Kevin Johnson, Rick Devenuti: Microsoft Worldwide Partner Conference 2004

Remarks by Kevin Johnson, Group Vice President, Worldwide Sales, Marketing and Services, and Rick Devenuti, Corporate Vice President, Microsoft Services & IT, Microsoft Corporation
Microsoft Worldwide Partner Conference 2004
Toronto, Ontario, Canada
July 11, 2004

KEVIN JOHNSON: Good morning, Toronto. I am so excited to be here today. I’ve been waiting months for this day, the day to talk to partners about velocity, on the same day they’re running the Toronto Molson Indy, velocity is a wonderful thing. And it’s so clear to me that if we’re going to win customers, we’re going to win customers together. If we’re going to drive satisfaction, we’re going to drive satisfaction together, and if we are going to grow the business, we are going to grow the business together.

Just Friday, Steve Ballmer and I were sitting in his office talking about our investment in this next fiscal year, we talked about investing in the Ps, investing in our people, and investing in our partners. And I’m so enthusiastic about the investments we’re making, because in many ways it’s based on the feedback that you as partners have given.

This last fiscal year I have been on the road, I have logged over 120,000 miles, visiting a number of countries, a number of cities, and in every stop along the way I do at least one partner roundtable, with 10 to 20 partners, and a very candid, open discussion around what’s working, what’s not working, feedback from you our partners, and opportunities where we can improve, opportunities where we’re doing the right thing, but need to continue to improve execution or add new features, new programs, or need to continue to collaborate and work together.

Now, in those meetings and in those discussions, certainly there’s a framework that I presented last year at this partner conference around connected sales and marketing. Allison talked about it a bit earlier. Our focus on being a market maker, creating market trends, whether it’s with a go to market or a product line, and the way we do brand awareness, how we go from brand awareness into awareness around a certain go to market, and a value proposition to the customer. How we generate interests together. How that interest translates to an opportunity pipeline that creates trials, and purchases. As customers purchase how we then go to service and support, and how we feed and create that velocity.

Now, in these roundtables with you, I’ve met with over 1,000 of you in small groups, 10 to 20 people in each group, and we talk about this. There’s kind of five core pieces of feedback or questions that I got in those roundtables, very common questions. Those questions were, Kevin, how can we get more connected to the Microsoft marketing team? Kevin, will you really invest to strengthen the Microsoft brand, partner brand in the eyes of the customer, or, Kevin, how can we work more closely with services? Kevin, what can we do to support the overall value proposition to customers? And Kevin, what are you doing with field priorities, and how can we get aligned behind those? Those are five big questions that I have, very common questions in these roundtables. So today I want to take the opportunity to frame for you the work we’re doing, with our field organization and our partner community to really get some alignment, and make some breakthroughs in these particular areas.

Now, as I talk to you today I’m going to talk to you the same way I talk to our field organization, because for me we are one. It’s about being together, being together to accomplish some specific priorities. What are the field priorities? Well, when I talk to the field, it’s very simple. It’s a balanced approach that starts with winning customers. Now, winning customers, as you all know, we operate in a very competitive marketplace. Whether you’re in MBS and you’re competing against SAP, or other app vendors, or whether you’re focused on the Microsoft platform competing against Linux and open source, or you’re building a .NET application and there’s J2EE, every part of the business has competition.

Winning customers is about having a compelling value proposition that differentiates us together, Microsoft and our partners, to win customers. Drive satisfaction, satisfaction with you, our partner community, and ultimately satisfaction in customers, and grow the business. Our field organization in Microsoft has specific goals around each one of these priorities. So when you ask yourself, how can you get aligned behind the field priorities? Start thinking about how we work together to win customers, drive satisfaction and grow the business.

So that’s going to be the foundation of my discussion today. Certainly, we talk about winning customers, and as I’ve traveled around the world, worked with you, and worked with our field teams, you know, there are so many competitive opportunities, and I get so passionate, so worked up on this, that sometimes it carries forward into my personal life. But, I just love selling, I love marketing, I love competing, I love to win customers. And even my wife says, sometimes you just get a little carried away.

Let me show you.

[Video segment.]

So perhaps later Allison will describe the new merit badge approach to the new partner program. The fact is, I learned something in all these interactions in the work that we do together in the market. And from that work, throughout our company and Microsoft, we’ve built this model or this framework on how we’re targeting these value propositions. It’s starts by putting the customer first, your target audience. In every one of the go-to-markets that we’re doing, we say, look, we have to have a very clear customer promise, what is the value we deliver. No. 2, that has to be differentiated from the competition, and supported by evidence. Third-party analyst evidence, customer references, customer testimonials, but it has to be compelling, differentiated, and factually supported in the market. And we have to look at the ways to balance that, to help the customer reduce their risk, reduce the effort required to take advantage of that solution, and put all that together with price to find the right proposition. That’s the work we’re doing from a marketing standpoint across these go-to-markets that I’ll talk about in a moment.

One example I will use to highlight this is Linux. People say, hey, Microsoft, you’re competing versus Linux, tell me how that works? Well, first of all, if you listen to the customer, the customer will say, hey, there are four key areas that they care about when they make platform decisions, they say certainly total cost of ownership is important, but so is interoperability, connecting with my existing systems. Of course, security, top of mind, no question in the industry and on the minds of our customers. Developer productivity, because of tightening up of IT budgets the last two to three years, the application backlog has grown. Customers want to build and deploy these applications faster.

Now, we launched a program called Get the Facts that is now running in over 40 countries around the world, and it’s really focused on this value proposition model I described. It says that we have a value proposition, when compared to Linux, around providing a lower total cost of ownership, supported by IDC who did the early study that showed the Windows platform being 11 to 22 percent lower total cost of ownership, but it’s backed up by 16 other industry analyst, third-party studies that came to the same conclusion.

