Michael Bloomberg, Steve Ballmer: News Conference

Remarks by Michael Bloomberg, Mayor, New York City, and Steve Ballmer, Chief Executive Officer, Microsoft
New York, New York
Oct. 20, 2010

MAYOR MICHAEL BLOOMBERG: Good morning. Over the past nine years, as you know, we’ve harnessed the power of technology to make government work smarter, and faster, and more than ever. And today, we are joined by Microsoft’s CEO Steve Ballmer to announce a groundbreaking partnership that will move our technology efforts to an entirely new level, while saving us money in the process. So, it’s good, and even better.

This new partnership between Microsoft and the City’s Department of Information Technology and Telecommunications encompasses a lot of different elements; most of them are, in all fairness, pretty technical. Much of them aren’t really very sexy. So, I’m sorry if you’re looking for a story of sex, and pizzazz, this is not what this is about. This is about making City Government work better for the people we serve, and doing it at lower cost.

Combined, they are going to make a huge difference in how our government operates by giving City employees the same cost-cutting edge resources that you find in top private sector businesses. Now, for starters, this partnership will ramp up our productivity, and help us fulfill what is, no doubt, City Government’s primary mission, providing the best possible services to New Yorkers.

At the same time, it’s going to spur efficiencies in how we do business, which, in turn, will generate significant cost-savings for taxpayers. In fact, we think this new partnership is part of a much broader effort spearheaded by Deputy Mayor Steve Goldsmith to make City Government more efficient, more electronic, and more effective. And it’s an effort we’re calling Simplicity. Figures. And at its heart is a commitment to using technology and data to more efficiently manage operations and reduce cost.

Now, our new partnership with Microsoft is really a prime example of these efforts. Central to this partnership is a new licensing agreement, the first of its kind, we think, in the nation, which will produce more than $50 million in savings for the City over the next five years.

Prior to today’s announcement, the City’s various agencies, as you know, would purchase their software individually, and the result was that we had more than two-dozen separate license agreements, and many more individual maintenance and support packages. It was complicated, cumbersome, and, needless to say, not very cost effective. But by leveraging City Government’s tremendous buying power, we are now able to consolidate those agreements into one single multi-year licensing contract covering more than 100,000 City employees.

At the same time, Microsoft will begin providing software that is more tailored to individual users. Until now, we bought software from Microsoft based on a one-size-fits-all approach, regardless of which programs individual employees actually need and use. But Microsoft has now agreed to provide three different software options depending on each user’s individual software needs, and this enables the City to essentially only pay for what it uses, a unique concept in government, but one that we don’t really have any choice but to implement.

Another major element of our new partnership is access to emerging and innovative products such as Microsoft’s cloud computing, which is going to help City employees work together in exciting new ways. I’m sure you all know that cloud computing is becoming an increasingly popular method for people to collaborate and access information instead of working off a hard drive or as server, all your programs and documents are delivered securely through the Internet, hence, in the cloud.

It means City employees will be able to more easily share their work with co-workers, whether they’re sitting in the next room, across town, or even on the other side of the world. And because programs used in the cloud are updated instantly whenever newer versions are released, City employees will always have access to the latest technology.

Microsoft’s cloud computing will also be a great new platform for our IT experts to develop software applications for both City Government and for public use. It will actually save us even more money, because cloud computing reduces the need to buy hardware, which often represents the lion’s share of development costs.

The transition to Internet-based computing will also cut down on our reliance on City Government’s own network of servers, and that will facilitate our ongoing effort of condensing the City’s energy intensive data services, an initiative we call CITIServ. As part of this initiative, we’re working to consolidate the City’s more than 50 separate datacenters into one centrally managed, state of the art facility located in Downtown Brooklyn.

And if you think about how much energy each one of these datacenters consumes to both power and cool this hardware, you begin to see how much money and energy this effort actually will save. In fact, CITIServ is expected to generate $100 million in savings over the next five years, not to mention the substantial environmental benefits that it will bring.

