Q&A: CIO Devenuti on Melding Technology and Operations at Microsoft

REDMOND, Wash., Oct. 9, 2002 — When Microsoft combined its global operations and information-technology efforts earlier this year, the company didn’t have to look far to find someone to lead and understand the benefits of such a merger. During almost 15 years with Microsoft, Rick Devenuti has gained first-hand experience in both corporate operations and technology.

Devenuti oversaw worldwide operations for Microsoft before he was appointed corporate vice president and chief information officer (CIO) in the late 1990s. In that position, he ran the company’s Information Technology Group (ITG). Today, Devenuti is busy combining those responsibilities and his former operations responsibilities into a new role — as corporate vice president and CIO of what is newly named the Global Operations & Technology group.

Devenuti shared some of his perspective on the new group during the keynote speech he gave today at MEC 2002, Microsoft’s annual enterprise IT conference. In a recent interview with PressPass, Devenuti offered in-depth detail about his combined responsibilities and discusses the significance of the change for customers.

Rick Devenuti, Corporate Vice President & CIO, Global Operations & Technology Group

PressPass: What is the role of Microsoft’s Global Operations & Technology’s group?

Devenuti: Part of our responsibility is the creation and operation of Microsoft’s corporate network, data centers, enterprise applications and other infrastructure. We also drive the specific architecture and consulting requirements to ensure that our business applications meet the needs of the end user while fitting into our data strategy and bandwidth usage. When I say infrastructure, I mean telecommunications, the network, client hardware, data centers and the servers that sit in them. We’re talking about the applications we run our business on. We think about how our channel partners come to our Web site and get license information. We think about how to transfer code to third-party partner companies. These are truly the applications we run our business on. We also run Microsoft’s support Helpdesk.

PressPass: How critical is Microsoft’s IT organization to overall business operations?

Devenuti: If a data center goes down, we stop generating revenue, we stop communicating with each other by phone or mail, and we stop answering our customers’ calls. So in those terms, it’s critical. In terms of driving revenue, virtually all the revenue in the company goes through either the operations center, or the network, or data centers that connect the operations center.

PressPass: You’ve used the expression

eating our own dog food

with reference to running Microsoft’s complex operations on pre-release, or beta, versions of Microsoft software. Why do you implement beta versions of Microsoft software internally?

Devenuti: Today we have more than 900 servers running a release candidate of Windows .NET Server 2003, which will be out later for our customers. We’re running our business on pre-release software that customers won’t see for quite a while, and the feedback to the development team about our deployment experiences ensures that our products are enterprise-ready by the time our customers get them. During our early adoption, the product code gets stress-tested by being on our internal servers, being on our network and having 70,000 end users, vendors, agency temps and partners using it. We also gain knowledge from our deployment experiences that we share with the product group and our customers. Questions such as,
“How did migration go? What’s wrong with the set-up? Why does this function result in this outcome?”
We look for things that aren’t just bugs that you find in testing, but actual usability design changes that happen because the IT pro using the product has a different experience than a tester who tests written code. The learning that we have and share with the product groups on our products before they ship results in a better product for customers. If we can’t use a Microsoft product in our IT shop, then we cannot market it as an enterprise application.

PressPass: How does Microsoft’s IT organization differ from the IT departments at Microsoft’s customer companies?

Devenuti: We are Microsoft’s first and best customer. The priorities that we run our business on are what makes us different. We truly implement beta software in our enterprise. We also try to provide thought leadership for the product teams and the overall organization. We explore questions such as:
“When is the right time for wireless? What is our client hardware standard? How did we think about Windows CE devices and PDAs? What about mobility?”
We try to lead the technology organization in terms of what standards and implementations of technologies we will permit.

PressPass: To what extent does this philosophy help drive corporate strategy in terms of product development?

Devenuti: There’s a constant communication between us and the product groups. In some cases, they’re leading us by developing products for enterprise customers. In other cases, we as an enterprise have needs that our product set doesn’t fit, and the product groups start to look at that missing link as an opportunity.

