Remarks by Kevin Turner, chief operating officer for Microsoft
Jordan Business Value Launch
Nov. 4, 2009
MODERATOR: Ladies and gentlemen, Mr. Kevin Turner. (Applause.)
KEVIN TURNER: Thank you very much. Well, hello. It’s great to be here today, it’s great to be able to announce some exciting product launches that we’ve got, and what some of the business value creation that we can work together on, and on behalf of all the Microsoft employees here in Microsoft Jordan, as well as globally, it’s our honor and privilege to be able to share some exciting technology, and innovation with you, and I look forward to jumping into that.
I really want to talk to you. At the heart of what we’ll talk about with this Business Value Launch is really at the heart of creating business leadership, because I think it’s a unique time for IT. I think it’s a unique time for CIOs. I think it is the time that the CIOs can help drive and direct company strategy.
This is a very tough economic environment that we’re all in. And I think it’s going to take innovation in IT to really pull us out of that particular situation, and really drive and propel businesses forward. So, that’s one of the things that really, really excites me about innovation in technology.
But, before I jump into the remarks, I really want to say thank you. Thank you for your time today, thank you for your partnership. Certainly we appreciate the feedback that you continually give us, and keep it coming. We need the feedback, we need your ideas and thoughts. You’ll see some of the products. We’re going to talk about Windows 7 in a moment, but that product was based on a lot of the feedback we got from you, our customers, and we’re very appreciative of that. And it is something that I want to make sure we do is properly thank you, and thank your teams for all their help and participation.
Now, as we jump into it, I thought it might also be helpful to talk to you some about Microsoft’s strategy, and what are we up to as an organization, and where are we headed as a company. And this slide really is the best way for me to be able to articulate our strategy with you. We want to be uniquely positioned in the marketplace as being a company that can help connect the digital work style, and the digital lifestyle.
Now, we’re about a 35-year-old company. We’re a company that was founded on the promise of being the company that can help enable a PC on every desk, and in every home. That was Bill Gates’ original aspiration that he had for Microsoft. As we’ve moved the company forward, that dream, that aspiration, in developed markets it’s largely fulfilled. In emerging markets, that’s happening very, very rapidly.
And so our new aspiration of being this company that’s uniquely positioned to connect that digital lifestyle and work style is a unique one, and it’s an important one. And we want to do that across three screens, three devices, the PC, the mobile device, and the television in the home, because we see where people work, and how they work, and when they work continues to have more and more overlap between the workplace, computing on the go, and the home or the living room. And so being able to uniquely connect that is an important part of our strategy.
Also as an important part of our strategy is being the company in the world that can really offer choice as it relates to on premise and software plus services. Being able to offer this choice is a distinct advantage because our competition says, hey, look, put it in the cloud, or there is no software plus service. That is not the Microsoft approach. The Microsoft approach says, you can put whatever you want in the cloud, we’ll enable that, and you can locally manage, locally host, or have on premise whatever you want, and we’ll help you manage that. That’s our model, built on choice. So, three screens, on premise, and the cloud being the company in the world that can help connect the digital lifestyle and the digital work style.
Now, this is a company that took a look at our R&D portfolio like all responsible companies would do in this era that we’re in, in this global macroeconomic environment, and we said, what should we do with R&D? Most all companies in the world are cutting R&D spend, particularly all technology companies are cutting R&D spend. We said, what should we do? We looked at it and we said, OK, last year we spent $9.1 billion in R&D. And you know what we decided to do in the toughest macroeconomic environment of our generation? We decided to double down. This year we’re going to invest $9.5 billion, an increase of $400 million. Not only is that $9.5 billion in annual R&D spend $3 billion more than the next closest technology company, but that $9.5 billion this year is more than any company in the world regardless of industry. We passed the biggest oil and gas R&D spender, and we’ve passed the biggest pharma R&D spender as well this past year.
And so that’s an awesome responsibility, but one of the things that I think is important, and we ground you what we’re going to talk about today, is that when you make an investment in Microsoft, ladies and gentlemen, you make an investment in a company that is committed to R&D and innovation. Because when you look at the technology sector, there just aren’t a lot of companies investing in R&D.
If you look at where they’re putting the R&D, it’s interesting. One of our biggest competitor’s R&D strategy is to do acquisitions, and acquire a bunch of companies and become the licensing police. And we’ve gladly handed them that mantle, and they’re going to continue to run that. Another one of our big companies that we compete with, their R&D strategy is to really be in the consulting services business. And that’s not our sweet spot. We are a software company at heart that really believes in the magic of software, and illuminating the power of software. And that’s what we’re committed to over the long-term.
