ANNOUNCER: Ladies and gentlemen, please welcome Senior Vice President, Business Solutions, Business Group, Doug Burgum. (Applause.)

DOUG BURGUM: Good evening, and welcome. It’s great to have so many of you here with us tonight. We’re so pleased, especially I want to welcome all the partners who came in a day earlier for our Worldwide Partner Conference, and invested an entire day with us today. I want to thank you for being here. I want to also thank and welcome the press and analysts that are joining us tonight for this very exciting day of the Dynamics Axapta 4.0 Launch.

I want to kick off tonight really talking to partners and say thank you to all of you, because you know that the business we’re in together is built around partnership, many of you have been invested around Dynamics and Dynamics AX for a number of years. You’ve worked with us, you’ve helped shape our direction, you’ve provided input, you’ve provided feedback. You’ve driven our success with our customers in the marketplace, and you’ve been a key part of the success that’s brought us to where we are today. And we’re thrilled about the partnerships that we have. We’re thrilled that we’re in business together. We’re excited about the direction we’re going, and we’re excited about the messages we’re going to be able to deliver to you tonight.

As you know, Microsoft has our mission statement, and our mission statement is about enabling people and businesses around the world to realize their full potential. I think this is a fantastic mission. It’s a mission that really embodies the magic of software, and it embodies the fact that we have an opportunity, all of us in this room as individuals, to really make a difference in people and organizations’ lives, and together we have done that. We have done that with Dynamics implementations around the world, helping companies become more successful, helping them achieve their goals, and reach their dreams, and we have much more potential reaching to do together as we move through the future.

But in the last year, we helped many, many organizations reach their potential and put them on that path, and that mission statement comes through in the great results that we have. And what a fantastic year that we’ve had across all of Dynamics with releases across Dynamics GP, and Dynamics CRM, and Dynamics SL, and Dynamics MED, and of course now with the Dynamics AX launch. What a great year from a product standpoint. And we had a great year for our number of solution providers, and ISVs and industry builders who also released their own additional IP into the marketplace, enhancing and creating even stronger solutions for those partners. And, of course, this is the year that we launched the Dynamics brand, and we got behind the brand in a global way with advertising to really help get the message out about the great value that we can provide to customers, the great solutions that we have, and about how Microsoft is deeply committed to the business applications business.

But as we look back on that year, and the year of success that we had, the partners played a key role in that, in the success that we had this year, and again I want to thank all of you for the great work that you did, FY06 was a fantastic year by every measure that we can think of. I’m very excited and, again, I want to thank you for the great work. So, thank you, partners. (Applause.)

The agenda today for those of you that were here throughout the day was a full one. We had the full drill down on product, on pricing, on packaging, on demos. You had a chance to hear about the exciting new performance levels that we have in the products. We also talked about some key themes that we’re driving in the products in terms of the global nature of the product, the scalability, the adaptability, and the completeness, and that completeness, again, is the hundreds of enhancements that our team is delivering in addition to those great solutions that you have to extend and deliver the complete solutions for partners. So, we covered a whole realm of great information today.

Tonight, the agenda is also terrific, but a little bit simpler. We’re pleased to be able to have Steve Ballmer kick off tonight, followed by Satya Nadella. Satya Nadella is the Corporate Vice President who leads R&D for Microsoft Business Solutions, and leads our global team across Copenhagen, and Fargo, and Redmond, and India doing the development around our product lines. And we also are pleased to have on stage tonight an Axapta customer, and an Axapta partner to further talk about the great work that we’re doing with Dynamics AX, and how we’re moving that forward with this new release.

But I think, you know, tonight to sort of set up Steve and him coming out here, because it’s a great thrill to have him here, you have to really think back about the success of Microsoft in the 30-plus years that Microsoft is, and if you compare it to any business success story in the world, Microsoft is one of the amazing success stories. But at the heart of that success story, if you take a look at the heart of that, part of the heart of that success story from all those years is partners. And if you look inside and sort of say, well, what’s underneath partners, what’s sort of at the center of partners who are at the center of the success story, at the center of that partner mentality, that partner culture, that partner passion is Steve Ballmer.

