Speech Transcript – Allison Watson, Microsoft Worldwide Partner Conference 2003

ALLISON WATSON: Good morning. The many come together. It starts with each of us; together we become stronger, and momentum builds.

I’m excited to be here today at our Building Momentum conference for Microsoft. It’s an important event and I’m glad you were able to get here, for those of us that are here, this morning. It took two wake-up calls, two alarm clocks and two pots of coffee for me at 4:45 this morning and I’m thrilled you’re here with me at 7:30.

This is the most important business conference that Microsoft runs every year because partners are the way we do business. This year is unique because it’s the coming together of two partner conferences: Microsoft Fusion started in 1997 and Microsoft Stampede that’s been running since 1982. Welcome and thank you for being with us.

The Worldwide Partner Conference represents partners of every type from around the globe. It’s a great opportunity for us to meet with each other, to meet with the Microsoft personnel and to network together. I encourage each of you here today: if you’re an ISV, meet with a group of CTECs. If you’re a system builder, meet with a group of systems integrators. If you’re a Microsoft Business Solutions (MBS) partner, network with other training companies. Come together, discuss business opportunities; explore opportunities, gain insight and give is feedback.

The Rio tool is a great tool that you have at your disposal to schedule meetings with each other and other Microsoft personnel such that you can have the maximum experience in building your business at this conference.

This conference has participants from around the globe. There’s over 5,400 partners in attendance today, although they’re not all here yet this morning. So you all represent over 100 countries.

And there’s 1,500 Microsoft employees here from executives all the way down to general managers and partner account managers, serving and working with you day-to-day.

I welcome our many sponsors and thank them, with particular thanks to our platinum sponsors Hewlett-Packard and Hansen Information Technologies.

And, of course, I’d like to thank the city of New Orleans, because if we don’t have enough fun between these four walls we’ll absolutely have fun outside the walls. We’ll have a spectacular three days of information, business building and fun.

Our theme: Building Momentum. It starts with customers. Customers are at the core of everything we do. They shape us, they shape our businesses and we help shape their future.

And partners: Partners are critical to the impact that customers have in our marketplace. Partners are the primary way that customers are introduced to technology. And more importantly, partners are the way that our technology is turned into real business value for our customers.

This week, we’re going to highlight the advantages of partner commitment, talk about our product advantages and advantages of integrated information, and finally, opportunity and engagement. So our conference is built around these three momentum-building themes.

On day one — today — we’ll talk about partner commitment. We’ll talk about some very specific steps we’re taking to listen to you, invest back in you and build our mutual commitment together.

Starting this afternoon and all day tomorrow, the theme is around integrated innovation and product advantage, where you’ll hear from our product group executives about how their tools and technologies come together to create unique opportunity in the marketplace.

And on day three, opportunity and engagement: How are we going to come together with sales and marketing innovation to energize this industry and make sure we deliver true value?

Hang on for a great three days.

Now, we have some special folks in the room, the Microsoft Partner Advisory Council for the Worldwide Partner Conference, that have worked on behalf of all of us to shape this conference. I’d like to thank these executives who helped and played an important role in framing the content of the next three days.

One particular innovation this year was feedback about how to organize the breakout sessions such that each individual attendee could, in fact, experience the things that are most relevant to them. So through the CommNet tool at registration, you were able to input the specific interests to you, your industry market, the businesses that you serve, your link, your role in the business and the tenure of your business with Microsoft, and were able to produce a personal schedule and the breakout sessions that are most likely to be of interest to you. One of our Partner Advisory Council members called this an “attendee’s personal treasure map.”

Please join me in welcoming and thanking the Partner Advisory Council who helped shape this conference. (Applause.)

So I stood on the stage in Los Angeles 15 months ago and Doug Burgum and the team stood on stage in Minneapolis about 12 months ago. And we had heard quite a bit leading into that conference. We heard it was hard to communicate with us, that there was pressure on the business models that we were all facing, that Microsoft doesn’t seem to care enough about partners anymore and that although the partnership program and benefits are good, it needs to get better.