Now, many of you know I’ve been a CIO. I was a CIO of the largest industrialized company in the world. And during that time period, it was an interesting sort of reflection to say, gosh, if we’re going to have business leadership, what’s required from the CIO? And as I sort of fast-forward to this environment, there’s some things that I think are very important, because uniquely I also have responsibility for IT at Microsoft in addition to that. We have one official CIO in Tony Scott, who just yesterday was awarded the CIO Hall of Fame by CIO Magazine. That’s a very cool distinction for him.
But, what’s also important is, we also have 30,000 plus unofficial CIOs at Microsoft. We have a bunch of technology people, if they don’t like what you’re doing, they simply write it themselves, or put a server under their desk, and create problems for you. Big opportunity there.
And so he and I sat down ad I said, look, there’s about six things that I want us to drive as a company from a business leadership standpoint, and then I want to know what the accountabilities are for you, Tony Scott, as it relates to CIO accountabilities. And these six things are sort of my operating principles for Microsoft in this environment, maintaining this real-time connection with reality, focus on growing share, be an energy carrier while managing with intensity, this environment requires intensity right now. Not only intensity, it also requires concentration. Being bold about building the future. This is a company that wants to bet big, eliminate the unnecessary. That is a big opportunity that certainly during this era we found plenty of those challenges. Keeping the clear accountability with differentiated performance. Important, how can IT enable, how can IT help? These are eight things that Tony and I went through together to create his moment of truth, if you will. And I’ll talk about the importance of moments of truth.
But business insight and analytics has never been more important. How do you manage external data with internal data? How do you marry those two things? The need for rapid feedback. We sell products, ladies and gentlemen, in 191 countries around the world, over a billion people every single day, in the world use Microsoft products. I need real-time feedback. I need analytics like I’ve never had them with speed, and accuracy, and precision because the decisions we have to make on a daily basis are critical, and certainly have a lot of downstream ramifications. So the leaning on him has been important.
And every day about 1 a.m. in the morning, no matter where I’m at in the world, on my Windows Mobile device I get all the analytics for how we did yesterday, where did we do what we said we’re going to do, and where did we not, by subsidiary, by area, down to the product level I get all the insight and analytics.
And I also get the market. How did the market do? How are we doing as it relates to market share against all of our products and solutions, in a real-time way, from a business insight and analytics standpoint. Speed and flow of communications is critical, that timeliness, because decisions have to get condensed. This is where if you don’t have speed there used to be an old ad campaign that talked about speed kills. Speed enables in this environment. It’s critical.
Scorecards and dashboards, I’m a big accountability guy. And I think it’s important that we have a common set, a common version of what’s expected of every group. And the same metrics throughout the company, in real time, reporting on those metrics to see how we’re doing is a critical aspect. And that’s something, again, lighting up scorecards and dashboard. And don’t be a company that over-metrics, but certainly have the most important metrics, and then manage those metrics in a real-time way, and using IT. And we created a product called the Business Scorecard Manager, in fact, it’s not even called that anymore, but that’s what it used to be called, to be able to create that. And we moved that product into our BI strategy now, and it’s one that we commercialized. But, certainly we used it internally first.
Eliminating the unnecessary, so I’ve said, hey, Tony, let’s eliminate a number of applications, let’s eliminate a number of servers. What a big opportunity for IT to really become more efficient and effective. And one of the things, the way I feel about efficiency and effectiveness is that efficiency is important for survival, effectiveness is necessary for success. They’re different, they both play a different role, but they’re both critical to being the best company that you can possibly be.
Supporting new business models, we’ve talked a little bit about our cloud-based strategy. I’ll show you in more depth what it is. But, clearly it’s a new business model, subscription-based pricing, bounty-based pricing is a completely new and different licensing model for Microsoft. IT has to help enable that. That’s an important thing that I think they can get on the front foot, and really lead the organization in that transformation.
Creating clear moments of truth, so Tony and I went through each of his direct reports and said, what are their moments of truth, delivering on time, on budget, delivering the functionality to the user’s specifications, being able to reduce the number of applications that we have in our environment, being able to reduce the number of servers that we have in our environment. Having those clear moments of truth, by person, by employee, is a critical part of getting great clarity and great execution.