In the areas of interoperability, Jupiter just ran a survey and found that 72 percent of IT professionals surveyed rated Microsoft as the No. 1 company providing interoperability solutions for their existing environments. In the area of developer productivity the Giga study showed that building a .NET application, deploying it and managing it over a four-year period is 25 to 28 percent lower total cost of ownership than J2EE and Linux. And in a recent Forrester study it showed that Microsoft demonstrates the lowest average of all days to risk when it compares to Linux. This is an example of factual-based discussions with customers focused on their value.

Now in the area of Linux and open source, the discussions have moved. They’ve moved from an emotional debate or discussion around development models, they then evolved into sort of a technical feature function comparison, and today these discussions are very focused on business value. That’s what this model and this approach is about, it’s about a business value model that puts the customer first, supports the proposition with evidence, and differentiates from the competition.

We’re doing this in every part of the business. So if you’re a partner focused on MBS solutions, we’re focused on the facts on why our solution and the platform that we deliver through you is differentiated better than the competitive alternative. If you’re a platform provider, a service provider, a system builder, in every area we’re going to provide the facts that help differentiate our go to markets and our value from the competition.

Now I know we have about 200 partners here who are partners of other technology providers. But, they’re here today to have this discussion and understand how they can join the family of Microsoft partners, so that together we can win customers, drive satisfaction, and grow the business. This approach to winning customers, I argue, is a very powerful one. And it’s one that we provide to you, our partners, and you our partners extend it.

Integrated innovation goes beyond what we as a company do in research and development. Once we release the product, integrated innovation continues with the phase of work that you as partners do. The custom solutions, the offerings, the services that you bring to market is what helps create value at velocity. And we’ve seen that this year. In fact .as we focus on this get the facts, we’ve seen partners like you doing great work to win customers. And let me just take one situation and show you an example of Bay Shore Solutions winning customers by using this model.

(Video segment.)

I want to congratulate Bay Shore Solutions on that win, and I also want to point out that last year at this conference I announced a series of awards called the Winning Customer Awards. And there are hundreds of stories just like that. And I’m pleased to announce the winners, 39 partner winners, of our Winning Customer Awards, and I would like to ask those of you that work for these particular partner companies to please stand, and let’s give a round of applause of recognition for the great work winning customers together.

(Applause.)

Thank you for your contribution, and you should know, we recognize it’s a competitive world out there, and we recognize you compete every day. And when we see competition, we say, bring it on, because together, with Microsoft and our partners, we will win. Each of these companies will be receiving specific recognition, an award plaque for their offices, the local general manager in their team will host an event, a local recognition event. We will also issue a press release recognizing the good work by these partners, and each of these partner companies will receive a $10,000 to $15,000 credit toward their partner award. These are partner that when the competition gets tough, they go the extra mile.

Now, going into fiscal year ’05, we’re going to run this contest again. We want to make sure that we continue to work to win customers together. How? First, by having that value proposition alignment. We’ve got to be very clear in our go to market, in the work that we’re doing, what the value proposition is coming form Microsoft, how it’s differentiated from the competition, help you with the evidence to support it, and then you extend that with your value proposition, you’re differentiation. And if we’re great at execution, we will win. What are we doing to help support this going forward?

No.1, we have this pre-sales technical support group. It means if you are out there competing on a tough opportunity, challenging opportunity, and you need some technical information to help support, or you need some pre-sales information to help support this tough competition situation, use that pre-sales technical support. It’s free for our certified partners, it’s part of what we’re investing in, we want to help you compete to win.

In addition to that, there’s a process that we implemented last year within our field to deal with hot, competitive situations, it’s called CompHot. The way it worked last year was that the field team was in a tough competitive battle, and they needed additional help from Redmond, our business group, the regional selling team, they utilized CompHot to access that resource. We’re extending CompHot to be available to you, or partners. The way you access it is through this pre-sales technical support. If you call into that pre-sales technical support line, your teams are out in the field, fighting and working to deliver the best value to a customer, you’re in a competitive situation, use the pre-sales technical support. You’ve got some tough issues, whether it’s Linux or open source alternatives, or whatever it may be, we’re going to use CompHot to help bring additional resources to back you, our partners, up in the selling process.

We’re continuing to enhance the Get the Facts campaign. We’re going to continue to run it in 40 or more countries around the world, and this year we focused mainly on the total cost of ownership, going forward we’re going to throttle up. There’s a lot of evidence around the value and the differentiation that the Windows platform brings in the areas of security, interoperability, liability. We’re going to throttle up on that, and as Allison mentioned, the competitive training that we do for our own field sales force, we’re making available to you and your sales and marketing team, so that you have the information and the resources to go win customers.

It’s about winning customers together, and for FY ’05 we will have another Winning Customer Award where we will have another winning customers award where we will recognize the top partners in those tough competitive battles, that we work together, to put the customer first, deliver a clear value proposition, differentiate it from the competition, and win customers. Winning customers together is a key part of the investment we’re making.

Now, certainly the second piece is that, it’s not just enough to win customers. We have to have satisfaction. Now, the satisfaction involves not only our customers, but it involves your satisfaction, as well. So we’re very focused on the fact that we believe that customer and partner satisfaction begins with value, it’s enhanced with a great end-to-end experience, and it’s really cemented with long-term relationships. That’s true of our relationship with you as partners. We know we have to deliver value, whether it’s in the Microsoft Partner Program, whether the R & D and the products and solutions we bring to the market, our marketing engine, our marketing efforts, it has to add up to value to you. And we have to create a great experience for you, in our work together, and we have to have a long-term, predictable relationship.