Before I turn the floor over to Steve and some of other speakers, I want to make a final important point. Today’s agreement moves us a long ways towards our goal of centralizing our IT infrastructure. We want every single dollar that we invest in information technology to drive efficiency, generate savings, and improve the delivery of services. Until this week, that was quite a challenge for us, because almost every single agency managed its own IT planning and purchases, and made those in a vacuum. But today, I’ve signed an executive order that centralizes all these activities under one agency, the Department of Information Technology and Telecommunications. And that’s going to ensure that we maximize our investment in IT while moving us forward in our comprehensive effort to make City Government leaner, more responsive, and more innovative.

Today’s announcement is really just the latest in a long relationship you should know between Microsoft and New York, I’m happy to say. For instance, Microsoft has developed a virtual senior center, which we use to connect homebound seniors to important community services. Microsoft has provided an internal safety video at no cost to more than 200,000 of our public school students, and today I’m very excited to announce that next July, we’ll be co-hosting the worldwide finals of the 2011 Imagine Cup. This competition sponsored by Microsoft is challenging students to solve some of the world’s toughest problems using technology. Microsoft decided to bring the finals here, because it recognizes our position as a center for innovation.

But I think it’s fitting for another reason, using technology to solve long-standing problems is exactly what we’re trying to do in City Government, and with partners like Microsoft, the sky really is the limit.

Steve, it’s a pleasure to have you here in City Hall. We did begin our chat upstairs in the bullpen. He’s really one of the great innovators in this country. So, we’re really excited to be working with him, and I should point out that I think Microsoft has 2,000-odd employees right here in New York City. So, you’re a big employer. Thank you very much for that.

Steve Ballmer. (Applause.)

STEVE BALLMER: Well, I thank the mayor. I want to thank Deputy Mayor Goldsmith. I want to thank the Commissioner. It’s a real pleasure to have a chance to be here today, and to announce this partnership.

It’s also a pleasure for me, second time in two weeks, I’ve been in New York. California, Oregon, or even Washington, is about as far as you can get in the continental U.S. from New York, but this is an important place, and I had the fun of doing an important product launch last week, and then the announcement of this important partnership here today.

It will also be fun to be back next year for the Imagine Cup. The mayor talked about it, but I have to tell you, it’s fun to have literally thousands of kids, high school and college age, coming together and showing off some of this great programming work that they’re doing, and you’ll see a lot of folks speaking a lot of languages, even perhaps rare here in New York City, all of whom do speak computerese, which will be I think a lot of fun for the citizens here.

Today’s announcement really does represent a win-win, certainly from a Microsoft, and I think from a New York City standpoint. As the mayor moves to modernize what’s going on in government here, and centralize some of the activities, the opportunity to work with the City of New York on that program on a leading-edge basis, whether it’s the datacenter consolidation, the move to the cloud, the move to get next-generation collaboration technologies in front of the workers, an issue that the deputy mayor highlighted quite vividly in some of our preceding conversations, I think it’s fantastic.

We gave our two cloud initiatives their final names yesterday. Office 365 will be the name of one of the two initiatives and our Windows Azure system is the other, that we’ll collaborate with the City on, not just providing software and cloud services, but really partnering to figure out the next-generation ways to really use this kind of cloud-based infrastructure to deliver next-generation City services with an agility and a speed and an effectiveness of City workers that hopefully has never been seen before.

I particularly want to congratulate the mayor on the order he signed today centralizing a number of things here from a technology prospective in City Government. I’ll tell you, as I travel the world I don’t see that very often. And one of the problems I think that government has in keeping its information technology infrastructure up to the same level as commercial organizations is an issue of critical mass. And I think the critical mass that through the mayor’s initiative gets to be brought to bear on information technology issues by the City is fantastic. And Microsoft is delighted to have a chance to be a partner in that initiative. Thanks very much.

MAYOR MICHAEL BLOOMBERG: We are thrilled. I should point out, Microsoft is just one of the IT companies that has been growing here in New York City. People don’t recognize this. We are becoming one of the IT centers in the world and our objective is to make this a business-friendly place that everybody wants to bring their jobs here.

Deputy Mayor Goldsmith is going to talk about how today’s announcements contribute to innovation efforts.

DEPUTY MAYOR STEVE GOLDSMITH: Thank you, Mayor. I work for Mayor Bloomberg, so he’s always right. But, I was highly disappointed a minute ago where he told me that my work here was not sexy, or didn’t have much zest. And I’m really excited about this announcement, Mayor. This is really it says a little bit about kind of what I’ve been my personality, I guess.