Driving payback and ROI, giving Tony the capability to say, you have a big list of projects, and IT projects, that you need. Guess what, let’s not work on them if they don’t have great payback and ROI. And, oh by the way, I need the end user to sign off, physically sign off on each project that we’re doing to do, to make sure that they agree with the ROI calculation.
And then take it one step further. After you deliver that project let’s go audit and say, did we get the ROI and payback that we said we were going to get. And in the event that we don’t, de-prioritize that end user’s product, their projects, and give priority to those end users who give us great payback and ROI.
And then earning the right to be the trusted advisor, clearly that’s something I have formula that we use with both our sales and marketing, and services team, and I also use it with our internal IT team. It’s called the formula for credibility. My formula for credibility, ladies and gentlemen, is track record plus empathy equals credibility. That’s the formula that I use inside the company, and certainly it’s an important one.
So, as you look at the business leadership that’s required in this era, it’s requires a whole new level of CIO accountability, and it’s one that I think is important as we make this transition together. And I think that one of the biggest things that I see around the world is this transformation that’s happening from IT to BT.
Now look, I’ve been around technology for a long time. When I first started on technology it was called data processing. OK. Then it was called information systems. And then it was moved to information technology. I think the next transition that’s going to happen in the world is going to be business technology. I think we’re going to have less and less information technology, and more business technology, business technology that adds value to people. I think that’s important. I think all of us have too much information, but I think how we translate that into value is very, very important, and something that I think as you get great IT leadership I think you’ll have great business technology.
So, today I want to talk to you about some technology launches that we’re bringing to this market that really enable business leadership. First up is Windows 7. Clearly this is the greatest single operating system we’ve ever launched. It’s the most important. It’s the safest. It’s the most secure. It’s the fastest, the slimmest, and absolutely the best operating system we’ve ever launched, and we’re excited about that, Windows Server 2008 R2, Exchange Server 2010, Forefront and System Center.
So, we’re releasing these all aimed at improving end user experience, and helping you to create business leadership and business value. So, let’s jump into Windows 7 and the optimized desktop. If you look at the Windows 7 product, our new browser Internet Explorer 8, the Microsoft Desktop Optimization Pack, and System Center, it’s really about how do we enable everyday tasks to make them easier, anywhere any time. How do we help give you the next generation of security and control? How do we streamline your PC management experience and provide you this robust platform that gives you performance, compatibility, safety and security?
And when we took a look at this, and we went through it, there are some really unique opportunities, things like seamless access to data, with our Direct Access. It lets end users access corporate networks from anywhere, anywhere within the organization, without a VPN connection, so that they look and feel like they’re behind the firewall.
See, we’re a company that, again, is very diverse geographically throughout the world. Having this real time access to data anywhere anytime is an important element to being able to have that safe and secure environment. And reducing costs by streamlining PC management, and I’ll show you specifically when I look at that, we’ve done some really great studies with our customers to say, what is the real savings of upgrading to Windows 7?
Well, if you look from a service standpoint, the desktop management standpoint, the deployment and provisioning standpoint, and a power management standpoint it’s substantial, between $111 and $191, because, you see, we have technology built into Windows 7 like hot patching and the ability to not have to reboot the machine, the ability to be able to get in there and manage power so that you can actually save electricity and have a greener IT solution with Windows 7 has never been greater than it is today.
The opportunity that we have if you take that one step further, with the Microsoft desktop optimization pack, and App V, the opportunity that we have on app deployment, and image management, and provisioning, and patching, gets simpler and easier for the IT environment.
So, it’s an incredible solution that we have together with real hard dollar savings. And you can see one of the testimonials there from a customer here in the market, it’s an incredible opportunity for you to look at your environment, upgrade your environment, and really enjoy the savings and TCO savings, and value that you get from Windows 7. And we’re happy to be able to partner with you to bring you that solution.
Next I’ll talk about server management and productivity. All of us know about virtualization and how hot it is in the marketplace today. Clearly, it’s an opportunity for us. It’s an opportunity, because it’s a way to reduce the number of servers, reduce your power consumption, really sweat your assets and use the assets that you have to their fullest degree.