There’s a set of things we’ve been doing to really help drive that. And I know this year we’ve had some challenges, certainly a lot of the feedback from our MBS partners in the U.S. said that we had some challenges in the area of both long-term and predictable relationships. We recognize that with the changes that we made going into fiscal year ’04, the transformation we did in the field, that we had a quarter, in Q1, we weren’t executing as well as we are capable of. Q2 we were stronger, Q3 we were stronger yet. We’re investing in the partner account management resources, we’re investing in the business simplification process, and we are moving this forward.

Across the company Steve Ballmer has given Jim Allchin and myself the assignment, we are the two, Jim and I, are the two senior leadership team co-sponsors to oversee our customer and partner experience efforts across the company. And we’re very focused on that, and we have a set of personal CPE priorities. This happens to be mine, the field execution around security mobilization is a very, very key point. Jim and the team have worked very hard on innovation, that you will see in this conference, with Service Pack 2, security updates, patch management, providing more prescriptive guidance and engagement.

Certainly being world class at listening and responding is a key priority. We launched something in the company called our Response Management System. It’s a system that enables our sales teams when they see a customer issue, to enter that customer issue, we have teams that help us connect to business groups, connect to different business functions, to resolve that issue. We’re expanding that, to our partners, and I’ll talk a little bit more about that in a minute.

Relationship excellence, the investment we’re making in partner account managers, the work we’re doing around something called conditions of satisfaction, enhancements to the Microsoft partner program, broad customer connections, our outreach to IT professionals and developers, whether it’s Web casts, forums, newsletters, events, we’ve reached and connected with 2 and a half million IT professionals and over 20 million developer connections here in the last year. We’re throttling up on that. And our value proposition, we’re re-engineering our go-to-market.

Finally, business simplification. The experience, whether it’s licensing, whether it’s the Microsoft partner program, whether it’s opportunity management, we’re working very hard to simplify and make those experiences great experiences for you, and for our customer. Now, we can’t do this alone, we need you as a partner, a family of Microsoft partners, to help us drive satisfaction. And there are so many great examples where you have helped us with just that.

Security is one. So let me just take this opportunity to share with you a perspective on the good work that you are doing together with Microsoft to help our customers become more secure.

[Video segment.]

So I want to congratulate and thank Net IQ who really went above and beyond to really go ensure that we are working together to help our customers become more secure. And I also want to take this opportunity to announce the 35 customer experience award winners. These are the partners that over this last year we were recognizing for their outstanding work in helping us together drive customer satisfaction. If you work for these companies I’d like to ask you to please stand up, and let’s give you a round of applause, and thank you for your great work.

[Applause.]

Great. Thank you. Certainly, along with this award is some recognition that will be in the form of an award, a local recognition event, a press release for these companies, and certainly the $10,000 to $15,000 credit toward the Microsoft Partner Award. These are people that went the extra mile to help us satisfy customers, and we thank you for that.

Now certainly a big part of satisfaction is our ability to work together on services. Services are key to making a market, not only the Microsoft services, but the services you offer. Services are key to solutions, they’re key to making a market. Now our services strategy has not changed.

We are not in the consulting services business to compete with partners. We are not in the consulting services business for consulting revenue, and consulting profit. We do have Microsoft Consulting Services as an enabler, and we think it’s a very important enabler, an enabler to help us bootstrap new technologies, help us create new market trends through design wins, help us transfer skill and knowledge to our customer, to you our partners, and to help back up you, our partners, as you go take on these very complex projects.

Now this year we made a leadership change in services, and Rick Devenuti came in to lead services. I challenged Rick. I said, Rick, I’d really like to find some ways to get better connected with partners, help find some ways that our services organization can establish tighter relationships and tighter links to help our partners win customers, help our partners drive satisfaction, help our partners grow the business.

So right now I’d like to introduce Rick Devenuti, and ask Rick to come up on stage and share a little bit with you on the work that he is doing to help us tighten that relationship with partners.

Please join me in welcoming Rick Devenuti.

RICK DEVENUTI: Thanks, Kevin.Thank you. I’m excited to be here today. I’ve got a few minutes to talk to you about Microsoft Services and IT, and to introduce a new program which we think will help you be more successful in servicing your customers. As Kevin said, it’s been six months in a row, it’s been an exciting time. Understanding the services business, and what we can do to help you as partners drive success for our mutual customers.

Let me start by talking a little bit about what services and IT is, what we did in December was take the Microsoft Information Technology Group and add it to the Services Group. So today I think of my job as a portfolio manager, if you will, five distinct businesses, all very related around driving partner enablement, and customer satisfaction. Microsoft Consulting Services, our group of dedicated consultants, to work with you as partners, to drive satisfaction in deployment, and development of applications with our customers. Premier, both an offer and a program which allows us to deliver support to enterprise customers. And the people within the Premier program, the technical account managers, or TAMs, as we call them, I see as key to Microsoft delivering service ability to our customer set, and I hold those people accountable to making sure the investment our customers have made with you to develop and deploy technology, to make sure that technology is running successfully.

Technical support is our Incident Support Center, the call center we use to answer problem resolution questions. Customer service, a growing area for us, to make sure we’re accessible to our customers, and to our partners, to allow people to ask questions, and make sure we get the right answers to you. Then finally IT.

I said it’s a related portfolio. People look at this slide and say, how do those things relate to one another, and why would Microsoft bring those organizations together. The reason is we wanted to take the experiences we had in IT, the experience and skill set we have in services, and drive improvement in product quality, and improvement in customer deployment experiences.