PressPass: How does the presentation you’re giving today at MEC draw on your IT experience at Microsoft?

Devenuti: I’m offering my fellow CIOs, IT department managers and developers an inside perspective on how Microsoft runs its global infrastructure. Microsoft’s IT organization is unique in terms of the broad variety of responsibilities. Our first area of responsibility, as with any other large organization, is to run the IT service, which entails developing and maintaining IT systems and solutions that help Microsoft employees do their jobs efficiently and effectively. Another aspect is to provide a robust application and infrastructure architecture as the foundation for building line-of-business applications. In my MEC address today, I talk about how our IT organization serves as Microsoft’s first and best customer, provides thought leadership and runs a world-class utility, all on Microsoft technology.

I also discuss the importance of working to integrate IT and business operations by using XML Web services and Windows .NET Server 2003. In addition, I demonstrate how we use Microsoft beta technology internally to achieve four key business objectives: One, to connect the people, processes and systems inside and outside a company while capitalizing on previous investments; two, to increase productivity by making a business and its employees more efficient and effective; three, to realize the best business value for IT dollars by driving top- and bottom-line gains; and four, to beef up dependability by relying on an industry leader whose technology solutions are always up, always running and always ready.

PressPass: Your MEC presentation concludes with a discussion on tightening security in the enterprise. How do you create a secure network environment?

Devenuti: It’s important to remember that the security of your company depends on a combination of people, processes and technology. You must have good people working on your corporate security infrastructure. They also need to work with and educate employees on security practices and policies to ensure security within the working environment. And having great technology is just as important. One example of the importance of technology in this equation is the demo of the SMS 2.0 Software Update Services Feature Pack, which is a full enterprise deployment system that is ideal for the security patch and software distribution needs of the enterprise.

PressPass: What is your new role at Microsoft, when did it begin and how has your position changed?

Devenuti: The role that I assumed in May, as vice president of the new Global Operations & Technology organization, combines the CIO role I’ve had at Microsoft and the vice president of operations title that I had before I was CIO. So it’s a space I know well, and there are lots of similarities between the two organizations. Bottom line, we share process and technology. Some of the core competencies of the groups are the same in areas such as vendor and program management. The primary mission that I see of the organization and of my new job is to blend these two organizations in a way that allows us to execute the customer interaction with Microsoft more predictably. In other words, how we can work with the business side to enable world-class and predictable customer experiences.

PressPass: What other objectives does the Global Operations and Technology group have, and what are your responsibilities as its top manager?

Devenuti: Besides carrying out Microsoft’s vision for customer satisfaction, we are charged with devising strategies for effective collaboration across the group’s global constituents to achieve integrated, end-to-end IT and operational excellence. Our mission also entails protecting Microsoft’s physical and digital assets and attracting and developing the best people. And, of course, we continue to serve as Microsoft’s first and best customer. Toward that end, I’m responsible for providing thought leadership in effectively integrating Microsoft products and services internally and showcasing those products and services to Microsoft customers. My primary responsibilities revolve around policy and planning, performance management, IT and operations management, Microsoft product integration, cross-group collaboration and financial and human resources management.

PressPass: One would think that this is a relatively inward-looking role. But you’re saying that the ultimate aim of combining operations and technology infrastructure is to make things easier for the customer?

Devenuti: Operations is another of those backoffice areas where customers interact with Microsoft. What we’re aiming to do by combining these two groups is to use the technology and the infrastructure as well as the business process to enhance our customer touch-points with the company. Customers might spend weeks or months negotiating an enterprise agreement with their sales representative. Then, for the next three years, they’re going to be interacting with operations on a very regular basis about everything from licensing agreements to availability of new code to documentation for products. That’s all operations, and the technology we use to make that interaction seamless, to make it something the customer can do over the Web versus the phone, for example. To make the billing seamless so they know they got what they actually paid for and they paid for what they got. All of that is in the operations space, not the sales space. We have a very high level of interaction with our customers.

PressPass: How unusual is it for a company of Microsoft’s size to combine the roles of technology and operations, and what prompted this change?

