Q&A: Microsoft CIO Stuart Scott Outlines the Company’s Commitment to People-Ready Business

REDMOND, Wash., Oct. 16, 2006 – Given Microsoft’s expertise in the technology industry, “business as usual” at the company means delivering internal IT services using the most sound judgment possible. This practice calls for a constant reassessment of resources within Microsoft IT, the organization charged with delivering reliable and innovative technology solutions to the more than 340,000 computers used across Microsoft’s business divisions worldwide.

In keeping with this practice, Microsoft recently outlined an expanded leadership role for Stuart L. Scott, corporate vice president and chief information officer at Microsoft, from an applications and business-process-focused role to full CIO responsibility for the company. The move prompted PressPass to seek Scott’s insight into the innovations taking place within Microsoft IT, as well as the forward-looking strategies he envisions for maintaining a world-class IT organization.

PressPass: Please begin by giving us a brief recap of your first year as Microsoft’s CIO. What are the highlights for you?

Stuart L. Scott, Microsoft Corporate Vice President and CIO

Scott: Shortly after becoming CIO, I began meeting with our employees, customers and partners around the world so I could really understand our marketplace, and understand where Microsoft IT can drive value and enable the success of our customers and ultimately the success of the company. From those extensive interviews, I learned that we needed to improve the way we go to market in terms of our business structure and our business processes, and align our IT activities to have the maximum impact on delivering Microsoft strategies. To that end, we created a new high-touch organization within Microsoft IT – called Solutions Delivery –, that focuses on people enablement and people capacity creation. I believe that transforming people and processes is as important to delivering the business performance we strive for as great technology is.

Let me give you an example from our partner space. We determined that, by improving the way our sales people in the midmarket channel do their selling, we could drive a 15-percent capacity improvement – meaning that we could enable them to spend 15 percent more time with customers and 15 percent more time developing our customer and partner ecosystem. By giving them a better pipeline of information in terms of market opportunities and market intelligence, we’re enabling Microsoft to achieve record growth in market penetration, share and revenue in the partner space.

PressPass: Looking ahead a couple of years, where do you see Microsoft IT headed?

Scott: First, let’s look at where we are now. We continue to have a great set of technologies and innovation engineers. And in the past year, we’ve established that IT is a critical component of Microsoft’s operational success, in concert with program management, product development and test disciplines. In effect, we’ve created a fourth leg for the stool. As we go forward into software as a service, we’re positioning Microsoft IT as an integral part of our success in delivering on that business initiative.

Another dimension of our vision for Microsoft IT is getting the business to operate in real time as it relates to market information and customer feedback. One way we get there is by reducing our customer information systems from 37 to two. That will drive clarity of our customer’s engagement model and provide higher customer satisfaction because we make Microsoft easier to do business with. We are also going to implement the largest Microsoft SQL Server data warehouse in the world. The goal there is to drive real-time intelligence around our service offerings so we can target our investment profile at the voice of the customer, in terms of how we need to respond with innovation.

PressPass: Are you assuming any new roles now that you’re taking on full responsibility as CIO at Microsoft?

Scott: My responsibilities won’t change with regard to the three roles that every CIO has – drive revenue growth, reduce operating costs and protect shareholders. However, I’m now assuming the full scope of some responsibilities that were shared before, including managing the network, security, client services, the help desk and Tier 1 and Tier 2 services, along with the primary role of delivering IT to the business. I’m also picking up the regional teams that provide that infrastructure support, and the application team that provides our business groups and product teams with development services and product development support. Also, as CIO, I’m the first and best customer of new Microsoft technologies like the Microsoft Office 2007 system, Windows Vista and Exchange.

PressPass: Do you foresee taking Microsoft IT in any new directions during your tenure as CIO?

Scott: The Microsoft IT organization has a heritage of strong technology leadership, and that’s not going to change. It will continue to be enhanced. That said, the new direction I plan to emphasize is looking closely at how we do IT, not just from a technology perspective but also from an end-to-end business process capability perspective. By that I mean defining and enabling our business processes through complete business cycles, such as “order to cash” or “procure to pay,” and implementing enterprise solutions to support those-end-to-end business capabilities.

PressPass: Are you putting any new strategic initiatives into practice within Microsoft IT?