I’ve had an opportunity personally to be a Microsoft partner for 18 years, up until the time before I was part of an acquisition that was a company that was acquired by Microsoft. In those 18 years, I had a chance to experience personally Steve and his leadership when he was out leading the field, and working with partners, and driving the success of Microsoft, and driving that success through partners.

And now, in the last five years that I’ve had an opportunity to be at Microsoft, work directly with the rest of the senior leadership team, and had an opportunity in the last five years for two of those years to work directly with Steve, I’ve seen Steve’s passion around business applications, and I’ve seen Steve’s passion around partners from the other side. And as passionate as I thought he was when I was a partner on the outside, being internally, it’s hard to describe how passionate Steve Ballmer can be about any particular topic, but I think maybe you’ll get a chance to feel and hear some of that passion tonight.

So, please give me a warm partner welcome for the CEO of Microsoft Steve Ballmer. (Applause.)

STEVE BALLMER: Wow. Well, thanks, it’s an honor and a privilege to be here with you tonight. I have to say, for me coming to Boston always has kind of a little nostalgia associated with it. I went to college here in the Boston area, and I stayed here summers, and I got my first sales experience with selling group ticket packages to Harvard football games to businesses in this area. And they said, we’ve got this conference at the Boston Convention Center, and frankly I’m racking my brain, I couldn’t remember exactly where this is, and I’m glad you all found us, frankly, in this venue. It seems to be absolutely super.

In this nostalgia theme, I also have to say, songs mean a lot to me, and they flit through my mind, and they are sort of a marker of life. And the song that really came into my head is one that was popular about the last time I lived in Boston, and seemed appropriate for tonight, it’s the McFadden and Whitehead song, There Ain’t No Stopping Us Now, We’re on the Move. And I really feel that way with Dynamics and Dynamics AX, and I think if we haven’t already drummed it into you after a full day of kind of wallowing in this stuff, I hope some of my excitement and enthusiasm for what we have going on in the Dynamics product line, and with the new launch that we’re doing tonight of the AX product will really help give you a sense of the opportunities that we see to really go out there and serve customers, to drive business, for our partners to make money, and for our customers really to get absolutely, absolutely fantastic, fantastic solutions.

I do want to start, though, with a thank you. Doug talked about the centrality of partners to our strategy, that certainly has been true for everything that goes on at Microsoft. But in no place is it more true than the work that we’re doing with Dynamics and in business applications. Really the job of making the technologies that we produce come alive and solve a customer need is something that has to happen, I wouldn’t say magically, because that implies that there’s not a science, and a training, and a discipline behind it, but has to happen almost magically in the hands of our partners, really understanding that customer’s business processes, really making the product do what that customer wants it to do, really allowing that customer to get value. And it’s really the partners in the room tonight who make that happen every day for our customers in a very powerful way.

You make the customers happy, drive revenue for Microsoft, and we thank you for that. We know you have choices, you have alternatives, the most valuable, in a sense, thing you have to allocate is your time, and all of you have taken not only the time today to spend with us, getting up to speed, trained, educated, giving us your feedback, helping make us better so that we can hopefully make products to serve you better, but every day you’re out there really bringing these products to life for our customers. And for all of that I want to say, thank you very much.

I want to say a particular thank you, not that we can say anything about our earnings results or any of that stuff, because they’re yet to be announced, but I know a lot of partners seemed to have worked very hard closing out the financial year, and I want to say thank you to all of you for that, as well. (Applause.) Stand by for news.

We’re sitting here about five years after we entered the business application space, and much to my almost shock I still get questions: What is the role of business applications at Microsoft, why did you enter this business, what are your design goals, what are you trying to accomplish. And to me it’s really quite straightforward.

In a sense what we’re trying to do is to have a more and more complete toolbox that our partners can take to market, and really solve problems for our customers. Some people like to go all the way back to the compilers and the operating systems and build applications. Some of our partners do customizations around Office and SharePoint. Some of our partners, many of our partners, want to do customization at an even higher level, building from the ERP and CRM level.