So we responded. We responded with a number of specific commitments. First, executive participation: As you know, last year we introduced bonuses tied to customer and partner satisfaction for the executive team at Microsoft. This year we’ve taken that one step further in a significant way. Six hundred Microsoft executives have over 60 percent of their long-term bonus tied to customer and partner satisfaction and every Microsoft employee has 30 percent of their annual bonus tied to customer and partner satisfaction. So you’ve got commitment from us, and we’re continuing with that commitment.

You asked us to focus as a business on how you do business, so we introduced the concept of the Partner Business Cycle, and in my division have framed, with our field efforts, everything that we do in the context of the business that you run, rather than a set of things that Microsoft delivers out to the market.

You asked us to align marketing and sales to better meet the needs — the pains — that our customers were trying to solve. So we introduced the go-to-market concept, a true innovation in sales and marketing. What you see listed here are the go-to-markets that we ran across Microsoft’s classic last year. The Small Business Server campaign last year, we had over 16,000 new partners join us in representing the Small Business Server product alone out to customers. And since July of this year, over 3,500 certified partners in the United States have signed up and integrated to produce in the two go-to-market campaigns we’ve launched this fiscal year. So we have a continued focus in sales and marketing.

If you look at Microsoft Business Solutions, we had unique go-to-markets targeted at horizontal and vertical campaigns with an integrated end-to-end demand generation lead follow up and partner relationship management systems. So you’ll continue to see the investments in this area as this is a key pillar of sales and marketing innovation for Microsoft.

You asked us to invest in training, a very critical cost to running your business and something that makes you look great in front of our customers. We were committed. We launched over 500 courses in seven different course formats. Over 22,000 partners, individuals, took Microsoft Business Solutions training and in total 420,000 people around the globe trained on the tools and technologies that we released last year.

In the area of technical support, you said we need to be in front of customers and we need to look great. We responded. We promoted the availability of business critical support. If a server was down, you had a place to call, you no longer had to figure out how to call your incidence and give your credit card to Microsoft.

We piloted deeper services for Gold and Certified Partners, and you’ll hear about some of those pilots today.

And we introduced the Online Concierge to give you a faster way to get through our online tools and technologies to get the support that you need.

You asked us to engage more effectively. We added people to engage. We added 700 people in the worldwide field to engage with you directly, and we now have over 2,800 people inside Microsoft engaging and committing to growing the businesses that you all are running every day.

On the MBS side, we added additional marketing and tools support by introducing the Microsoft Business Solutions brand under the Microsoft umbrella. Integrated advertising and PR campaigns in the launch of that brand, extended to you in the Microsoft Business Solutions space, allowed you to get the power of the brand and the integration brought from that brand.

We listened about pricing. We rationalized the ERP pricing of our products so that you all have consistency in which to compete in the ERP market. And we launched Total Solutions Financing in the U.S. and several other markets, so that you had the ability to work with your customers to get them into the new technology arena in a way and a pace at which they could do it.

So we responded, but we’re in a constantly changing market. What happened in the market this year? It was still a tough year for partners. Although we’ve seen improvements, sales remain tough, IT budgets have been tight, the skepticism about the value of IT has increased and there’s been continued pressures on the business model.

What do I hear? I hear from ISVs that it’s hard to sustain R & D over multiple years. As you add new customers and add new products, how do you sustain the R & D required to keep the investment strong and to keep the business healthy?

If you’re a services partner, you can’t compete anymore in technical business acumen alone. It requires business consulting acumen. It requires solutions acumen. It requires having and improving your competence at all times, which is expensive to do.

If you’re a reseller, our customers have become very well trained, not only in our market but in every market. They find the lowest price and they will shop and shop and shop and shop until they find the lowest price. We have to respond to that. Margins alone don’t help us anymore in this market space.

If you’re in the MBS space, the big ERP vendors have come down market. They realize there’s a great opportunity in the midmarket and so we’re facing competition like we’ve never had.

And if you’re a CTEC, multi-modal learning has really impacted and caused us to have to fundamentally rethink how we run learning solutions businesses.

Microsoft has had challenges too this year. Our image has remained under challenge. It’s about us in this room every day working toward improving that image and making everyone realize that we are a company that cares about its customers, cares about its partners and is a responsible leader.