Scott: We have been doing that throughout this past year. Currently, Microsoft IT is focusing its investment on three main initiatives. The first has to do with improving customer satisfaction and service in the licensing and pricing space, which our customers have requested in customer surveys. The goal of this initiative is to ensure that our customers have accurate and up-to-date information in terms of where they stand with the Microsoft software they license, and what software they need to license to make their business successful. We’re investing significantly in simplifying our licensing and pricing processes and making them transparent so our customers can do business with us in a real-time, self-service way.

Our second main area of strategic focus is enabling more selling time for our sales people and delivering better market intelligence, which together help drive revenue. We’re doing that by fundamentally revamping all of our commercial systems and processes. I see this as my organization’s contribution to making sure we’re a people-ready business. That by definition means making sure we’re constantly giving our people the right software, services and technology to communicate and collaborate internally and with customers, partners and suppliers; to innovate and to improve operations and reduce costs.

The third area where Microsoft IT plays a big role is investing in employee systems and tools. We want to make sure we deliver the best experience for our people and improve the transparency of our business processes so that our employees can better manage their careers and achieve their career aspirations.

PressPass: What other goals do you have for Microsoft IT?

Scott: We envision Microsoft IT constantly investing more in innovation and driving business value while continuing to improve the reliability of the business infrastructure that we have in place today. Our organization is already in a position to be world-class, and we have great people. I think it’s really important — and healthy – that we continue to grow our intellectual property in-house by developing our people.

We’ve also made a strategic commitment to increase the amount of money that we spend on programs relative to the amount we spend on maintenance, support and other aspects of keeping the business running. We do that by operating more efficiently. For example, we expect to cut business complexity in half over the next three years by standardizing and simplifying our business processes, and by consolidating and eliminating redundant systems, applications and tools. We’re also going to make Microsoft employees much more capable of doing work that our customers consider valuable by eliminating areas of internal friction. Bottom line: We’re going to eliminate more than 50 percent of the business complexity, we’re going to focus 100 percent on end-to-end business cycles, and we’re going to do it all on Microsoft enterprise technology.

PressPass: It’s said that you’re a Six Sigma “black belt.” Could you explain what that means and why it’s an asset, and tell us how you parlay that sort of expertise into success in your role as CIO?

Scott: Six Sigma is a data-driven process for making business decisions and choosing investments that help ensure a return for your business. It’s a discipline in which you use analytical tools to draw out statistically significant information. So if you’re talking to customers, for example, you want to do that in such a way that you come away with a genuine understanding of what they want, and you grasp the difference between what you could do to make those customers feel better vs. what’s critical to enabling those customers to be successful, and what’s critical to Microsoft’s growth. Using good data and analytical tools, you can invest in programs like improving the business or putting in a new information system with the confidence that you’ll achieve the desired result in terms of incremental business value. For me, that’s always measured in a ledger. Any benefit we talk about has to be quantified in a way that demonstrates increased shareholder value.

PressPass: What other strengths did you bring to the CIO’s job at Microsoft?

Scott: I brought industry insight, technology insight and customer experience from my work in multiple industries, including healthcare, consumer products, media and entertainment, and financial services. Before coming to Microsoft last year, I had the good fortune of serving as CIO at GE [General Electric Co.], where I worked with excellent leaders and learned a lot about how you run a business that strikes a balance between driving innovation and installing standard processes for business efficiency. I think that’s critical to where Microsoft is today. A company of Microsoft’s scale has to put disciplined processes in place where those make sense, while maintaining an innovative, creative environment that inspires our engineers to build world-class products.

PressPass: Microsoft’s IT infrastructure is one of the largest corporate technology systems in the world. Does sheer size create unique challenges above and beyond those facing CIOs of typical Fortune 500 companies?

Scott: It actually presents us with opportunities because we can capitalize on the size and scale of our infrastructure to apply resources into the areas where our customers want us to go. Size can slow you down or speed you up. In our case, we can use our size to advantage in our strategy-setting process, to help us set very specific goals. And our infrastructure is large enough that we can flex it in the direction of business needs and initiatives. For example, we’ve had the flexibility to shift a significant amount of our technology and talent into supporting our Live transformation.