GREGORY B. MAFFEI - MICROSOFT CORP.

Greg maffei seems a little uncomfortable with all the attention he's been getting lately, even though most of it is the kind that any CFO would be happy to have. He's proud of his accomplishments as senior vice president and CFO of Microsoft Corp., but he worries that his finance team won't get its due share of credit. And he was already the subject of a recent cover story for this magazine ("Smooth Operator," August), so it's understandable that he'd rather spend less time with reporters and more time on the affairs of his company.

Nevertheless, attention must be paid. That's because Maffei is the winner of two awards in this year's CFO Excellence competition, for information/knowledge management and risk management. And though he received plenty of help from his colleagues in Redmond, Washington, the value of his leadership is clear.

Some might think that Maffei's victory in information/knowledge management is a little too pat. Microsoft, after all, is arguably the world's leading vendor of information- management software, and it has a workforce of techies eager to use it. But in fact, the award was anything but a gimme putt. Like many other companies, Microsoft used to have financial systems that barely kept up with growth. Finance had trouble responding to new information needs -- it required two weeks to close the books. And like many a corporate Luddite, Microsoft used to rely solely on hard- copy reports, distributing more than 350,000 a year.

If the software giant was more advanced when it came to risk management (thanks in no small part to Maffei's work in his previous job, as treasurer), it still faced stiff competition from the other finalists. But in the end, Microsoft's innovations in managing both financial and general business risk -- including, of course, a sophisticated, Web- based risk-evaluation system -- put the 39- year-old Maffei on top.

Characteristically, Maffei sees these results as a benchmark of collective progress. "Finance was not viewed as a cutting- edge place in the company five years ago," he says. "We have tried to build a place that has intellectual challenge and competence."

Based on the evidence presented here, he's succeeded.

Information Management: A Digital Nervous System
While it is hard to believe that Microsoft wasn't always on the cutting edge in information management, it's easy to see why it needed to get there. Consistent annual growth of 30 percent­plus sent net revenues soaring, from $800 million in 1988 to nearly $20 billion in fiscal 1999. And until a few years ago, that stellar growth exposed glaring inefficiencies in financial reporting. For example, there wasn't a master chart of accounts for the company's financial groups (now numbering 54) to work with. At one point, Microsoft had more than 30 separate general ledgers around the world, with inconsistent data definitions.

To bring order out of chaos, Microsoft, starting under former CFO Michael Brown, set out to build what it calls a "financial digital nervous system" (FDNS). Based on common policies and processes, the FDNS was intended to provide a coherent, worldwide replacement for the company's disconnected systems. It would deliver fast, global access to information and financial reports, and it would provide an infrastructure for knowledge management and collaboration.

In short, Microsoft wanted "a world-class information system," says Maffei, who stresses the team effort in its development--and, in particular, controller Scott Boggs, whom he calls "the driving force" behind the system.

The FDNS was built on three primary technologies: an enterprise transaction- processing system, SAP R/3; data warehousing, which extracts SAP's transactional data for analysis; and a financial intranet, which knits together the financial groups and allows employees to access both SAP and the warehouse from their desktops.

The core of the system, R/3, was selected in 1995. Its financial modules were implemented in seven months, along with a single chart of accounts. At the same time, Microsoft upgraded its network bandwidth to accommodate SAP data traffic. Today, the system serves 2,000 named users and, thanks to its integration with the intranet, 39,000 total users--that is, Microsoft's entire workforce--in 62 countries.

To consolidate the SAP information and make it available for analysis, Microsoft created a financial data warehouse and reporting system, dubbed MARS (Management Reporting System). Refreshed daily, the warehouse's database system is Microsoft SQL Server. It's augmented by OLAP Services, Microsoft's online analytical processing engine. Microsoft Excel provides a standard user interface with drill- down capability; a custom tool, called MS Reports, enables deeper, multidimensional analysis.

Finally, to share all this information, Microsoft created a financial intranet, FinWeb, in 1995. Detailed financial reports are now posted on FinWeb and updated daily. In addition, virtually every financial group has a site on the intranet. From their desktops, employees can visit FinWeb sites to submit expense reports, purchase goods and services, review P&L and headcount reports, and transfer capital assets.

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