Allison Watson: Microsoft Worldwide Partner Conference 2004

ALLISON WATSON: Welcome. It’s great to have partners like Roland, the Microsoft Netherlands teams, and all the partners here from the Netherlands today, because they’re going to use this conference to build velocity in the market in the Netherlands and across Western Europe. Thanks, Roland, for that great introduction. Welcome to Toronto. It’s incredible to be here in this fabulous setting for the biggest industry partnering event in the world.

Now, I would like to do a little bit of exercise to get us started this morning, because many of us have attended conferences for a number of years. So, I would like to ask that everyone where this is your third or more Microsoft Partnering Conference, please stand up in the audience.

This is good. Looks like about 50 percent of the audience [have attended] three or more Microsoft Industry Partnering Conferences. Stay standing. If this is your second Microsoft Partner Conference, please go ahead and join the standing.

So, 60-65 percent of you, this is going to be your second or more conference. Now, finally, everyone else who is sitting down, welcome to your first Worldwide Partner Conference. Please stand up. Everybody stand up.

Now, if you’ll turn around and introduce yourself to someone who is either new or old, so that we can start the networking right here, and get started to a great week.

Thank you, and welcome. To give you a sense of the size of the audience for which every one of those handshakes is going to matter this week, there are 5,500 Microsoft partners in the room with us today, and over 2,500 Microsoft employees. We’ve incredible diversity from around the globe, and we have incredible diversity of business types and business models, 30 percent of you are from global systems integrators and regional and local systems integrators; 27 percent of you focused on Microsoft Business Solutions; 16 percent ISV; and the remainder from learning solutions, from seller, from distribution, and from OEM and system builders. Welcome. Imagine the diversity of the ecosystem in this room, and the potential that we have coming together in a unified way around the world to deliver against the goals of technology in our customers’ market.

Now, it takes a tremendous amount of people to put a conference of this size and scale on. And I want to thank the Microsoft Worldwide Partner Conference Partner Advisory Council that you can see up here. They participated with us over the last nine months going over every detail since this is best industry conference. Thank you all for your participation.

I would also like to thank all of the sponsors for our event with special recognition for our platinum sponsors, Hewlett Packard, Computer Associates, and Hansen Information Technologies.

So, let’s look at how the conference is going to shape up over the next three days. Our conference theme nine months ago was about building momentum. I have the distinct pleasure to introduce the new Microsoft Partner Program as the partnering foundation against which we would take momentum forward in the marketplace.

Now, it’s about velocity. It’s about speed. Speed to market, speed to customer, speed to value. It’s also about the speed at which money changes hands in the economy. Our goal over the next three days is to deliver the groundwork for how each of you and all of us together achieve velocity against all of those definitions in the marketplace.

We have three themes over the next three days. Today, we’re focused on capturing the business opportunity. I’ll be joined on the stage with Simon Witts, Orlando Ayala, and Sanjay Parthasarathy to discuss how we capture the business opportunity for your partners and your partnering business, and for each of the customer segments that you serve. Tomorrow the business group executives will discuss Integrated Innovation, and they’ll talk about not only our products and our technologies, but how you as partners are critical to our delivery of Integrated Innovation, because you make our products come to life in our vertical markets, for our customers, and their unique solutions.

Finally, on Day Three, Mike Nash and Steve Ballmer are going to join me on stage as we talk about the promise that allows you to bet your business on Microsoft. Now, Steve is taking questions all week long from you, if you’ll enter them in this CommNet system, so you can ask the questions that matter most to you, that would say, wow, that’s the thing that would cause me to bet more of my business on Microsoft.

So I look forward to the great three days ahead, and with the goal of achieving velocity. Now, where are we in our environment over nine months ago when we last got together? The economic environment is shaping up. We had a turning point in 2003, with worldwide tech spending increasing 5 percent for the first time in over three years. CEOs are saying, hey, I’m spending more money on new projects now, they’re saying, it’s important to me to do infrastructure upgrades for the first time in four years. We as a group have to capture that incredible opportunity out there.

Finally, there’s no shortage of responsibility that we have as partners, because the customers are demanding increased partner expertise, so they can really, really deliver value in their information technology solutions. The competitive partnering environment is interesting, as well. Think about competition in two ways, one, we compete together against other vendors in the marketplace for a share of our customer’s wallets. The second place we compete is Microsoft versus other vendors for a share of your wallet. What’s going on out there?

IBM, they continue to make incredible announcements around on-demand, and a lot of noise in the marketplace. They’re focusing on deep verticalization, and really leveraging their impact with ISVs. However, inside IBM they still remain a services company. Their fastest-growing business is their services business, and I don’t believe that in their on-demand world that a very strong growing services business will deliver either the best partnership promise, or the best customer promise.