Five years ago we set out on a mission in Microsoft IT to become Microsoft’s first and best customer. To move the business to running beta software, and making sure those products were really ready for the enterprise. This was a time when people questioned, can your products run in enterprise. So we took IT and we built a new relationship with products. We made an arrangement that we would run the business on beta software, as long as we had the ability to get product changes made before the product was released. We built a very deep and rich communication organization and process with the product groups, so that as we ran into deployment issues, be they bugs, be they design changes that we wanted, or deployment confusion, how do we do the migration, how does it really work, and why did it not work the way we all thought it would, that that information would get directly into the product group, we’d get the issues resolved, and then the product would ship.

We hadn’t been successful in driving that same information, those same processes into our services organization. So we think by putting IT and services together we can build a virtuous cycle of product improvement, and deployment improvement, by making sure our products go from beta into IT, and the experience we learn in deployment goes right into our services organization to share with you, to share with you as initial wins, as we work together to try to drive the first initial deployment of our technology, to create prescriptive architecture so that you and our customers know what you can count on, what scenarios have already been proven, and how you can deploy those quickly. And then to take the experience and knowledge that you get, working with our products, back into the product groups.

We need to know, since we run a very heterogeneous environment in Microsoft, we need to know what you’re learning when you’re deploying within homogeneous environments. Let me reverse that. Since we run a very homogeneous environment in Microsoft, we need your experience to make sure that, as you deploy those in different environments, that our products meet your needs, that they interoperate correctly, that we get that feedback into the product group. We use that same rich communication channel we have with IT to get those product changes made. To make sure the feedback loop continually works, you’re getting the information on deployment and products that you need to be successful.

We’re committed to your success. And in the partner program that has been announced, we’ve made additional investments on your behalf. Kevin just mentioned the technical support service coordinator, a role that allows, when you’re looking to support a dedicated resource, that understands your business, and understands your needs. It’s a great place to get your incidents managed, to make sure they get escalated properly, and brought to Microsoft’s executive attention if needed. It’s also a resource that allows you to get great information on hot fixes, patches, or security alerts that are going out.

We want to make sure the pre-sale support is available for you. So, making sure whether it’s a product issue, a configuration issue, a question you have about our license agreement, that you have the information you need to respond to your customer proposal. So that’s now available for you on a phone-based service.

We also understand when a customer is down, when a server is down, you need a fix right away. You need to directly connect to Microsoft, and so we want to make that available. Microsoft Business Critical Phone Support. If you have a server down, you contact us immediately, and via the phone we’ll help you get that customer up. We’ve enhanced and are offering managed newsgroups to make sure you can communicate with one another, that we can introduce new issues to you, and understand what’s on your mind.

And over the course of the year, working with the partner team, we’re looking at ways to expand our core services, both for ISVs and MBS partners. This is an initial commitment we have made as part of this partner program. We know there are still new things to do. In fact, we’ve heard these offers aren’t enough. And so, today I’m pleased to announce an enhancement in those offers, what we’re calling Microsoft Service Partner Advantage. We heard customers like the premier service that we offer today, but it’s flexible enough for our partners. The price point to start is too high, and the offering isn’t really tailored for partners. So, we wanted to take what’s already offered in the partner program and build on it. We wanted to take the experience we have with our premier program and make sure it was more tailored for more types of partners.

So, we’ve put together a program based on our premier, which has the four chief components of a premier agreement. Managed service, to let you have a resource that will help manage your incidents, and make sure they get escalated properly. Problem resolution, the core of our support relationship, to make sure the issues that get raised by your customers get supported. Consulting and workshops, we want to be able to wrap around with our relationship, not just incidents, but proactive training, proactive workshops, and Microsoft Consulting Services where you want it, all in one contract. So, when an issue comes up where you want services involved in a richer way, you don’t have to think about a new contract, you don’t have to think about the pain of the negotiation, a single contract that will allow you to take advantage of an already preset amount of hours, which, of course, if you want more we can always expand. And, finally, information, giving you access to all the same information we use internally for supporting our customers, our Knowledge Base, TechNet and MSDN, to make sure those tools are available for you.

This program is based on what we think the benefits our partners have asked for, and making sure that together we can give benefits to our customers, based on a predictable relationship. We’ve heard that when you call support, you get the technical issues you want, but it doesn’t appear to you that those technical resources understand you’re a partner, and so you’re different than a customer, and you want a different level of attention. By coming in through a dedicated managed resource, and having proper escalation, we think we can build a more predictable relationship for you.

We wanted not just incident resolution, we wanted a deeper relationship around end-to-end support. So, adding proactive hours, either workshop or consulting, to wrap around the incident support, to make sure the relationship is deeper and end-to-end, and gives all the services assets available to you, and making sure, again, that you have expertise and content, the same expertise we have, the same content we use to meet your customers needs.

We think, together with the Microsoft Partner Program, this program will allow you to add benefits to the customer knowing that between you and the resources you have at Microsoft, the best technical resources are available to develop, deploy and support the solutions you’re providing to the customer. The time to market can be reduced, because whether it’s incident based on the phone, or asking Microsoft Services to get involved in the initiative, we can reduce time to market for you to deliver benefits to your customers. And that the solution that you’re offering will be supported by you, and by Microsoft, through this larger extended offer.