Let me just thank the mayor and Mr. Ballmer and also make a comment or two about why this is particularly important. The mayor has tasked Carol and me with not only efficiencies, but with transforming the way City workers do their work. And today’s announcement has a series of kind of cascading benefits. It sets a very important platform for the future.

We do immediately save 50 million, which is not insignificant, given the financial stress that the City is under. But, actually that’s just the beginning point. Even just the beginning point in the cost savings, because under this agreement we’ll be able to apply and provide technology to City workers who don’t have it now at all, there’s 100,000 workers who don’t even have e-mail, that will be provided. An additional set of services is being included in this price. So, there’s a dramatic growth opportunities, as well.

We’ll receive the best and newest of Microsoft products as we go forward, which means New York City’s government will always be on the leading edge with respect to governments around the world and in this country, as well.

Additionally, as the mayor referenced, and as Steve Ballmer referenced, Mayor Bloomberg has directed us to find ways that our employees can work more productively. That means they have to work more collaboratively. They can’t work in these verticals. They have to be able to work with community groups, and take in their information, and process it. And we are purchasing today in this relationship a series of collaborative tools that will dramatically change the way employees communicate with citizens and with employees and other parts of the organization. And over time these knowledge management tools will produce true innovation and breakthroughs that this platform that’s been put in place to date will allow us to further.

So, if you add these things together we have the dollar savings, Mayor, we have the productivity gains, we have knowledge management tools, we have the best of innovation, we have a platform for the future. And the Simplicity goal that the mayor mentioned is an important piece of the foundation that has been laid in place. Today’s relationship with Microsoft is the second one. And with a few more in place, as well, Mayor, we’ll be able to further your vision and your request that we have a smarter workforce that produces quality city services more effectively.

Thank you.

MAYOR MICHAEL BLOOMBERG: Thank you. Our next speaker is the woman that runs DoITT, the Department of Information, Telecommuncations and Technology Technology and Telecommunications.

CAROLE POST: Technology and Telecommunications.

MAYOR MICHAEL BLOOMBERG: She knows that. That was a test. If she didn’t know it we’d be in big trouble, Carol Post.

CAROLE POST: Thank you, Mr. Mayor. That was the easiest part of the test, I assume. Now the real difficult part of the test starts, but thank you. And as the deputy mayor spoke about being charged by the mayor to create a new IT paradigm, so has the Department of Information Technology and Telecommunications been charged accordingly.

And what I’d like to add to some of the comments that have been made is that DoITT as an agency is tackling this agenda by doing really three things, building on the unprecedented technology advancements that this administration has already made, coming up with new ways to introduce technology resources to both our City staff and New Yorkers at large. And at the same time finding operational efficiencies. So, to do this we’ve begun thinking about IT infrastructure as a collective enterprise, rather than as many individual loose parts.

The executive order that the mayor signed today puts us in the driver’s seat to do that and the partnership with Microsoft is an example of how we can really move the train further down the path in that regard. Ultimately it’s this type of approach that enables DoITT and the City to provide IT services to our partner agencies so that they can focus more on what they do well, which is to deliver city services to New Yorkers.

So, I’d like to thank the mayor, and the deputy mayor for their leadership. I’d certainly like to thank Mr. Ballmer and his team at Microsoft for collaborating with us on this arrangement. And I’d like to thank the DoITT staff for their efforts to pull these together, specifically Paul O’Brien (ph) and Michael Monty (ph), who are behind me, who led the discussions with Microsoft, as well as Jim Fowler (ph) and Brett Robinson (ph) who led the discussions around the executive order.

So, thank you.

MAYOR MICHAEL BLOOMBERG: Thank you. We’ll be happy to take some questions about the agreement. Yes, sir, in the back.

QUESTION: (Off mike.) Are there any security concerns with the cloud?

MAYOR MICHAEL BLOOMBERG: So, I think there are a couple of different ways to think about the answer to your question. First, one of the exciting things for us in this relationship is we have the best of Microsoft’s desktop tools and the best of their cloud computing tools, and we can merge those together. So, in this arrangement we have some power users who will have more stuff than they’ve ever had before, and we have some very light users who will be able to use stuff off the cloud and then we can price those users appropriately, as contrasted to kind of one price fits all.