What about business applications? It’s hard to tell what’s going on with the Microsoft business applications, given our new P & L structure that’s reporting earnings in a way differently than we have in the past. There’s a very important leading indicator about the health of this business, it’s the net number of new licenses sold per month. Our business application business is at an all time high of net licenses sold per month, and we’ve got double-digit growth month over month over month. It’s an incredible place to be, and we have the best partnering proposition to drive our business applications business.

The final area is open source. There’s no 10(k)s to look at in this area, rather it’s a question of scenarios. Microsoft is committed to winning against open source, with technology platforms on key scenarios, and with incredible sales engagement about the value of Integrated Innovation with our technology, and with our partnering model. If you competed with us in the last year in situations on this side, you’ll see that we’ve been able to win most often because of our ultimate story around Integrated Innovation.

The third aspect is the concept of the Microsoft partnering environment. Since New Orleans I’ve had the opportunity to travel to 11 countries and 11 U.S. cities to gain feedback from our partners. I’ve met with partners of every size, serving every segment, and across all competencies. It’s amazing the creativity, and energy, and passion you all show in terms of going after the business out there. But I also hear very consistent feedback about what we need to do better, and you’ll see it framed on the slide.

Integrated solutions. You want us to do a better job, teaching you and talking to our customers, about how products do come together to deliver value. Better connections, there are 7,500 of us in this room, how many of you need to know each other so that we really drive velocity in the marketplace. We can do a better job helping you connect.

Competitive help, you have the help you need it, where you need it, to win every deal you go after. Accelerating business solutions. We’re on the path on that one, and you’ll hear some exciting things going on later today. Of course, you wouldn’t be here if you didn’t want to worry about increasing your revenue and profit. We’re going to do that with you in two ways, we’re going to help take cost out of your business, and we’re going to help drive up revenue, and demand=generation opportunities for you.

Finally, the concept of simplify your relationship with me, and let’s just go execute. We talked a lot about this in New Orleans, and in fact, for those who joined me on the Day Three keynote Q & A, Orlando got on stage, when asked a good question about partnering systems with Microsoft, and he said he would fire himself by this conference if we didn’t make progress, because that’s the level of our commitment.

Now, I’m not here today to make any personnel announcements, but we are moving forward. It’s a tough problem to solve, but I’m very proud that as of the April launch of the new Microsoft Partner Program system, we’re taking 87 different partner databases around the Microsoft Corporation and bringing them down into one. That one database will be the central place we use to serve all of the other sales and partnering systems. We’re making progress against the vision we shaped with you nine months ago, and are completely committed to that vision.

So what’s our promise of partnership? Our promise of partnership, the Microsoft promise of partnership, centers around the Microsoft Partner Program. And in that Microsoft Partner Program, two fundamental tenets. The first is the competency model. We launched eight competencies in April. We added the ninth competency from Microsoft Business Solutions 10 days ago. Welcome to the competency framework. Later this year we’re going to add licensing and software asset management and OEM and hardware solutions to round out the promise we made nine months ago.

The competencies are a super, super important way that we’re going to bring one promise of partnership from Microsoft to the vast array of partners we have around the world. No. 1, it will allow you to focus, tell us where you focus in the business, and allow us to then direct the focus that we give to you around driving value in and out of the businesses that you’re delivering to our marketplace. No. 2, it allows us to direct our investments. If you’re an ISV partner, or a system builder partner, or a business solutions partner, you have different needs than perhaps partners in other competencies. We’re committed to directing our investments to drive up the value in your business.

No. 3, the competency framework is my personal commitment with every business group around the company. Each business group executive knows which competencies are most relevant to their business area, and they now have a dedicated sales force that they’re thinking about every day, how many do I have, how successful are they being, are they trained on my new technology, and what kind of feedback are they going to give me about new technology investments I’m trying to make. The promise around the competencies is super critical, and we’re committed to deliver it.

Within the competency framework, then, we’re committed to delivering value at every stage of your business cycle, planning, enablement, creating demand, SAL, service retaining, every competency will have deep, deep focus to deliver value, to drive cost out of your business, and increase revenue across the partner business cycle.

I have an opportunity now to shape up the size of the opportunities in each competency. What you see listed here is the market opportunity, software revenue only, for all of the solutions that make up each competency. What you’ll see in the top orange bar is what we call the Microsoft addressable revenue in FY ’04, and the pink bar represents how much of that revenue we’re getting today. You’ll see incredible opportunity for every competency in terms of growing business within the solutions in that area.