So, we’re excited about Microsoft Service Partner Advantage. We think it’s the right solution. It’s tiered to allow for a standard offer as well as a plus, so you can have as much or as little as you think is right. There are specific offerings for ISVs and for strategic integrators, because we know the offer needs to be different, we know the type of pro active work we need is different. We’ve got more work to do. There’s also an offering for MBS to make sure the three main pillars all have specific deliverables for you. Again, it’s a first offering. We need your feedback. We need to make sure we’ve done the right thing, and we’re going to continue to listen to make sure we meet the needs you have of us as a partner. That’s the program. We think it’s going to be exciting for you to add value to your customers.

Now I’m going to end with what’s confused me most in the six months I’ve been in the role. One of the first questions people ask me is, now that you’re new in the role, how are you going to compete with partners differently than you used to? What about channel conflict? I’m sure you never hear these terms, but to me they are things I’ve been hearing a lot in my six months, and I’m confused by it.

Kevin made the point, our strategy hasn’t changed. We’re an enabler. There are three key pillars around the Microsoft Services Business, we want to build deep technical relationships with our customers, we have a specific role called the Enterprise Strategy Consultant that works with CIOs and their directs to make sure the Microsoft road map that they’re adopting gets implemented, that they have deep Microsoft technical resources to make sure they get success on the investment they’ve made. That’s a single role that we want to drive into many of our enterprise customers.

Second is the role of early deployment, again, taking the bottom of the virtuous cycle and driving it through to make sure, working with the partners, you have prescriptive architecture, you have case studies you can show, we have deployed our technology early in the release cycle, and customers are getting benefit. That is a primary role of the consulting organization.

And finally, partner enablement. Working with you, sharing our knowledge with you, and helping you drive great value. Those are the three pillars of the organization.

Twice a week, every week, I look at deals based on size and risk to make sure we’re entering into the right agreements. And every one of those deals has a partner included. Now, I’m working on information management for this organization, because when I speak to you in the future I want to be more transparent, to let you know exactly how many engagements we have and how many partners are involved in them, because I know from my view that we are partner-friendly. I know we are engaging to enable partners, and I want to make sure that you know that, too.

But most importantly, I want to leave you with my e-mail, which is RickDe@Microsoft.com. If you are confused, if you think we are competing, if you think we’re doing something that doesn’t make sense, send me mail. I will respond. If this program needs to change, if you don’t think you’re getting all the benefits you wanted, let me know so we can alter it. We’re here to work with you to bring solutions, supported solutions to customers. I’m excited about the new role. I’m excited about the challenge Kevin has given me. I’m excited about taking the information we have inside an IT and driving it out through our service organizations to you partners. There is much more benefit we can give our customers than we have today, and I’m excited to be part of that model. If you find an issue with us, if you’re concerned about what we’re doing, please let me know.

Thank you for your commitment to Microsoft, and thank you for your time today.

KEVIN JOHNSON: All right. It’s very clear to Rick and the Services team at Microsoft, we want to build an asset that is an asset for our partners. Enabling partners, creating new markets, helping us win customers, drive satisfaction, and grow the business together.

Now, certainly we’ve pulled this together in the area of driving satisfaction. There’s a set of things that we know we want to do and step up our efforts with you, our partners. The Microsoft Partner Program is a fundamental foundation for how we’re working with you, how we’re working together to deliver a great customer experience every single time, and it requires great execution.

How we’re going to help get there? A set of things, certainly. Jim Allchin and the R & D teams are focused on some product quality initiatives, something called engineering excellence in the work we’re doing in the area of security. They’ve implemented a security development lifecycle. We’ve trained our developers using source code scanning tools, something called Prefix and Prefast to help us detect areas in the code that are going to lead to quality problems down the road.

Watson is now implemented in over 50 products, helping us dramatically reduce the crashes and hangs that customers experience, and, as Allison mentioned, we’re making Watson available to you. If a customer is experiencing a problem on a piece of software that you as an ISV have developed, you’ll have the ability to access and get that information so that together we can improve product quality.

Security mobilization: Not only the work we’re doing in R & D, and you’ll see Windows XP Service Pack 2 and you’ll hear about the steps we’re taking in systems management, software update, but the work we’re doing together to educate and connect. You know, over 400,000 customers we’ve connected with via our broad customer connection events to go through training and topics on security, helping customers get more secure, over 140,000 partners have attended security training events. We are working together around security mobilization so that together we can better server our customers.

Sales orchestration: We’ve made more investments in Partner Account Managers, Partner Technology Specialists and other specialists such as MBS specialists to support our selling efforts in the small and mid-market segment. Certainly Orlando and Simon covered much of that earlier this morning but sales orchestration is our opportunity to improve our execution together.

And then finally in the area of Response Management, the team built this interesting approach. They used Response Management, which in the last year was used for our field sales team to enter issues that customers were having that they couldn’t solve themselves so that we could mobilize our company behind those efforts.

Well, the partner teams came together and said let’s create an extension of that focused on the partner experience. So the Partner Experience Center is a subset of Response Management where the Partner Account Managers now can enter into partner Response Management any concern or issue or challenge that you as a partner are having and we have a way now to systematically look at that data, we build a heat map. Not only will we follow up with that one Partner Account Manager to address that one issue but we can now look at things that are systemic, systemic changes that we can make to improve the partner experience in working with us, the partner experience, whether it’s marketing, demand generation, service, support, selling. We want to use this Response Management as a way for us to not only be in tune with our customers but to be more in tune with you, our partners.

So we’re making that investment and in fiscal year ’05 we’re going to have the same set of customer experience awards and we’re going to recognize you, our partners, who do a great job going above and beyond to help us drive satisfaction together.

Now I’ve touched upon winning customers, touched upon driving satisfaction. I now want to spend a little bit of time on grow-the-business, because at the end of the day velocity is about us together growing our businesses.