Secondly, there’s a number of Microsoft collaboration tools. There’s Live Meeting, SharePoint, I don’t want to use all their brand names, because that’s not the purpose. But, there are these tools that will allow us to manage projects across agency silos, and to manage those projects in a more inclusive way with information from citizens through social networking tools and the like. So, I think the best way to summarize that is to say that these tools as we advance will allow us to kind of break out of many of the barriers, more creative use of information will lead to more breakthroughs. And I’m very excited about that. And also it will reduce transportation costs, because we can do a lot of things through live meetings we wouldn’t have to do otherwise.

Carol gave you a more definitive answer, but I think the best way to respond to your security issue is to say that we will demand the same security protections when we use cloud computing as we do when we use our own servers. And that has been a subject of the conversations and we’re confident that those protections, which they provide a corporate America, can be even more fortified when they provide those protections to the City of New York.

Other questions? Yes, sir.

QUESTION: How does Microsoft get compensated, or paid for this service, and how does the City save $50 million?

STEVE BALLMER: Microsoft has two different arrangements, essentially, as part of this deal with the City. One, we’re licensing software, the City is consolidating its volume to buy software more effectively from our standpoint it looks like a win, because we get a chance to touch workers we’ve never touched before. The City gets a win. So, that’s one thing.

On the cloud it’s sort of a pay-as-you-go service-based model, because we’re running servers, et cetera, and the like. And in that case for us the money comes in from both the software that’s being delivered, as well as providing the service. The City gets to consolidate its software volume, but at the same time, since we’re doing the operation there’s a consolidation set of activities the City can engage in to save personnel, hardware, and other costs that effectively we can deliver more cost efficiently in a centralized form, even than the City could with all its volume.

MAYOR MICHAEL BLOOMBERG: Let me also point out that you work for somebody that for 20-plus years has been in cloud computing. We started that back in 1981-83, whenever we really went live. We had a cloud, a centralized thing, and if you could go back another way to look at it is think of the old mainframe days. There was a point where everybody went to distributed-processing and then they realized that’s not really a great solution, because if you want to share data across users you can’t do it if it’s stored every place. There’s also a security issue that’s much more difficult to address, not insurmountable, but difficult to address, if everybody stores data locally, as opposed to storing it in one place.

Other questions?

QUESTION: How are you going to save this money?

CAROLE POST: The savings are really derived from a number of advantages that we’re gaining from this. So, firstly, by consolidating these dozens of independent contracts, we’re able to have one unified contract that allows us to tailor somewhat what tools we need for the users as we need them. So, there’s significant savings there.

And then, because of the productivity tools that we’re able to take advantage of, that actually allows us to reduce some of the back office strain and burden on some of the servers, the database systems, and the like. So, we’re saving both in the tangible dollars, as well as some of the soft dollar expenditures that we’ll be able to reduce.

MAYOR MICHAEL BLOOMBERG: Another way to think about this is, we’re trying to put in the infrastructure and the tools for down the road, and how they’re going to get used isn’t important at this point in time. If you try to think what do people need, and only provide that, you’re never going to have what they need down the road, because you can’t anticipate it. But I think it’s fair to say that almost everybody in this room, a vast, vast majority of City employees carry a personal computer with them all the time, it’s called their cell phone. All of these technologies are merging and blending, and whether we use the network for one thing or another thing, you have to have the network. You build the network. And you have to have the servers. You put those in place. You have to have the security system.

Yes, sir.

QUESTION: (Inaudible) I don’t see that very many city governments are reaching critical mass, and (inaudible) are there other cities in the United States or over the world (inaudible) are the city governments of the world including the U.S. (inaudible) strategy?

STEVE BALLMER: Yes, there are other government bodies that are embracing both collaboration and the cloud, which I would say are fundamental to this agreement. I think I can refer to the State of Nebraska, the State of Minnesota, and there are some other big states you’ll see make announcements and moves in this direction. It’s almost even harder, I’ve found, globally at the city level. In fact, state level it’s complicated; city level gets sometimes even more complicated because the diffusion of activity, and the federal level actually is both harder and simpler.

But, in private industry this kind of consolidation would be, let me say, a more routine matter than it is in government. The mayor can probably talk about that even better than I can.

QUESTION: What about the local?

