Building an innovative solution with in-house technology and third-party applications
Microsoft’s customers sometimes need access to extended payment terms in order to alleviate budget/cash flow constraints. In developed countries, Microsoft addresses these with programmatic options. However, in developing markets, such as the Middle East, Africa and India, the needs are more acute and the available options are more limited.
In light of this challenge, Microsoft’s Global Financial Services (GFS) and its sub-group, Strategy & Solutions (S&S), set out to develop an innovative bank financing solution which would enable the company to offer extended payment terms to customers in those markets.
Extended terms needed to be provided on a non-recourse basis, which meant that regional banks were the most suitable counterparties for Microsoft to negotiate with in emerging markets. As country-specific solutions began to come online, the challenge then became to weave the bespoke customised solutions across a variety of countries and customers into a broader common offering, thereby providing the opportunity for scale.
When building a standardised solution, Microsoft’s standard global sales process meant that S&S had to follow various rules. This included ensuring that legal agreements with banking partners were compliant and that the necessary cross-border settlements could be achieved. In addition, all this needed to be accomplished without increasing headcount in order to ensure the solution was cost effective.
The S&S team used multiple technology modules to do this. The end-to-end customer transaction lifecycle was mapped (including financing workflow), while various processes were automated in an ‘as is’ state, and linked to each other so the reporting data could be fed into a single source. This was achieved through a combination of existing Microsoft technology and third-party applications.
Best practice and innovation
By harnessing Microsoft’s own technology as well as third-party applications, the company has been able to deploy several tools. An intake tool was developed using Microsoft SharePoint to place customer requests from different countries into a central queue. The queue is then approved via a web-based tool built using the latest Microsoft technologies, including SQL Azure, Azure Blob Storage and Azure Key Vault.
A third-party Excel-to-Word documentation add-in was used to automatically generate transaction bank documents/agreements by pulling appropriate Excel invoice data generated by the ERP system. These documents are then loaded to a third-party PDF electronic signature platform so that they can be signed electronically.
Providing extended payment terms in challenging credit markets involves navigating significant credit risks, but is also a key differentiator for this project. Regulatory complexities, onerous KYC compliance and lack of public credit scoring in specific countries ensured that solutions had to be customised for each of those countries, but still needed to be standardised in order to achieve scale. Microsoft selected suitable financing products and funding providers in the relevant countries, while limiting the execution process to a limited range of customer variants within a harmonised standard.
The solution required collaboration from various specialist resources across the organisation. Under the ‘One Microsoft’ approach, various individuals from departments across the world came together to function as a high-performance team. The team and processes have continued to be effective, even while working remotely during the COVID-19 pandemic.
With many untested options to choose from, and no guarantee that any particular approach would succeed, Microsoft’s modular approach meant the company could embrace a ‘fail fast’ strategy by testing various options and scaling the most suitable one. Leveraging standard processes allowed predictability of outcomes for customers, and in April 2020 S&S recorded a multi hundred milestone of in financing offered to customers.
With this pioneering solution, Microsoft has been able to showcase the power of its own technology and manage the continued expansion of customised solutions, without any need for additional resources. Building on its success in the Middle East, Africa and India, Microsoft is now in a position to build a playbook for emerging markets which can be used to expand the solution and standardised processes across CEE and APAC.