Security has been a major concern and an even growing concern. It’s important to our governments, our families, our businesses and our customers. You’ll hear more about our responsible leadership in that today.

And although we’ve started down the path of doing a great job listening to partners, you tell us there’s more to do. And so we have room for improvement.

Despite those challenges, it was a great year for revenue. Microsoft’s revenue grew at rates faster than many of our competitors. Why is that important to you? Because uniquely in the industry as a large provider, 95 percent of Microsoft’s revenue is driven through partners. That means the growth that Microsoft experiences is a growth opportunity for the people in this room.

And you continue to tell us that for every dollar of Microsoft revenue it produces about US$7 in services revenue. So we look forward to the great and happy growth that we all celebrate as we grow the market together.

Our commitment starts with partners. It starts with you. I’d like to introduce a video that underscores this commitment. This is a video we used at our internal sales meeting, Microsoft’s Global Briefing. It is fun and funny. You might recognize some of us in outfits and wigs. In fact, all but four of us work in my division on behalf of partners. It tells an important story. It talks to Microsoft’s internal team about how critical partners are and that we still have work to do. So lean back and enjoy a rendition of a great dance routine from the movie Grease. We call it “Partner Lovin’.”

(Video segment.)

(Applause.)

ALLISON WATSON: We had a lot of fun making that video. Not only was it just fun to sing and dance, but it was a lot of fun to be serious about the things that we take seriously, our partners.

If I could, I’d like to ask all the Microsoft employees in the audience to stand up. There’s a few of you. On behalf of all of us in this room standing up today, I’d like for you all to clap and thank our partners together, because we’re all about “Partner Lovin’.” (Applause.) Thanks.

So we’ve been listening. We’ve been listening for the last 12 months and you can see on the screen in front of you some of the things we’ve heard. You say it’s a great partnership but you ask: assist us with direction, share our risk, simplify our engagement, help sell Microsoft against competition, listen to us and innovate with us and help us work together. Clearly you’re telling us there’s need for more change.

But in addition to what you’re telling us, our customers are speaking as well. Our customers are more sophisticated than ever before, and in many cases, they’re more cynical about IT than they have been before. The ability of partners to deliver deep, specialized competencies and solutions is important, and having and improving your expertise is critical. Consulting around business processes is equally important as technical acumen you bring. And the pace of technology integration is not slowing down; it’s speeding up.

So as we move from starry-eyed customers to hard-nosed skeptics, we have to come together, and we can’t do it alone. So, therefore, our tenets of partnership are more important together. The Microsoft Partner Program and partner commitment is built on sound principles of partnering that have not changed and will not change. We remain committed to creating a strong economic opportunity for our partners of all types, for supporting diverse business models in our partners, for leveraging Microsoft’s resources to, in fact, bring together a one-plus-one equals three combination, a commitment to listen and a continued commitment to innovate. Innovation in our partnerships is critical for our mutual long-term success.

I’m very proud today to announce a profound change in the way we approach partnering with the concept around partnering innovation. We’ve built a new Microsoft Partner Program that addresses the challenges we’ve heard and is aligned to support you with better business needs.

The new Microsoft Partner Program was developed from a partner point of view. It’s a revolutionary approach to partnering innovation, delivered in an evolutionary way.

This program recognizes your present investments and commitments, and sponsors a way for you to change and grow in the way that your customers and your business demands. Simply put, the changes we’re making are about us coming together to deliver against the range of customer needs, to be agile as a company and as a group delivering together, and to realize the value of realizing potential in our lives and in our businesses.

The new Microsoft Partner Program, launching in January 2004, and rolling out over the next 15 months, is about us coming together. It’s about Microsoft and our partners, it’s about partners with partners, and it’s about us with our customers.

(Video segment.)

ALLISON WATSON: Focus, impact, value: Those are the three core tenets of the expansion of the Microsoft Partner Program.

Let’s start with focus. Focus is about a new competency framework we’re introducing. It’s about a competency framework for you to allow us to tell us where you specialize and focus your business, and for us to tailor our investments and our commitments and benefits to you based on the business that you’re in.