STEVE BALLMER: The same thing. Particularly if you visit most of the cities in, for example, Western Europe, they are very financially constrained, and very diffuse, and they are now trying to address some of the same kind of issues that the City is doing with not only our partnership, but the executive order the mayor signed.

QUESTION: Mayor, I’m wondering if your administration has tried to consolidate these licenses before, and met with resistance, or if you hadn’t thought of it before?

MAYOR MICHAEL BLOOMBERG: No. I mean, one of the reasons that Steve is here is to do this. We can’t do everything. I would look back and say, wouldn’t it be great if, back on January 1st, 2002, we addressed every issue the City had. This is just another step. And I think one of the benefits of, if it’s a benefit, or one of the results is maybe a nicer way to phrase it, but the economic downturn forces governments and companies to look and see whether what they’ve been doing are really necessary, and to see if they can do those same things better for less. It is a good discipline.

I’ve given this speech before, but I think one of the real problems with government is often we throw money at things that aren’t working rather than try to figure out why the things aren’t working and making them better.

QUESTION: So, you never previously sought to do this?

MAYOR MICHAEL BLOOMBERG: No, I think that’s fair. Yes and no, there’s always some small stuff, but never on this scale, and never in having a relationship with a company the size and the quality of Microsoft.

Yes, sir.

QUESTION: Mr. Mayor, I want to know how is the City and Microsoft going to work together to (inaudible) and is this a precursor to Microsoft becoming a strong Web 2.0 platform?

MAYOR MICHAEL BLOOMBERG: You want to take the question?

DEPUTY MAYOR STEVE GOLDSMITH: You asked one question, and half was so, I’ll give the City perspective, and then Mr. Ballmer can give the Microsoft perspective.

So, your question is an insightful one. We have, as you may have recently noticed, a working group that is looking at how to dramatically expand social networking tools for purposes of capturing more information from citizens, and reacting to it more quickly. And we also are looking at how to use social networking tools across agencies. And it will provide very substantial constructive changes in the way we do work. We are very interested in combining those tools with the tools today. Maybe not all exclusively through Microsoft applications, obviously, but we do need to make sure that the information that comes in through social networking can be utilized through the relationship we have with Microsoft today, so that our employees can fully engage in it.

So, we’re looking at blending those together, not all the social networking exclusively through the Microsoft agency.

STEVE BALLMER: I would take an example of something that the City has started that we’re excited about, and we’re trying to get at least our partners in the innovation community to really recognize, and it’s this Big App initiative, where essentially City Government is publishing data to enable people to write applications that are valuable to citizens based upon the government data. That’s been a lot of small, and sort of people doing that for fun. You’ve had some people now grow into small companies. But we have a network of business partners, I think 20,000 in the state of New York, I can’t tell you how many headquartered here in the City, who we’re trying to now galvanize to some degree to get interested in that dataset, and how they can be part of innovating in ways that are valuable for citizens here in New York.


QUESTION: In terms of trying to consolidate these contracts, do you plan to do this with other software (inaudible) the second part is, can you give some examples of how the cloud software will help make government more efficient?

CAROLE POST: Sure, the idea of consolidating our contracts, absolutely, this is one step we’ve had a few experiences with it before, nothing on this magnitude or scale. But, this represents exactly the kinds of things we want to do, that embraces a shared-services paradigm, where we can provide the service for agencies. So, you eliminate the need for each individual agency to have to devote time to negotiating contracting, procuring. Those are just burdens on an agency’s efforts. They can focus their efforts on what their core mission is. And we can provide the service for them.

In terms of what the cloud computing can offer, the deputy mayor spoke of much of that as principally around improved collaboration, the ability for staff to interact, engage, whether it be within staff and even outside the City parameters, on a much more effective, productive and efficient way. There’s also a whole host of advantages that you gain, again, from the back office perspective, some of the not sexy things, but where we really find true cost savings, by reducing the burden, the strain, power cooling, server maintenance, those kinds of things, by putting it all out in the cloud.

MAYOR MICHAEL BLOOMBERG: I just wanted to say to Paul and Michael, thank you for everything you’ve done over the years in making government more efficient. We’ll take a break for two seconds, because Mr. Ballmer has to go and run a business. And then we’ll take some off-topic questions in a minute.

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