And we have over 3,000 people in Microsoft dedicated to partners. We’re investing in ISVs, system builders, MBS, Partner Technology Specialists, a number of investments, including something called Through Partner Marketing.

We know we have the opportunity to take the great work and the great infrastructure and assets that you’ve built and do more to connect them, but to do that we knew we had to do some reengineering of our go-to-markets.

Now, one of the things we learned in the go-to-markets was, first of all, we had too many of them. You as partners said, wow, these are a lot of go-to-markets, which one should I pick, how should I focus? The second piece of feedback was — and they change every quarter, too many of them and they’re always changing. By the time we figure out which ones to focus on, you have a new set of ones, Microsoft. Now, our field gave us the same feedback, so interestingly enough our field and you, our partners, are kind of dealing with the same thing.

So we got together with our teams in Redmond, our marketing executives in each of the business groups and we said, look, let’s reengineer this go-to-market approach. Let’s use what we talked about earlier, value propositions, differentiation, evidence, let’s understand the risks and let’s provide it in information that is a get-the-facts kind of a way.

There are five global go-to-markets that we will focus on. I see these are multiyear go-to-markets. These are not going to change every quarter. These are go-to-markets we’re going to put enough marketing muscle and energy behind to create market trends and market momentum.

XP Reloaded for consumers is about having more fun and keeping in touch with people, being more productive. XP Reloaded for the business customer is about security; with Service Pack 2, it’s enhancing the security.

In the area of business applications we have a value proposition to help customers streamline operations, improve efficiency and provide them with business insight.

Connected productivity is about working smarter, not harder. It’s about going beyond individual productivity into team and organizational productivity.

Operational efficiency, helping customers do more with less.

And connected systems, quickly building applications and connecting systems.

Now, each of these go-to-markets you will hear more about tomorrow from the business group executives. They’ll talk about the value proposition, the evidence they have and how we’re working to drive these. But if you think about your opportunity to get aligned, think about the value we’re working to deliver to customers and how you extend that, enhance that, amplify that and turn that into a competitive advantage for your company.

Now, in order to do that we know we have to continue to provide air cover. Now, in these partner roundtables partners would ask me, “Kevin, are you going to run ads that really reinforce the Microsoft Certified Partner brand, are you going to tell customers that it’s important that they look to a Microsoft Certified Partner?”

Well, I came back from the field on these roundtables and I got our global marketing team together, along with our ad agency, and I said I want you to go research and show me where we reinforce the Microsoft Certified Partner brand. Here’s what they came back with. Here’s a print ad currently running. Where is the partner call to action? Couldn’t find it. The second ad, Windows Server System, where is the partner call to action? Couldn’t find it. Third ad that came back, this is the landing page on Microsoft.com that we point everybody to. Where is the partner call to action? Couldn’t find it.

The conclusion was it’s easier to find out how to become a partner than it is to find a partner. (Applause.)

So I said that’s unacceptable. Look, we’re putting $1.7 billion into our partners. Our partners are part of integrated innovation. We have to tell the story, we have to help customers connect with partners.

So we are re-engineering our approach to advertising. When you see ads now we are going to connect customers to partners. In every one of our print ads we will have the area that says, “To see our technology in action and to locate a Microsoft Certified Partner, go to this Web site.” (Applause.) If you go to Windows Server System, every ad, where’s the Microsoft Certified Partner, how do we connect. Our landing page, if you go to the landing page, it says “Locate the Microsoft Certified Partner.”

We are going to make this a standard approach in our advertising. We’ll certainly allow if they want to not have the reinforcement of the Certified Partner brand, they have to go through an exception process, but I want to make our investment in advertising reinforce our investment in the partner channel and the work that we do together.

What do you think, a good thing? (Cheers, applause.) It’s a good thing and you know what, it is based on your feedback. It is based on those roundtables I conducted around the world, that you educate me, you show me where we can improve and we are a company that wants to be world class at listening and responding. It’s one example.

Now, we’re making a huge investment to drive demand for our partners. We’re investing in marketing proficiency, we’re working to provide guidance and utilization on go-to-markets, we want to enable you as partners to easily create, customize and execute your campaign using a set of tools.

Now, I challenged Allison Watson and her team, I said, “Allison, if we want to get value at velocity, our partners need to be able to do through-partner marketing in a very systematic way. What are we going to do to help them? I know we’re going to change the ads but how do we now help our partners connect to the Microsoft marketing machine?”

And so to show us the work we’re going to do here I’d like to invite Pam Salzer on stage to give us a demo of the work that we are doing and a new system and a new tool to help us enhance through-partner marketing. Hello, Pam.

PAM SALZER: Hi, Kevin.

Good afternoon, Toronto. (Applause.)

KEVIN JOHNSON: So, Pam, I mentioned through my roundtables and discussion with partners in the field I got a lot of feedback on the desire to get connected to the Microsoft marketing machine and the way that we do through-partner marketing. Why don’t you share a little sense of the feedback that you’ve gotten from partners, what they’ve been telling you they need?

PAM SALZER: Great, Kevin, thanks.

Well, we’ve heard a lot from you all about what you need and I think you mentioned some of it before. We have too many GTMs, it’s hard to understand which GTMs are right for partners. You need marketing guidance, you want support, you want an easy way to execute. So I’m excited to showcase this tool.

KEVIN JOHNSON: Great. So now let’s assume I’m a partner, I’m a Certified Partner, I’m profiled in the Microsoft Partner Program, I’m committed, I’m trying to win customers, I want to drive satisfaction, I want to help Kevin grow the business, what are you going to do to help me?

