Modern Finance: Embracing Advanced Analytics
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Classified as Microsoft Confidential Finance of the Future Increase Productivity Power BI Machine Learning Classified as Microsoft Confidential Classified as Microsoft Confidential EY CFO Survey Finance Tools and Team of the Future Does the current Finance function have the right mix of capabilities to meet future priorities Will the finance leader role fundamentally change as traditional finance tasks are automated or managed in shared service centers Classified as Microsoft Confidential Modern Finance: Embracing Advanced Analytics “To be able to set the right course for the future, finance functions must get better at processing—and extracting forward-looking insights from—large amounts of data.” — E&Y, The DNA of the CFO, 2016 Classified as Microsoft Confidential Classified as Microsoft Confidential “By adopting innovative technologies, finance will strengthen it’s business leadership through compliance, accuracy, and efficiency.” — Amy Hood, CFO Microsoft Classified as Microsoft Confidential efficiencies Compliance accurate Classified as Microsoft Confidential Classified as Microsoft Confidential efficiencies Compliance accurate Classified as Microsoft Confidential Classified as Microsoft Confidential A Day In the Life of our Finance Team at Microsoft • Email + Calendar • Chat Messaging • Skype meetings • Video Conferencing • Document sharing • Revenue • P&L • Headcount • Balance sheet reconciliations • Stat tool Electronic approvals - Approval dashboard • Purchase Orders • Invoices • Expense Claims Classified as Microsoft Confidential • Vacations requests Increase productivity through Innovation Communicate through chat, meetings & calls Collaborate with deeply integrated Office 365 apps Customize & extend with 3rd party apps, processes, and devices Work with confidence enterprise level security, compliance, and manageability Classified as Microsoft Confidential Classified as Microsoft Confidential Digital transformation journey Classified as Microsoft Confidential Impacting Through Finance Data Knowledge Action Impact Systems & Analytical Art of Reporting Framework Storytelling Classified as Microsoft Confidential Classified as Microsoft Confidential Revenue Summary – 3 years ago Segment (ST) YoY% FY16 - H1 Actual FY16 - H2 Forecast FY16 Full Year Forecast Fcst Seasonality (Change YoY) FY14 FY15 Actual $VTB YoY% Forecast $VTB YoY% Forecast $VTB YoY% Q1 Q2 Q3 Q4 EPG Commercial (2.6%) 10.4% 21,141 (276) 6.2% 36,222 335 (0.5%) 57,361 57 1.9% 0.6 pts 0.9 pts 3.1 pts -4.6 pts EPG Government 44.9% (6.6%) 16,702 (3,182) (0.4%) 42,630 3,903 5.4% 59,289 678 3.6% 1.7 pts -2.9 pts -6.7 pts 7.9 pts EPG Education 15.4% 28.3% 1,123 (1,471) (67.6%) 10,484 902 15.5% 11,607 (568) (7.5%) -4.3 pts -13.7 pts 8.0 pts 10.0 pts EPG Public Sector 40.0% (1.8%) 17,825 (4,652) (11.9%) 53,114 4,805 7.3% 70,896 109 1.6% 0.9 pts -4.8 pts -4.0 pts 7.9 pts EPG 18.3% 3.3% 38,967 (4,928) (2.9%) 89,336 5,140 4.0% 128,257 166 1.7% 0.7 pts -2.2 pts -0.8 pts 2.3 pts Corp AM SMS&P (98.6%) (0) (0) (4860.0%) - - (100.0%) (0) (0) (548.5%) -73.0 pts - - 121.2 pts Corp TM SMS&P 15.8% 20.4% 79,618 (1,103) (18.4%) 89,124 2,115 (20.9%) 168,760 1,029 (19.7%) 1.8 pts -1.1 pts 1.9 pts -2.7 pts Breadth SMB 19.8% 55.3% 30,984 (632) (23.2%) 33,925 (1,900) (36.9%) 64,934 (2,507) (31.0%) 1.3 pts 3.6 pts 3.6 pts -8.4 pts SMS&P Other (3.2%) 6.8% 8,470 1,484 3.9% 8,873 0 (43.6%) 17,343 1,484 (27.4%) 3.8 pts 10.9 pts -5.8 pts -8.9 pts SMS&P 14.8% 27.4% 119,072 (252) (18.5%) 131,922 215 (27.6%) 251,036 5 (23.5%) 1.9 pts 1.1 pts 1.8 pts -4.7 pts Commercial Surface 730 730 9422.8% - - (100.0%) 730 730 359.3% 43.1 pts 52.1 pts -1.1 pts -94.1 pts Managed Retail 5.2% (1.3%) 7,775 537 (65.3%) 6,931 924 (61.1%) 14,683 1,439 (63.5%) -1.9 pts -1.0 pts 1.6 pts 1.3 pts Online Stores 50.2% 61.8% 2,434 (97) (7.4%) 3,397 (0) 8.2% 5,831 (97) 1.1% -1.1 pts -2.7 pts -0.9 pts 4.7 pts Retail 7.8% 3.7% 10,209 440 (59.2%) 10,328 924 (50.7%) 20,514 1,341 (55.4%) -1.5 pts -3.3 pts 2.0 pts 2.8 pts Other Distribution 