to ISO 20022 XML. “We want the richer detail.
And we want something that will upload au-
tomatically to our SAP ERP system,” he says.
“That will allow us to manage more efficiently
and tie up fewer people. The old way was to
call a bank and ask them to fax us a bank ac-
count statement. Then someone in treasury
would type it into a spreadsheet and send a
copy to the controller so it could be manually
re-entered in the general ledger, the book of
record. If banks were to standardize their re-
porting so their clients did not have to perform
complex data searches in different fields to get
their balances, it would free up resources to
provide greater value-add at both the compa-
nies and the banks.”
Getting electronic bank account manage-
ment (eBAM), and getting it through SWIFT,
is another Microsoft priority. “We’re pushing
it and talking it up whenever we can,” Zinn
says.
Recently, Microsoft treasury has pushed
to make its cash forecasting a showpiece
of technological efficiency. Ironically, the
centerpiece is Excel. While spreadsheets
and manual entry are often cited as the
hallmarks of inefficient treasury operations,
Microsoft has crafted an exception. Treasury
gets monthly cash flow forecasts from more
than 350 subsidiaries in numerous currencies. In the past, collecting and consolidating these forecasts was a slow manual process that tied up several analysts. Variance
reports were generated almost three weeks
after forecasts were submitted, and subsidiaries were rarely held accountable for inaccurate forecasts, Zinn says.
The cash operations team now uses SharePoint to receive and consolidate the subsidiary forecasts automatically and upload
them to a third-party-hosted tool based on
the .Net platform, Zinn says. It still looks like
Excel, but the collecting and consolidating
are now automated.
Actual bank account statement data come
over SWIFT through the Biz Talk accelerator,
which gives treasury electronic visibility to 99%
of its global cash. The data are uploaded to
SharePoint using an automated batch process
and then onto the same .Net-based platform,
where staff can then generate instant variance
reports using the bank statement and cash
forecast data. With quick, automatic variance
reporting, subsidiaries are now held accountable for their forecasts, which has dramatically
improved their accuracy, Zinn reports.
“We implemented a system that not only
gave us better forecasts but measured the accuracy of subsidiary forecasts and allowed us
to reward them for improving their accuracy,”
Zinn observes. “Incentives drive behavior. We
have been able to maximize invested cash and
move to just-in-time funding.”
Auto-posting has
eliminated the
need for literally
hundreds of hours of
our controller’s staff
time annually.
—MICROSOF T’S ZINN
Efficiency and economy are still big fac-
tors. “In addition to cutting costs by several
million and keeping cash invested longer,
we can now convert data into meaning-
ful business intelligence, something we
couldn’t do before,” he comments. “And
auto-posting has eliminated the need for lit-
erally hundreds of hours of our controller’s
staff time annually, not even counting the
exceptions that had to be handled manually
in the old process.”
While Microsoft is synonymous with inter-
connected software, speed wasn’t a top prior-
ity when Zinn was named treasurer in 2004.
“It is not that we were bad at cash flow fore-
casting; we just never had the pressure to excel
at working capital management,” he recalls.
“That has changed now that we have returned
over $150 billion to shareholders since I started
and are borrowing in the capital markets.”
Automating across treasury these days is
about speed as well as operating efficiency
and cost reduction, he says.
“For example, we have improved our FX
trading system to the point where we cut the
time required for end-of-month closing by
100 hours,” Zinn reports. The information
flows into a spreadsheet and then auto-posts
to SAP. “That is critical for getting hedge accounting treatment,” he notes.
In addition, the investment operations
team has been a leader in driving straight-through processing for the approximately
$200 billion in trades it settles each year
for the capital markets team. The team has
moved to SWIFT-based trade communications and is leveraging the SharePoint portal
to manage its custodian relationships. “In
fact, this aspect was so successful that the
custodian can hardly keep up with the ever-growing demand from its clients to deploy the
same interface to improve transparency and
timeliness of communication,” explains Zinn.
While Microsoft has a profitable line of
business hosting IT for other companies,
that doesn’t prevent treasury from having its
vendors host systems when the economics
are right.
“Where we have variable demand and
high IT requirements, we’re moving to S+S—
software plus services—arrangements,” Zinn
reports. “The most striking case was our
risk system implementation, where we let
TotalRisk [now BarraOne] host it, reduced
our staffing needs and saved 50% of the total
cost of ownership by not running the servers
on-site. S+S, supported by cloud comput-
ing efforts, including our own, is bringing
economies that are just beginning to be
recognized.”
To optimize automated operations on
such a scale, the treasury team continuously
pushes technology suppliers, leverages its
own software products and innovatively con-
figures systems and software into straight-
through processes, winning several industry
awards in recent years. Over Zinn’s seven-
year tenure as treasurer, automation has
allowed him to cut his staff by a third.
Now the biggest obstacle to Microsoft’s
achieving straight-through processing is
banks’ lack of progress on a single standard
for electronic reporting, Zinn says.
“We’d like to see standards adopted like
banks do, for example with ACH—develop
and propose a common standard, vote on it
and then set a date when everyone will have
to adopt it,” Zinn says. “That, assuming it is
an XML standard, would make banks more
valuable partners and provide us with more
time to analyze richer data, thereby providing more valuable insight to our management and constituents.”