PAM SALZER: Awesome. Well, great, I’d like to walk you through the tool. And I’m actually going to be a partner myself. I’m going to be Allison Watson from Fabricam. And so when you first arrive at the tool it’s designed to know you because one of the things partners have said is we want things to know us, so actually it knows me and it knows that I’m with Fabricam and most importantly it knows my competency. So what it’s going to do is actually serve up the appropriate competency GTM for me.

KEVIN JOHNSON: So in this case I’m a partner focused on advanced infrastructure and so this system will go through and pull out and say, okay, here are the go-to-markets that most align with my competency, right?

PAM SALZER: Absolutely.

KEVIN JOHNSON: Okay.

PAM SALZER: Absolutely. And so it serves them up right here, as you can see, connected productivity, and it gives you a little screen shot of what they are and the elements that are included in them.

So this is the competencies that you have today. What we’ve heard from partners is if they want to grow into new competencies they want an easy way to be able to find the opportunities.

So what we’ve done as well is we’re going to be able to serve up campaigns by alphabet, by vertical, by product so that you can find the kinds of opportunities you want in the GTMs.

KEVIN JOHNSON: Okay, let’s say I want to go run a campaign, I want to go sell some cookies, what do I do?

PAM SALZER: Okay, great. Well, if you’re ready, I’m going to show you in just a second but for those partners that aren’t ready, because one of the things you just talked about is partners said they need marketing guidance and training, so if they’re not —

KEVIN JOHNSON: Okay, so I’ve got to get trained, okay.

PAM SALZER: But you’re ready, so we’re going to move along in two seconds.

KEVIN JOHNSON: No, no, no, you can train me.

PAM SALZER: We’re going to move along in just two seconds.

But for those that aren’t we’ve actually got new how-to guides that are about, for example, how to run an integrated campaign, how to run an event, all kinds of how-tos. So on the fly partners can quickly understand how to go run an integrated campaign to get to customers. In addition, we’re going to be offering training, for example, on connected productivity 101, how to maximize this GTM.

But you’re ready, so let’s go, let’s go build a campaign.

Great. We’re going to build a connected productivity campaign. Awesome. And so we’re here. And, Kevin, as a partner what this really allows you to do it gives a recommended set of elements like direct mail and e-mail already for you, so it kind of pops it up and says from this campaign this is what we recommend you do.

In addition, depending upon your business, we wanted to be able to support all the partner types and all the various businesses we had around the world. You could add different things, different elements like radio, TV, any kinds of things you want, Web banners. We’re going to have the ability for partners to get an integrated campaign and decide what’s integrated and what works for them.

And so we’re going to decide we’re going to do a postcard as well, so we’ve picked these four elements, direct mail, e-mail, a telesales script and a postcard so that we can have multiple touches to the customer to ensure we increase our pipeline in a greater way.

And now what partners have said is they really want offers and these are non-cash offers designed to help partners move customers through the stages of the sales cycle. So, for example, white papers, Webinars, a whole range of things, partners want to be able to get information from us and have it easily available to their customers in an automated fashion. So we’ve built that in. So there are going to be a standard set of offers that come up that the partner can choose from but then if the partner wants to add their own they can do that, because one of the things we’ve heard is partners want to be able to customize and differentiate themselves.

So we’re going to go build this campaign with these four elements and we’re going to go customize, because one of the things we’ve heard, one of the number one things we’ve heard is partners want the ability to customize and have flexibility so they can differentiate.

So great, we’re here, we can see this campaign, this is a direct mail flyer. And so we actually chose four elements, direct mail, e-mail, postcard and the telesales script. We’re going to be able to input our information into one of the elements and it will actually cascade into the others. So we can quickly in about ten minutes or so build a whole integrated campaign.

KEVIN JOHNSON: So as a partner I have my custom value proposition that helps support the Windows Server System value prop, whether it’s “Do More with Less,” and help customers get more efficient and I can add more content on here’s how I help enable that as a certified partner?

PAM SALZER: Absolutely.

KEVIN JOHNSON: And then that gets woven into any direct marketing or the postcards or the telesales script?

PAM SALZER: You’ve got it.

KEVIN JOHNSON: OK, great.

PAM SALZER: Perfect.

So what I’m actually going to do right now is this is inserted text and so partners can use the inserted text, the sample text that we recommend but partners can also add and modify. And so we’re actually going to add and modify on the fly so that we can add in our information.

And if you remember, I’m Allison Watson from Fabricam and so I’m going to actually add in a little bit of information about me.

They said it was risky but I’m going to do it anyway.

KEVIN JOHNSON: You type like Steve Ballmer. It’s OK.

PAM SALZER: Yes. (Laughter.) Luckily this has Spell Check and it will help me but I’m going to do it really quickly. Networking partner. And so you can see I can just add in some sample text very quickly.

And so if you scroll down you can actually see that I’ve added it in. And so I can add in my differentiation and I can also add in my own offers as well.

So we’ve created our own little direct mail piece and now what we want to do is add in our logo. And the beautiful part we’ve added in here, because we’ve heard feedback from partners, is they want to be able to co-brand. And so we can add in our logo, we can also add in our competency logo, if that’s something we choose, and/or if we’re marketing with another partner, because one of the things we’ve heard is partners want to be able to market with each other and go to market with customers with a multi-tiered solution, and so we can actually do that. For right now we’re just Fabricam and we’re just going to add in our logo. And you can see there’s multiple opportunities to add in different logos. So we’re just going to add in our logo and it’s already inserted in here and so if I wanted to I could add in a whole range of logos in my own Web site and my own database.

And I’m going to just take the one that’s our normal partner logo, Fabricam, and so we’ve now built our piece. Literally in about 10 minutes we’ve built one direct-mail piece and then it cascaded into the other elements, the e-mail and the telesales script. (Applause.)