100.0% (78.3%) 13,242 7,975 106.3% 8,481 874 (11.5%) 21,706 8,831 35.7% 19.8 pts 1.0 pts -21.3 pts 0.5 pts OEM Field (4.5%) (54.7%) 4,074 142 (68.4%) 4,868 381 (40.0%) 8,942 523 (57.4%) -15.2 pts -0.7 pts 3.7 pts 12.1 pts OEM Field + Other Distribution 40.6% (69.2%) 17,317 8,117 (10.4%) 13,349 1,255 (24.5%) 30,648 9,355 (17.2%) 1.1 pts 3.1 pts -9.2 pts 5.0 pts CCG 29.9% (49.5%) 27,525 8,557 (38.0%) 23,677 2,179 (38.7%) 51,162 10,696 (38.4%) 0.2 pts 0.1 pts -3.7 pts 3.4 pts Total Field Billed 19.8% (1.2%) 186,294 4,107 (19.2%) 244,936 7,534 (20.2%) 431,186 11,597 (19.8%) 1.1 pts -0.8 pts 0.2 pts -0.5 pts Total SMSG Billed 19.8% (1.2%) 186,294 4,107 (19.2%) 244,936 7,534 (20.2%) 431,186 11,597 (19.8%) 1.1 pts -0.8 pts 0.2 pts -0.5 pts Memo: B&S Total w/o Surface 15.9% 19.7% 158,039 (5,180) (15.1%) 221,259 5,355 (17.4%) 379,293 171 (16.5%) 1.2 pts -0.5 pts 1.0 pts -1.7 pts Memo: Total OEM 40.6% (69.2%) 17,317 8,117 (10.4%) 13,349 1,255 (24.5%) 30,648 9,355 (17.2%) 1.1 pts 3.1 pts -9.2 pts 5.0 pts Memo: Total Public Sector 17.1% 13.7% 51,095 (6,921) (16.3%) 85,629 6,385 2.2% 136,680 (580) (5.6%) 0.4 pts -5.1 pts -0.4 pts 5.2 pts Memo: MCS - External Net Revenue 3,613 (2,174) (41.6%) 6,096 (637) 8.3% 9,710 (2,812) (17.8%) -3.9 pts -11.2 pts -1.1 pts 16.3 pts Memo: Premier - Support Net Revenue 10,075 728 15.5% 10,525 199 8.6% 20,600 927 11.9% 2.0 pts -0.4 pts 0.3 pts -1.9 pts Memo: Total ES Net Revenue 14,209 (1,637) (7.1%) 16,934 (455) 2.4% 31,143 (2,092) (2.2%) 0.6 pts -3.0 pts -0.2 pts 2.6 pts Memo: Consulting New Work Sold (43.9%) 3,302 (1,828) (35.0%) 7,063 107 113.5% 10,365 (1,722) 23.6% -25.7 pts -3.0 pts 24.3 pts 4.4 pts Memo: NWS Decrement 47.6% (89) (89) 94.0% Memo: NWS Net Decrement/Increment 32.8% 114 114 107.9% - - 100.0% - - 100.0% Memo: Premier Core Billed Revenue 2.6% 6,125 48 4.2% 10,964 267 32.5% 17,089 315 20.7% 4.8 pts -10.5 pts 5.6 pts 0.1 pts Memo: MCS Utilization Rate 439.1% 49.3% 6.6 pts -8.6 pts 52.5% 6.4 pts -10.3 pts 50.8% 6.4 pts -9.4 pts -10.5 pts -6.2 pts -10.8 pts -9.8 pts Memo: Global Delivery Mix % 3903.3% (415.2%) 21.5% -11.4 pts -14.7 pts 33.2% -18.8 pts -0.3 pts 28.1% -15.9 pts -6.8 pts -2.9 pts -26.0 pts -6.0 pts 3.8 pts Memo: Commercial Cloud (SI) 315.1% 89.0% 30,052 3,353 12.1% 59,030 3,951 15.3% 89,081 7,304 14.2% -3.8 pts 3.2 pts 0.6 pts 0.1 pts Memo: Azure (SI) 557.3% 264.9% 5,240 570 (37.5%) 10,775 (104) (34.8%) 16,015 465 (35.7%) -9.6 pts 8.7 pts -4.8 pts 5.8 pts Memo: Office 365 (SI) 315.2% 48.6% 27,237 2,729 32.1% 52,566 5,147 39.6% 79,803 7,877 36.9% -1.9 pts 0.7 pts 2.1 pts -0.9 pts Memo: Dynamics CRM Online (SI) 86.4% 100.0% 533 0 121.6% 1,016 56 176.5% 1,549 57 154.8% -2.9 pts -2.2 pts 13.6 pts -8.5 pts Classified as Microsoft Confidential * MMDS Memo Lines are directly from NDS Systems and do not contain the adjustments necessary to tie to Mercury. Budget data is available only for Area level. Revenue Summary – 2 years ago Classified as Microsoft Confidential Power BI Demo Classified as Microsoft Confidential Classified as Microsoft Confidential “a technique of data science that helps computers learn from existing data in order to forecast future behaviors” - Microsoft Classified as Microsoft Confidential Classified as Microsoft Confidential Microsoft Revenue Forecasting Process The challenge • Complex businesses: B2C and B2B, direct and channel, cloud subscription and software licenses, software and hardware • Inconsistent definitions, processes, and reports • Enterprise-wide forecast and consolidation system was spreadsheet-based • Hundreds of analysts forecasted revenue for 80+ geographies, 8 customer segments, and dozens of product SKUs; 80% of their time compiling data • Two-to-three week process was required to generate quarterly forecast • Forecast accuracy was not meeting expectations; poor forecasting leads to P&L volatility Classified as Microsoft Confidential Machine Learning Revenue Forecasting The Outcome Accuracy • 1.6% mean absolute % error over 6 quarters 10 As we have continued to invest time and resources in 100 harnessing the power of Machine Learning for • 98.4% accuracy with ML vs.