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Making the Business Case to Finance Leadership for Business Reporting Michael Ohata Director Reporting Standards Microsoft Corporation

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Objectives Identify common business information problems that negatively impact reporting and related control cost & effectiveness Define a business architecture that minimizes the risk Describe how open standards achieve lower cost Use these processes to better understand your business

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Common Business Information Problems

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A Typical Business Objective Increase production and throughput by leveraging the large warehouse engine. Tightly integrate critical business functions and align business processes to enhance flexibility, increase efficiency and productivity. Does this sound familiar to you?

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Leveraging the warehouse engine

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Externa l Financi al Reporti ng Business Operations Interna l Financi al Report ing Investme nt, Lending, Regulati on Processes Economic Policyma king Participants AuditorsTradingPartners InvestorsFinancialPublishers & Data Aggregators Regulators Software Vendors ManagementAccountants CompaniesCentralBanks Corporate Reporting Process Standard Taxonomy (Definition & Access) Common Business Logic Every step along the way people collect, validate and analyze information repeatedly

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Common Business Data Integration Challenges Complex, heterogeneous back office environment Lots of data physically managed And we replicate it for specific applications Common business rules/controls live within wide range of disparate applications We use manual data validation processes that are often circular Poor reuse of data definitions & business rules

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Many Internal Controls SubsidiaryERP CRM CRM ERP ERP ERP SubsidiaryERP Consolidation Supplemental information Control Control Control Control Control ControlControlControl Control Control Control Controls located with data or supplemental, manual processes InternalControlDocs ManagementReporting

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Internal Reporting When you consider Compliance as continual process, we begin to see more clearly the need for better automation Interna l Financi al Financi al Report ing Report ing Externa l Financi al Reporti ng Business Operations Investme nt, Lending, Regulati on Processes Economic Policyma king

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Heroic Analytic Processes Transaction data Multiple departmental Excel spreadsheets Consolidated spreadsheets for management Beyond business data integration challengeswe often drive our businesses to new performance insight ManagementReporting

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Lead to Risk of Manual Error Transaction data Multiple departmental Excel spreadsheets Consolidated spreadsheets for management

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Business Architecture that Minimizes Risk

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Where Do You Want to Be? Technology Financial Reporting

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Observation from CFO.com Performance management is to performance data what ERP is to transaction data: Relevant information, fully integrated providing a single view tailored to the needs of finance & operating executives. Goal: Common, standardized databases to establish and maintain a single, unimpeachable version of the truth about company operations and performance From IT, Compliance, and Performance ManagementIT, Compliance, and Performance Management

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Business Performance Management Competitive Analysis Risk Management Auditor tools 404 Monitoring Real-time Connection Services Oriented Architecture A Web service is a standard communication protocol that can be used by applications to: Publish information Publish information Enable discovery of information Enable discovery of information communicate over platforms using open Internet standards communicate over platforms using open Internet standards Data Business Operations Acquisition Integration External Reports SEC Filings SEC Disclosure Checklist Dept of Commerce Banks Internal Reports Data Data General Ledger Consolidation Drill down

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Enterprise Use of SOA General Ledger consolidations Many subsidiary companies Acquisitions Integrating internal systems Language Lack of a standard chart of accounts Real example (Fortune 100 Company) 72 instances of SAP 14 days to consolidate the books 90 employees in G/L consolidations team to load, edit and validate the subsidiary ledger mapping and loading

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SOA & Common Taxonomies Transactional & subsidiary dataControlsControl Control Aggregation,Analysis,Viewing ManagementReporting Wrap & Map - Standard data definition XML/XBRL Web Services

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How Open Standards Achieve Lower Cost

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An Analogy for Standards in Business Integration Cargo Containerization: Data Encapsulation Up until the 1960s Shipping individual pieces of cargo Loaded, packed, arranged and unloaded separately Significant breakage and pilferage Today, Containerization 90% of world trade moves in containers Shipping costs reduced by 70% More reliable and efficient end-to- end transport Enhanced controls

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Web Services Integration Reporting System Sales System ERP Integrated Platform Integrated Platform Leverages All Enterprise Assets Captures New Opportunities & Creates Value from Existing Investments Subsidiary Current Technology Approach

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What is XBRL Collaborative market effort 450 member organizations Open standard based on XML Implemented across applications Crosses all industries Designed for extensibility Includes XBRL GL Standardization Calculation Cash = Currency + Deposits Formulas Cash 0 Contexts US $ FY2006, Budgeted References GAAP I.2.(a) Instructions Ad Hoc disclosures XBRL Item Label CashCashEquivalentsAnd ShortTermInvestments Validation Presentation Presentation Cash & Cash Equivalents Technology standard Only one for financial & business reporting

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Summary Efficient corporate reporting demands better business information integration Internal control discipline drives continuous monitoring and process automation Break-through performance management is about standardizing information