The green bar represents the growth trajectory for FY ’08, so whether you look at it in terms of growing the business now, or riding the growth curve of the software applications market in each competency alone, there’s plenty of opportunity to bet your business on Microsoft, and grow your business in a very, very rapid and swift way.

So that’s our promise of partnership to you, but all of that can only be successful if, in fact, we have a great mutual promise to our customers. Our mutual promise to customers shapes up in three ways. No. 1, Microsoft, what are we committed to? We’re responsible for bringing the platform, the tools, the brand, and the industry leadership to the promise to our customers. We couple that with deep customer understanding that comes from our relationships and your relationships with our customers. We have broad industry knowledge about the kinds of horizontal needs that our customers have. And finally, we have an incredible go-to-market model that allows us to really, really take the message to market in a really systematic and thoughtful way around the world.

But, our promise to customers isn’t complete without you. You’re a critical part of making it real for our customers, and we all know that. It’s your competencies, it’s the way you develop the custom solutions to make technology come alive for our partners, and perhaps most importantly, it’s the industry focus and verticalization approach that you take to our solutions that will make the ultimate difference.

I’m going to share the stage this morning with Sanjay, Orlando, and Simon, who will come out and talk to you about how this mutual promise will come to life for our customers in every segment, and for partners serving competencies to those segments.

END OF FIRST SET OF REMARKS

SECOND SET OF REMARKS:

ALLISON WATSON: Thank goodness I’ve got plenty of partner eyes taking care of this team for Microsoft. I have the incredible privilege of standing up here with you this afternoon and talking about the investment that Microsoft is making in delivering real value to you such that you can deliver with us against our mutual promise for our customers.

You just heard from Simon, Orlando and Sanjay, you’re going to hear next from Kevin about how we make this real, but I get to tell you about what we’re doing to drive business value for you specifically.

This year we get to continue to invest in our partner channel. We’ll have a total of $1.7 billion of investment to take cost out of your business and to drive up revenue. Let’s look at how those investments stack up.

The first is in the area of enabling you to be ready, capable and credible in front of our mutual customers. Two years ago I launched a long-term vision to enable you in your organizations and with each individual in your organization to be successful in front of our customers. We’re on the verge of realizing that vision today. We’re launching the Partner Learning Center on the Microsoft Partner Portal this year. The Partner Learning Center will allow you to assess, plan, register for online or instructor-led training at the individual level and at the end you can measure your results and understand how deeply capable you are to be in front of our customers.

Sales and marketing investment: One of the critical pieces of feedback we’ve received is give us access to the same training that you use internally with the Microsoft sales force. As many of you know, Microsoft solution selling has been customized to meet the needs of all the scenarios.

This year I’m pleased to announce that as partner organizations, for $500 per organization, you can train up to 40 individuals in your company, sales and marketing executives, with full access online to all of the Microsoft sales and marketing training materials. (Applause.)

For business owners you’ll find tracks at this conference designed to help you understand where you should be making investments in your business and if you’re considering different competencies or a different area of focus, I encourage you to attend the tracks led by key industry experts in the field.

And finally for developers and ISVs we’ve got exciting announcements you heard earlier from Sanjay but I’d like to highlight specifically advisory hours targeted over the phone for architectural guidance with Microsoft development engineers are available now through your relationship with the Microsoft Partner Program to allow you assistance at the key time when you’re developing your applications.

Secondly, the error reporting tool, the Watson technology that’s been popular with Microsoft applications themselves, will now be available for all ISVs to get real-time error data back based on how their applications are performing in their customer environment.

Our goal with enablement is taking cost out of the business and making your business ready, capable and credible.

I’m even more excited about the investments we’re making to drive the sales funnel and drive up the demand for our mutual customers. What you see listed here in descending order are what we’re trying to do to make sure we get more leads in at the top of the funnel, we drive faster through the funnel and we get more sales out of the bottom of the funnel.

The first two areas, advertising and go-to-markets through partners, Kevin Johnson is going to join us on stage right after the break and show you the breakthroughs for partners the call to action in our online and print advertising and a marketing tool that’s going to be launched later this year to allow you to reallocate, take our marketing funds and make them specific for your customer actions, your call to actions and the vertical markets where you focus.

We’re having availability worldwide of Channel Builder to help with that key thing you asked us to do, connect you together in an easier way. Channel Builder is an online tool to allow you to connect, find, locate each other as well as collaborate on the opportunities for you need to share in order to deliver the kind of results Orlando was speaking about earlier.

It’s also an offline set of events where local markets will be bringing partners together to encourage you to form relationships to deliver against the promise.

Windows Marketplace: You’ll hear from Will Poole tomorrow about a comprehensive shopping and download portal that makes it easy for customers to discover and experience the full breadth of Windows products, services and solutions that are compatible, all in one place.

