax, accounting, legal, risk management, portfolio management, corporate finance, cash operations, cash planning and IT. The team set off to work on the following key questions: firstly, how do we define cash? For example, what are the components we include, or how do we reconcile accounting, tax, cash operations and investment portfolio perspectives? Secondly, how do we improve our response time and accuracy?”

All relevant data resides in disparate systems and it takes time to reconcile these views. For example, SWIFT provides bank account balance but does not cover portfolio of investments which is the largest component of their total cash. Similarly the tax view of on-shore versus off-shore cash involved a more manual process of checking cash and investments at Microsoft entity level, and finally several accounting adjustments for accruals have to be factored in. Figure 1 illustrates the systems challenges which had treasury searching for a BI solution that would allow it to take and consolidate data sets from different systems to provide actionable BI.

Source: Microsoft

There was no such ‘off-the-shelf’ solution for treasury so TCM found their ‘nirvana’ last year when they met with one of the SQL developers at Microsoft and learned about PowerView (PV). Treasury has been using this tool for over nine months via SharePoint services and just last month they went live with a new custom application that leverages PV, SQL Server database, SQL Server Reporting Services (SSRS) and SharePoint services. The application is called Cash Flow Analysis and Reporting (CFAR) which provides critical BI functionality.

All of the quarterly review meetings with Treasurer, George Zinn, now use PV so they can respond to his questions at that moment. They can slice the data with a simple mouse click in the meeting and enable him to make decisions rather than reverting back later with different static scenarios.

Source: Microsoft

Pankaj Gudimella, Senior Manager explains, “If we want to understand the details behind euro-denominated cash, all you do is click on the euro bar under the currency section and the graphic will automatically update (see Figure 2 above). It takes the discussion with our executives to a whole new level – from a deck with 50 static slides, which still may not have the view they want to see, to a set of two to three key slides that we can dynamically manipulate in a meeting to respond to questions.”

The dialogue results in a richer understanding of the business dynamics and allows TCM to be a key partner and a trusted advisor focused on decision support with powerful BI.

Benefits include:

• Cost savings.
• Return on investment (ROI):
  • Significant ROI of more than four times; reduced time to provide global cash view from three or more days to instantaneous; increased visibility and ability to move cash of 75% to 99%; reduced un-invested cash by several hundred millions; improved working capital by allowing for more reliable and immediate cash forecast accuracy reporting; and improved tracking counterparty exposure and risk mitigation.
• Time taken to implement solution and realise benefits.
• Productivity gains.
• Process efficiencies.
• Yield enhancement.
• Foreign exchange gain(s).
• Risk removed/mitigated:
  • With the ability to slice the data by country, currency and counterparty, treasury is able to review risk in all these dimensions and find risk mitigation solutions in a timely manner. For example, if treasury sees that more than 50% of its cash is with bank counterparty A, it can take steps to reduce that exposure and bring the number in line with its counterparty exposure guidelines. If they hear about potential geopolitical risk in a country (for example Egypt), they can very quickly pull up how much cash is in that country and with which counterparty.
• Outstanding technology deployment to support strategic decision making.

The BI solution demonstrates the creative thought process that is a hallmark of the TCM team and the project was designed and implemented in a manner that generated more than 4 x ROI. The solution demonstrates some unique attributes, including:

1. The success of the project was driven by the unique cross-group collaboration across treasury, tax, accounting, legal, Microsoft engineering teams and sales teams. The trusted partner relationship that TCM team developed overtime allowed it to quickly pull this group together and drive results from concept to a functioning tool in record time – just four months.
2. Demonstrates the rich tradition of hiring, developing and growing treasury talent by empowering the team to make decisions and drive strategic initiatives. This commitment allows the team to think ‘outside the box’.
3. Supporting their peers in the industry by working with other treasury workstation providers to share what they developed and make it available to their peers. For example, Strategic Treasurer now offers this capability as part of its DART solution.
4. Pride of the team in showcasing what their company can deliver for the industry. The solution they came up with showcases MS SharePoint, MS SQL Server and MS Office amongst others.

As Prasad concludes, “we have also recently completed deploying similar BI functionality across all treasury operations (global cash management, trade settlements and credit and collections services for its online businesses). With its strategic focus, ability to think through next generation technology to achieve efficiency and business decision support, this team is able to drive broad impact across businesses rather than just the immediate treasury team.”

With the outstanding success in leading Microsoft’s TCM team to new heights, commitment to growing and empowering talent, this team is a most deserving winner of Treasury Today’s Top Treasury Team in 2013.