KEVIN JOHNSON: So this is going to enable me to build a custom campaign leveraging the Microsoft marketing asset but tailored for my company/

PAM SALZER: Yes.

And now what I’m going to show you is we’re ready to go execute it. So we’ve built it, we have the elements we decided we wanted, that we thought were most beneficial for us as a partner and now what we want to go do is deliver it in the marketplace.

KEVIN JOHNSON: Now, Pam, one other thing, if we’re delivering a marketing campaign in the marketplace we kind of want to know how we’re doing. Does this help me do that?

PAM SALZER: Well, it does but actually, Kevin, first let me show you one thing that the partners have really requested that really helps them.

So partners have said you all want to be in the driver’s seat, so we’re building this tool so you all can be in the driver’s seat in a couple of areas. The first one is around proactive scheduling. You’ll see here that partners can schedule any of the elements so we can send the e-mail maybe today and then maybe in two weeks we want to drop the direct mail. So it gives us the ability to schedule this whole integrated campaign in our timeframe so we’re the driver as a partner.

The second thing — that should be clapping. That’s some good news. (Applause.)

The second thing that we heard loud and clear from partners is they really want the ability to potentially use a range of vendors. So this actually gives the partner three options. The first option is you can do it in house. The second option is you can do it using your own marketing agencies. And the third option is Microsoft is going to provide a range of third party marketing service companies to help support you. So that’s great news for you all, that you get to choose which partners and which marketing vendors you want. (Applause.)

So now we’ve actually chosen all of the different elements and when we want them delivered and how we’re going to get them delivered.

And one other thing that I wanted to mention, in case you hadn’t noticed, one of the things we’ve heard is this ease of use. You talked about consistent, predictable and very simple, this ease of use, so all of this is all about steps one, two, three, four. Everything we have is about steps one, two, three, four. So the experience is really designed for ease of use and real great, quick and fast execution.

So now what we’re going to do, we’ve actually built our campaign, we’ve suggested that all the vendors go execute it, we’re now going to check back in about a month’s time, because, Kevin, you asked about how do we measure.

What we’ve built in is this concept of metrics. Partners have said they want to make sure — they have limited marketing dollars and they want to make sure that they’re using every bit of those dollars for maximum impact. And so what we’ve done is we’ve built a set of metrics so that partners can track the campaigns they do and even the elements within the campaign to make sure that they’re improving constantly on their marketing and they get a perspective.

KEVIN JOHNSON: So I as a partner could look and see how many responses I got from a certain piece of marketing and was it from my target audience, is my media mix, is my mix correct and am I getting the most bang for my marketing investment?

PAM SALZER: Absolutely.

And so you can see this connected productivity campaign that we executed a month ago, we’re doing incredibly well. So me, as Fabricam, I think I should give myself a bonus for doing such a good campaign. (Applause.)

So, Kevin, as you can see, what we’ve really done is tried to create ease of use, great flexibility, customization and really where the partner is in the driver’s seat. And what’s beautiful about all of it is we’ve connected it to our marketing so we together can go win customers.

KEVIN JOHNSON: That’s great. What do you think? (Cheers, applause.) All right.

PAM SALZER: Thanks, Kevin.

KEVIN JOHNSON: Thank you, Pam.

Clearly growing our business is an opportunity for us to get more connected and I think what you saw here, the changes we’re making in our advertising, the investment in through-partner marketing, I really want to see a third of our go-to-market marketing dollars be invested in a way that is through partner marketing so that we can help create velocity together.

And I would encourage you tomorrow, when Will Poole speaks, to take a close look at what he’s going to demo on something called the Windows Marketplace, because when I showed you that landing spot on Microsoft.com and customers from around the world go to click and do searches on your solutions, we are going to enable that through the Windows Marketplace. We will enable that through the Start button on Windows. Imagine hundreds of millions of customers around the world clicking Start, Find a Partner Solution, the value that can deliver to you as partners and Will Poole will show you that tomorrow. (Applause.) We are aligning our Microsoft marketing engine behind the investments we’re making in partners because we want value at velocity.

So I started with the five questions that I hear from partners in these roundtables: How can we get more connected to the Microsoft marketing machine, through-partner marketing, the demo that Pam just did, the work we’re doing on advertising, Windows Marketplace.

Will you strengthen the Microsoft Partner brand in the customer eyes? Yes, we are changing the way we do our advertisements to strengthen that brand proposition and connect customers to partners.

How can we work more closely with services? Rick Devenuti and his team clearly are on point in this area. They’re making some good progress. I think what they announced with Service Partner Advantage shows that we’re working to really harness the assets that we’ve built in services in a way that enables you as partners.

What can we do to support the overall value proposition? Get alignment around those go-to-markets and extend them. Create, innovate, add value to them, tell your story but leverage what we’re providing you in areas like Get the Facts, so that you can be more successful winning customers.

And finally, the field priority: Win customers, drive satisfaction and grow the business.

Now, I look forward to having the opportunity in this next year to work with you around the world as I visit countries around the world and continue to conduct these roundtables, because we have a great opportunity.

Now, we have an opportunity to really connect and create some velocity through the investments we are making, the investments you are making. We as a company take this very seriously and we’re delighted to have this opportunity and it’s been a real pleasure for me to be able to come back here a year from when we met last in New Orleans and talk about all that you’ve taught me and to help me focus on and in the actions that we as a company are taking.

I thank you for your partnership, I thank you for feedback. If you have comments, suggestions or other feedback for me, I will see you on the road or you can e-mail me at KevinJo@microsoft.com.

Thank you very much. (Applause.)

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