With Windows Server 2008 R2, we’ve got a new version of the Hyper-V that has improved scalability and a live migration feature, one that we haven’t had, that puts us on a great track in a competitive situation. What you’ll really like about this product is at least a third the price of what VMware is. So, not only do we have a great solution, we’re a third the price of the biggest competitor in the market. And more importantly is we have an open platform from a systems management standpoint. So, if you own VMware, that’s okay. We have a management tool that allows you to manage VMware, and our environment from the physical through the virtual, throughout your data center and operation. And do it all with a single, common pane of glass, one common systems management tool. And what a great opportunity we have for that. The Power Shell 2.0 enables backup and provisioning.
The secure access that we’ve got on Direct Access and Branch Caching, what an opportunity this is. When you get into Branch Cache the benefits for end users and IT is you spend less time waiting for files to download in branch scenarios. And we’ve even seen a savings on WAN bandwidth of up to 40 percent on early adopters. And Direct Access allows, again, this ability for users to connect to their data with enhanced security from anywhere, making them more productive and connected at all time. So, this is a big time business value creator, and a TCO saver for you.
Next, let’s talk bout the rich customer choice and experience we’ve got with Exchange Server 2010. You know, we get a lot of requests from customers about e-discovery, the ability to find, share, and archive information, the importance that it is on security and compliance. Well, for the very first time we have an Exchange product that has archiving built into it and enables this e-discovery, and the ability, again, to utilize the technology to find, use, and share applications. And it also allows you to avoid spending third-party dollars, or dollars on third-party applications. It’s a very, very important opportunity.
But, one of the things we’ve also got in this Exchange 2010 product that I think is critical, is the opportunity that we have for flexible storage and high availability, because it’s nearly a 90 percent reduction, ladies and gentlemen, in I/O overhead compared to Exchange 2003. So, you can use a wider range of storage hardware options from traditional SANs to desktop-class, direct attach storage. And it’s a big opportunity, again, for you to drive great value. So, we’re very excited about this product offering, as well.
But, as I said, $9 1/2 billion in R&D, this is just a snapshot of some of the products, some of the innovation we’re bringing to the market. We’ve got a lot going on at Microsoft. We’re committed for the long-term with software and innovating in software. And this is just a snapshot of a few of the offerings we’ve got coming out this year. But, our innovation engine is working faster than ever as it relates to bringing great solutions to market.
And, as I said, our platform around choice, we believe cloud services and software plus services are important. And this is a great depiction for you. We are the market leader on cloud-based services. And it’s important, because we do offer you that choice. So, no matter what pace you want to go, as it relates to cloud-based services, we’re willing to work with you on that pace and make sure we move at your pace. But, we do believe most companies in the world are going to have some pieces of data for some applications, for some sets of users that they don’t want to put in the cloud. And we’re okay with that.
We’ve got a model for that. We’re going to enable that. But, we also know for some pieces of data, for some sets of users, for some applications, you’re going to want to put it in the cloud. And we’re going to enable that. So, it’s all built around customer choice, and we’ve got great solutions from virtualization that I talked about through communications, collaboration, business applications such as CRM, and where we’re going in that particular space, storage, identity, and certainly on the client. But, customer choice is the Microsoft platform, and we’re going to continue to invest in that.
And as I conclude, there’s a couple of things I’d like to share. We’re really, really proud of the ICT project that we announced just a moment ago with His Excellency the Minister, and the ICT project you’ve got, and the strategy that you’ve got here to really enable technology, enable Internet access.
We’re very proud to be a partner on that, and we’re committed to making that work the best it’s ever worked in any place in the world, because we want to use it as a showcase, because it’s very forward thinking, and it’s something that I know as we land that particular project what it’s going to mean to the country is going to be huge. And we’re excited, again, to be a part of that.
But, we want to work hard with every business customer, in the private sector and the public sector, to earn your trust. It’s not important what we say. What’s important is what we do. And that’s why I’m here today, and we’ve got a great team here in Microsoft Jordan, and I’m proud to be able to represent that.
I also wanted to be able to take a few things and share with you a few things that we’re doing in the research labs, that are not yet products, but they’re really about how we’re thinking about the future of productivity. So, Windows 7 is a super product. We’re proud to be able to bring it to you today. Windows Server 2008, Exchange 2010, Forefront, and System Center are great products that you’re going to learn a lot more about, and you’re going to see a lot more about the rest of the afternoon.
With that, I would like to show you a quick video, again, of some of the future things that we’re thinking about from a productivity standpoint. But, I want to conclude by saying we appreciate this opportunity, again, to work hard to earn your trust. And it’s great to be here today. And on behalf of all the Microsoft employees, thank you for this opportunity. (Applause.)