Gates: New Waves of IT Innovation Will Help the Agile Business Balance Strategy and Execution

REDMOND, Wash., May 21, 2003 — At the seventh annual Microsoft CEO Summit today on the software company’s campus here, Microsoft chairman and chief software architect Bill Gates told more than 100 top executives from worldwide Fortune 1000 companies that that the potential for innovation in the information technology (IT) industry can fuel substantial returns on IT investments.



Gates addresses CEO Summit, May 21, 2003: “Our view is that IT long ago moved away from being simply about back-office activities.”

Addressing recent questions over the role of IT in corporate competitiveness, Gates noted that “IT has been compared to the railroad, where now that the tracks have been laid, there is no advantage to be had from having better IT systems.”

On the contrary, Gates said, “Our view is that IT long ago moved away from being simply about back-office activities.”

IT, he said “has become the tool that determines whether your information workers can do their job effectively. Do they know what’s going on with customer satisfaction? Are they engineering new models in a very effective way? Are they finding partners to work with in a strong fashion?”

Underestimating Potential

Conceding that a few years ago technology suffered from too much hype, leading to speculation that overestimated the functionality of software, Gates said that “today, we are in some ways underhyped — people are underestimating what can be done.”

In contrast to one, static breakthrough, such as the introduction of the railroad system in the 19th century, technology today represents continuing waves of innovation, which power one productivity breakthrough after another, Gates said. He cited the birth of the PC, the advent of e-mail and the Internet as examples of new technologies that have gone through a cycle from introduction to acceptance that fundamentally changed the way people live and work.

Gates demonstrated several technological advances that can directly provide return on investment, such as the Web-conferencing application PlaceWare, SharePoint collaboration technologies, and the Tablet PC. Each of the visiting CEOs attending the summit received a new NEC Versa LitePad Tablet PC, loaded with custom software that enabled them to access conference information and collaborate with each other during the summit.

Gates also offered his audience a look at how he uses personally uses technology in his day-to-day conduct of Microsoft business — including an onscreen peek into his e-mail Inbox.

Next Wave Will Support Entire Range of Business Needs

In his keynote, Gates outlined some of the factors in the tech world’s recent down cycle — the Internet bust, the complexity of managing multiple information systems, security crises and e-mail spam, among others. While enterprise software has done much to improve and automate processes, Gates said in general it has not progressed to the point where it can efficiently deal with process exceptions and other irregularities. Automated electronic processes must still be supplemented by the phone, e-mail and fax to address business issues that fall outside of the capabilities of software.

But according to Gates, the next wave of innovation will bring software that integrates these modes of communication on all levels and supports the entire range of business needs. “The idea that when you have these Web services, that you can capture the full richness of what’s going on with complete visibility to the knowledge workers, to update those things and be notified appropriately of things, that is where you get real benefit of saying that the paper approach really is completely obsolete.”

Gates said such advances in software functionality will be the primary driver of the next wave of innovation, but some advances are already being made. Today, companies use software to manage their entire information infrastructures from one central location, to perform complex business processes such as sales forecasting and analysis, or to unify a company’s telephone and IT systems. The challenge now, Gates said, is for IT departments to hone these new capabilities, further to realize the promise of business agility.

Gates noted that Microsoft itself has deployed a “Wi-Fi” network across the company’s Redmond headquarters. The wireless network allows employees to access their e-mail, applications and other information anywhere across the several-acre campus. According to Gates, this modification to the company’s infrastructure has helped increase efficiency and save costs with minimal investment. For example, Gates said printouts for meetings are becoming obsolete.

Software’s Key Role

While hardware modifications like Wi-Fi can provide real value with the increased processing power of today’s computers, the key to realizing such returns for most business needs, according to Gates, is the advancements that are taking place in the software industry.

Software will also play a key role in the unification of information systems with telephone systems. Gates demonstrated Microsoft PlaceWare software, which allows groups of two people up to thousands to be brought into a meeting through both the PC and the phone, allowing companies to bring workers together from across the globe for minimal cost.

Gates also showed off the company’s real-time collaboration technology, which can integrate the telephone and PC for individual workers, allowing phone calls to be forwarded automatically — by software — to cell phones or other devices. The technology also allows for e-mail alerts to be sent when calls are received, so workers in meetings or other locations can see who is trying to reach them.

“A lot of people thought about (this functionality) as requiring you to change the whole telephony infrastructure,” he said, referring to the traditional physical separation of a company’s telephone PBX system and its IT infrastructure. “But even without changing out any of the existing infrastructure you can start to get these benefits.”

Gates also discussed his company’s widespread adoption of the Tablet PC, new innovations in the company’s e-mail application, Outlook 2003, and the collaboration and knowledge-sharing benefits of the company’s SharePoint Services tool, which allows nearly anyone to quickly set up a Web site for sharing documents, calendar information and other project-specific data with co-workers.

Gates closed by emphasizing the bottom-line benefits of continued investment in the dramatic new functionality being created by the software industry, and the hardware platforms that support it.

“It’s important to see that, although those harsh realities are there, software is making breakthroughs to turn back those realities,” he said. “It’s worth it to give people those tools.”

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