Each competency that you see listed here has a unique set of requirements that will establish an accurate representation of the unique services and solutions you bring to the industry. These competencies include network infrastructure, advanced infrastructure, information worker productivity, integrated e-business solutions, business intelligence, security, ISVs, learning solutions, Microsoft Business Solutions, license and software asset management and OEM and hardware solutions.

Should you and your business choose to achieve one or more of these competencies, what impacts should you expect in the new partner program framework?

Number one, it will bring focus to the way in which we communicate with you.

It will identify to our customers the needs that you address, and help us as a community ensure a quality customer experience.

Number three, it suggests a roadmap where you can choose to gain and grow your business and/or partner with other partners in order to achieve greater business strengths.

It will allow more accurate matches between the leads and the demand generation and the unique business opportunities that you provide in the marketplace.

And it allows tighter alignment between your business and the Microsoft marketing engine.

The second tenet of the program is impact. Impact is about how well you do in the marketplace. You heard in the video it’s not just about two technical certifications, the current requirement for the Microsoft Certified Partner Program. In fact, you tell us you have to do much more to deliver a quality customer experience: service, train, relate, communicate and provide a range of services to truly enable real business value. You’ve asked for recognition and differentiation for when you provide the best value in the marketplace.

We’re introducing a concept around impact called Microsoft Partner Points. The Partner Points allows a flexible infrastructure such that, regardless of what business type you’re in, you have a way to express the success you have with customers and progress through the program and attain points, such that you can attain higher levels in the program.

You’ll earn points in several areas. Number one, you’ll earn them in terms of your competencies that you achieve, unique focus areas in your business.

You’ll earn points based on the true end customer satisfaction you deliver, probably the number one requested focus you asked of us in designing this new program.

You’ll achieve points based on the wins that you have in the marketplace in your business so that influencers, resellers, system builders and ISVs can have parity in terms of how they impact the marketplace.

You’ll achieve points based on the tested applications you have as an ISV on the Microsoft platform or your learning product sales or the overall revenue.

Points accrue like currency. As you move between levels you’ll be able to move up. But the partner point system is a true example of our evolutionary approach in the new partner program. All partners in the January 2004 timeframe will be grandfathered into the program and allow you to experience in the old way the Microsoft certification requirements as you acquire and move into the new partner points program.

The final pillar is value. Value is where it’s at. It’s about tailored benefits that are uniquely designed around the way you do business and the partner business cycle.

Value means delivering targeted benefits that are aimed at the solutions on which you deliver, based on the competencies you have and the partner points you’ve achieved.

Value means responding to the market needs by providing tools for you to compete.

Value means investing in the key brands that you’ve told us you value, Microsoft Certified and Microsoft Gold Certified Partners. It means we’re going to do greater brand marketing and provide greater brand awareness to our end customer marketplace about the value of the great partners we have in this industry.

If you were to take away about something about the new program, take away three things: There’s a new competency framework that’s a mechanism for aligning the specialties that you focus on. There’s partner points that allow flexibility and showing total impact that you make on the market. And there’s tailored and unique benefits to each of you based on the businesses in which you support and deliver.

In terms of value, how will the new value roll out and when? At the January renewal timeframe, we have several significant enhancements to the program value for Gold and Certified Partners.

Number one, presale technical support. You’ve asked us to be supportive of you, regardless of what situation you’re in, in an unlimited way: to be in front of customers, whether you’re in a competitive situation or just a tough situation, to be there on the front lines with us who are incrementing, and every one of you will have presale support starting in January via phone and field-based resources.

Additionally, tele-management for all Certified and Microsoft Gold Certified partners, a dedicated and focused inbound and outbound relationship such that you have a place to call and a place with which to connect with Microsoft at all times.

And finally, for Microsoft Gold Certified Partners, the introduction of the technical services coordinator to assist you in the post-sales support process both proactively with your customers and reactively for support situations.

In the second quarter of the year, we’ll be introducing the model for partner points and the competency framework. We’re introducing it for you to get a feeling of operating in the new model with really no requirements to attain any requirements at those levels. However, you’ll be able to experience and understand how the new program works based on the business that you run.