Devenuti: It’s not unique to have the functions in a single place. The direct communications link to senior management is new, but there are plenty of other companies that already do that, including a lot of other customer service-centered organizations such as banks.

This change reflects where we are as a company. Five years ago, when I was running operations, Microsoft was building a lot of packaged products. Licensing was a growing business. Today, our factory is the data center. We distribute electronic bits to enterprise customers. That is the nature of many technology and business services today. The Xbox introduction this year has certainly changed the manufacturing focus and the needs of the company. It is the first product outside of peripherals that Microsoft has manufactured. But outside of the Xbox, our business has moved very rapidly. We’re moving from packaged products to licensing. In that licensing space, where you don’t have the factory, the information system becomes your factory and your warehouse. The natural evolution of our operational processes blending with our technology processes is just the evolution of where our business has gone from a packaged product provider to a licensing provider of software.

PressPass: So the software is much more integrated with the infrastructure, right?

Devenuti: They have to be. They can’t be separate. In the old days, when Microsoft groups built products, they handed them off to manufacturing, which delivered them. With a service, there’s never a handoff. The product is always live. It’s always being improved. The customer’s always interacting with it. The most important thing is the seamlessness between the infrastructure that these services rely on and the operational procedures that are necessary to make sure the right bits are in the right place, the invoicing is correct and the service center is available when the customer has questions.

PressPass: Why do you feel you are right for this role?

Devenuti: We’ve combined a job I knew with a job I’ve learned. My qualifications are that I’ve run both of these businesses successfully and am probably in the best position to drive the best synergy out of them. And I’ve been here long enough to have the knowledge and business relationships to go through the changes I think we need to go through as the business matures.

I’ve been at Microsoft for almost 15 years in a variety of roles, from U.S. controller to the first financial analysis team. In the early years, I worked in finance and accounting. I spent two years in sales, managing distribution selling and a function called sales operations — compensation, call centers — and so I learned a little bit about the sales business.

Then in ’94, I was moved to operations, which was a combination of some of the customer-facing interactions and manufacturing and distribution. I spent two years doing that and three years as vice president of worldwide operations. The team that we just merged with is one that I ran and took through the divestiture of some of the manufacturing assets. Three years ago, they made me the CIO and I came over from operations and spent a good part of my time learning the technology and defining the role that we wanted to pursue in the company as the first and best customer.

PressPass: You were a finalist for a Wharton Infosys Business Transformation Award earlier this year. What did that recognition mean to you?

Devenuti: I was honored to be nominated and recognized as the first finalist in the Technology Change Leader category. The award itself went to Warren Lieberfarb, president of Warner Home Video, for driving the creation and adoption of the DVD standard and rejuvenating the home video industry. The recognition reflects the work that we as an organization have done over the last three years to build systems and capabilities that allow our technology to simplify our customers’ transactions with us. Over the last two or three years, we’ve really built the fundamental building blocks on which we’ve constructed our e-commerce platform. We’ve moved from testing software to implementing beta software and enhanced our products’ quality before they ship. We’ve transformed ourselves from a tester to an implementer with shared goals with the product group.

I see us evolving today into an organization that’s going to be much more involved in the design phase. We want to take the learning we have with the implementation and push that into future products, as opposed to just fixing the bugs or design issues in current products. I think the big change is that the product groups now see us very much as another big enterprise customer. So the comments we have and the needs we have are not different from those of other customers. They just tend to be clearer and earlier because we’re so focused on our products.

PressPass: Has this combination of technology and operations resulted in some best practices that customers can learn from?

Devenuti: One of the values for our customers by “eating our own dog food,” or serving as the first-and-best customer, is that we can document what we did and why we did it. I shy away from the term
“best practices”
only because we’re the first ones to do virtually everything. Because we’re early adopters, there are things we learn. Really, we’re perfecting what should be called first practices. We give you the parameters that you need to think about. It’s very useful for customers who then are thinking in their own way,
“What should we look like?”
They might make different decisions, but at least they have a guide book to compare themselves against.

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