And finally field specialists: You heard this mentioned briefly, but we have over 350 additional field specialists focused on delivering value with our partners in the areas of MBS solutions specialists, ISV marketing specialists, system builder account managers and partner technology specialists that are willing to engage with you to develop training plans and engage with you in sales and go-to-markets.

I’m incredibly excited to deliver against this value.

Now, there’s a partner in Toronto, Navantis, that’s a specialist in MBS and advanced infrastructure competencies. They had an opportunity to participate in the Canadian pilot of our new go-to-market activities this year through a program called Ready, Set, Share. They took focus around the CRM go-to-market and they were able to participate in their own partner led selling approach to seminars and demand generation.

In the last two months, Navantis was able to generate over 100 leads for CRM. They just have closed three deals in the last month and they have six solid deals in the pipeline to close over the next six months. They feel like with this kind of through-partner marketing effort they can do more to leverage with the limited resources they have and they have professional quality materials delivered in a timely manner to the customers. In addition, they can take advantage of the resources from enablement to create demand and selling resources, be credible in front of their customers and to move customers through the sales cycle from demand generation to close. Our goal of investing with you around these assets is allow you to increase customer touch and drive velocity through the sales funnel.

The final area is around engaging in a predictable way. I loved Mark’s comment, we’ve got to give, give, give so can take, take, take for our customers. We’ve got to simplify it for you and we’re committed to making that happen. I want to reinforce what Simon said on stage, help me navigate across Microsoft to find the resources I need, simplify multi-product engagements and, frankly, Microsoft, just be there to help me when I need help.

So we’re pleased to introduce Response Management available globally through the phone and online resources to you directly as well as through your Partner Account Managers and telephone-based Partner Account Managers. Our goal with engaging in a predictable way is simplifying navigation across Microsoft for friction free partnering.

I wanted to highlight one slide, the range of investments that we’ve made and continue to make to invest in our partners. You’ll see we’re very focused at every stage of the business cycle and if you were to click further through this every competency would have the set of investments that are designed directly from these to click into the solution areas you’re focused on, the go-to-markets you’re focused on and the key customer segments that you’ll be driving for us.

Now, I have a story from a partner, codenamed Geronimo, that’s going to talk to us about how he’s been successful with our Microsoft Partner Program.

“Dear Mr. Ballmer, last October in New Orleans, Andrew Grose, Nortec’s founder, and I sat in the audience and listened to you talk about Microsoft’s commitment to the partner community. The result of your commitment spurred us to provide you this feedback directly to applaud you and the Microsoft team for what you’ve done for Nortec.

“Late in 2002 and early 2003 we faced hard decisions in a difficult market. Our experience with partner offerings with Cisco, 3COM and HP had yielded spotty success. Their fleeting commitments and uneasy alignment proved to be detrimental to both our business models.

“Your passion about Microsoft’s commitment to partners gave us confidence that our decision to embrace Microsoft’s partnering model was the right one for us to stake our future on. Our 12-year old firm focused all of its resources on partnering with Microsoft in an attempt to become the premier partner in the Mid Atlantic in the enterprise and SMS & P segment.

“Today I’m incredibly pleased to report that your company’s commitment is turning that vision into reality. We started two years ago with our account manager, Herald Butler or HB, who came to start building this with us. Let me share the results.

“Nortec is now a Gold Advanced Infrastructure Partner. They’ve won 12 new enterprise accounts and [are] adding them at a rate of three per month. They’ve increased their SMS & P account base to over 200 and adding them at a rate of ten per month. The hourly billing rate has gone up 25 percent. The billable utilization has risen from 68 percent to 80 percent. We’ve had a 500 percent increase in overall profitability and we’re on track for a 200 percent increase in our sales pipeline.

“We now see and feel the love, as HB would say, both in your commitments and your actions.

“Sincerely, George Hammerschmidt, COO and Executive VP of Nortec.”

Thanks, George. Congratulations. (Cheers, applause.)

I want to share with you how important it is and reinforce that our promise of partnership to you is centered around the Microsoft Partner Program, bringing the assets together for the good of your business and for the good of our business and delivering it across the partner business cycle. I’m incredibly happy to share the two partner stories from Navantis and from Nortec on stage with you today and I challenge each of you, as you leave the conference today and you spend the next year back in your businesses, that you take advantage to the maximum degree of all of the assets that the team and I have put together to deliver value back into your business. And with that challenge, I’d love to hear about your success, your challenges and your creativity in making this come to live.

So my call to action, please share your stories. I can’t wait to hear them. I’m willing to address them if they’re not going the way you need them to go. But I’m pleased to take your stories so that I have more George’s and more Navantis on stage with me next year.

(Applause.)