Microsoft to Give Financial Managers More Power

Microsoft is ready to take the next step in overhauling its financial management structure by putting more power into the hands of individual financial managers.

The plan puts new senior executives, introduced to analysts Thursday at the company’s financial analyst Day, into a chief financial officer
position at each of the company’s business units. Each will have powers that Microsoft Chief Executive Officer Steve Ballmer formerly reserved for himself.

The new executives will report back to the unit’s general manager, and will have the responsibility for setting the units’ financial targets, budgeting, and measuring performance.

Until now, Ballmer kept the finance department on a tight leash by acting as the final authority on decisions over staffing, marketing budget and acquisitions for each unit. Under the plan, the new executives will take on those powers.

The new plan is part of the culmination of Ballmer’s efforts to restructure the company since he took the chief executive helm in 2000. Since then, Ballmer, together with Microsoft Chief Financial Officer John Connors, has focused on beefing up the company’s financial management and providing better visibility into the performance of its initiatives.

“We initiated a process, a little more than a year ago, to really scale up the level of financial leadership and the role that the finance organization plays, both in the center of the company as well as in the seven business groups and in our large scale operations centers and large scale Sales and Marketing Services Group,” Connors told analysts Thursday afternoon.

The first step was dividing the company into seven business units —
Client, Information Worker, Server and Tools, Business Solutions, MSN, Home & Entertainment, and Mobile and Embedded Devices — each self-sufficient as a mini-business. Each division had its own product development, sales, marketing and finance divisions, all headed up by a general manager with responsibility for that division’s profit-and-loss statement.

Connors, charged with implementing the plan, deciding on putting a CFO in each business unit. A number of the new CFOs have been drawn from outside the company, though others have been developed in-house.

Alain Peracca, a veteran of Hewlett-Packard, has taken over the position in the Client Group. Marc Chardon, a Microsoft veteran, has taken the role at the Information Worker Group. Peter Klein, also a Microsoft veteran, is the new CFO for Server and Tools. Another veteran, Bruce Jaffe, has taken the financial reins at MSN. Bryan Lee, now the new CFO of Home & Entertainment, has been with the company for several years after coming over from Sony. David Rinn, the new CFO of Mobile and Embedded Devices, is a nine-year veteran of Microsoft.

Microsoft has also beefed up its central finance function, placing Alain Crozier, with the company since 1994, with the Sales Marketing Services Group. Eileen Johnson, a six-year Microsoft veteran, has taken on the Operations Technology Group. Robert Uhlaner, who joined the company from McKinsey in February, has taken on Corporate Strategy, Planning & Analysis. Scott Di Valerio is the new Corporate Controller after joining the company from Disney in April. Microsoft veterans Mike Boyle and Brent Callinicos have taken over Tax & Internal Audit and Treasury respectively.

The new plan represents a substantial break with Microsoft’s past, when it
was heavily weighted toward its product development and sales divisions,
while giving financial management a secondary role.

Microsoft has been making the transition for some time now. In January, it
announced the landmark decision to institute
a dividend
, and it followed that move with the July decision to stop awarding employees stock options and begin compensating them
with actual stock instead.

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