We will also be introducing enhancements, including portal enhancements, such that you have the unique and specified way to find the information on the Microsoft Website that is tailored to the unique business that you have and, in fact, by company name.

You’ll be able to have a marketing services bureau if, in fact, you’re looking for a third party way to have a low-cost way to enhance your marketing capabilities.

And finally, we will introduce at that point the Partner Customer Satisfaction program to track for you and with you the results of your end customer satisfaction that you drive.

In July of next year, we’ll integrate the Microsoft Business Solutions partners into the program during the annual calendar renewal of the Microsoft Business Solutions partners. We will add benefits including: lead process improvements, partner resource directory enhancements — where we allow true partner-to-partner networking across competencies, geographies and business needs — and finally, incremental training benefits.

So, we talked about an evolution in partner. Let’s talk about a revolution. Let’s talk about putting in place the elements that serve as a unique opportunity for us in the marketplace, the elements addressing our customer needs of marketing innovation, technical innovation and partnering innovation.

So let me show you how it all comes together. What you see listed as a community is that we have to respond to customers’ pressing business needs. We have huge opportunities in this marketplace if we can address the customer pains out there.

Customers are trying to connect business processes together inside their companies and across company boundaries. Customers are trying to get the productivity out of their most expensive assets, their information workers. We together can unlock and address this pain. Customers are trying to figure out their customers. They either want to retain their best customers or they want to gain new customers. We can address this pain.

They want this on a stable financial platform that conforms to the current regulatory environment and they want a stable IT platform that is secure, dependable, flexible and agile for the future.

Our competency framework, the first pillar of innovation, partnering innovation maps to these customer needs. You’ll see the 11 competencies map that we just described in the partner program across this range of needs.

It’s telling if you think about it, at the range of competencies required to deliver value across the range of customer pains that we see. It supports an opportunity as you think about where to grow your business in terms of what you currently support and areas in which you’d like to grow your business. It also supports an opportunity to think about partners that have these particular areas of focus that you like to partner with to address a broader range of customer needs.

Partnering innovation then ties across the next pillar to marketing innovation. We are committed to outstanding success in marketing innovation and in year two of our integrated go-to-market model you’ll see here listed what we call FY ’04 go-to-markets. To do a great job in marketing innovation means bringing together innovation marketing messaging and creating awareness in the marketplace directly from Microsoft and creating integrated awareness and marketing directly from our partners to our customers, this slide list, the FY ’04 go-to-markets and the new products that we’re launching this year, that will come together across the range of customer needs.

The third innovation area is one around technical or integrated innovation. What you see listed are the current set of products that come together independently and in a unified way to serve the range of customer needs. Many, many, many of the products on this page are new. Many are new in the last 30 days, many will be new in the next 20 days. It’s an incredible opportunity, an incredible time for technical innovation to come together in a cost effective way.

It’s also an incredible time for ISVs, because each pillar of this platform provides a place on which ISVs can take a solid set of platform innovations and extend to a unique solution offering for a specific customer need. It’s never been a better time to participate in a set of integrated innovations and marketing and partnering innovations.

We have empirical evidence that this really works. Talk, if you will, to Mack Aikens from Ratio One in the UK or Gert Schmidt from S & L Networking in Germany or Pepe Smith from Network SI in the UK. Each of these partners who’s participated in a pilot of this program for the year has told us this alignment between marketing innovation, sales innovation and technical innovation has made a marked and sustained improvement on the way they do business and their ability to deliver business value for customers.

We’ll have drilldowns over the next three days, in fact, six sessions uniquely targeted to the Microsoft next generation partner program framework and I’d encourage each of you to attend one of those sessions to get more detail and understand how it makes a difference for your business.

So the journey begins here. It’s the beginning of a new Microsoft Partner Program. The framework we’re laying out is clear and robust. More importantly, it’s supported by an unwavering commitment to partnership on behalf of Microsoft and our partners, a commitment that is comprehensive, a commitment that’s about building businesses together, evolving to meet the real changes in the marketplace and adding value to you and your customers. In the end, this commitment and journey will help each of us as partners realize our full potential.

On behalf of Microsoft, thanks for being here today, and have an incredible week.

(Applause.)