We made a strategic decision that said, it was essential for our company to have this full suite of applications and building blocks for our partners to satisfy our customers. We saw a world of opportunity in that, opportunity for you and opportunities for us, to build big, strong, successful businesses. We’ve invested over US$2.5 billion in acquisitions in this business.

In business applications alone we’ve done over $1 billion of R&D since the time we entered the business, and perhaps more importantly, we sit on top of the strong foundation of .NET, of SQL Server, of Windows Server, of SharePoint, and as you see the demonstrations, and hear the benchmarks that I’m going to go through for you tonight, and that Satya is going to go through for you tonight, you’ll really understand that we do ride, Microsoft Dynamics really rides on the overall foundation of R&D investments at Microsoft Corporation.

I get asked, how can you be in business applications and be in the Xbox business? And I always come back to the basic principles. Number one, we have a broad horizontal platform in Windows, in SQL, in our graphics system, to support the broad range of use. Number two, we have experts in our company who understand very much what 18- to 35-year-old mostly male people want to do for entertainment, and we’ve got another set of experts who understand absolutely what the supply chain needs are of businesses small to large. And they aren’t the same people. They are people who focus, who specialize, who understand, but who all benefit from that core platform R&D that we spend quite broadly.

So we believe in the business, we believe in the opportunity, we believe in the fact that we can make a difference. Each of our two or three biggest competitors, they actually essentially go do their own software development platform, SAP has one, Oracle has one, we build from the native development platform in the operating system, from the applications, from Microsoft Office, and we think the way we live in that context is of real value not just to the end customer, but to the people who actually implement the solutions that are very important, and very powerful.

So we see synergy, we see opportunity, and we certainly see a chance to make a big, big difference with customers. And I want you to really sense not only my sense of excitement and enthusiasm, because we’re really on a roll. I feel like we’re at a substantively different position than we were a couple of years ago. We’ve got our wood all behind a single brand. We’re sharing technologies from the rest of Microsoft into this business much more successfully. We’re sharing technology across AX and NAV, GP, and SL, much more comfortably and broadly than we ever have before. We have real momentum in terms of sales flows, customer adds.

Our entry into CRM has been a major step forward for us, and frankly, draws us into so many more customer opportunities than we’ve ever seen before. The kind of partners, including some I’ll talk about tonight in our Industry Builder program, are really letting us go up-market, and target bigger, and bigger, and bigger customers with more complex needs, and needs for greater scalability.

I feel a palpable sense of progress, and certainly I want you to feel not only the progress, but the absolute commitment Microsoft brings to success in this business. I’ve done a lot of thinking as I’ve been out talking to financial people and others about what distinguishes great technology companies from other technology companies. And the one thing that’s perhaps the most important, maybe not the most glamorous, but the most important is absolute commitment to long-term success. More people drop and change, and fall out of the way than anything else. It doesn’t matter what technological trend or change is coming, we’re going to drive it, we’re going to drive Dynamics and business solutions, and we are absolutely committed to our and your, and our customers’ long-term success in this business.

That success has to be based on a foundation of innovation. At the end of the day it’s not going to be sales force presence, or even partner presence, that’s going to be long-term determinant of our fate. You will choose to invest your time and energy with us, based on the quality of our, not just support and partner programs, but number one is the quality of our innovation. Do we have distinctive works, works that allow you to provide your customers with better solutions? I think the answer to that question across the Dynamics family is yes.

We have really embraced the Office experience, the Office application, the Office user experience metaphor, to give a familiar look and feel, and a simplicity to our product line that you don’t see everywhere. We’ve really taken a strong view of role-based experiences as fundamental criteria for product design. We’ve embraced broadly Office in our SharePoint technology for collaboration in our portals. At the end of the day most businesses value their business applications because of what it allows their employees to do. It’s not about what’s in the backend, it’s about enabling people to find the information they need and collaborate against it, to analyze it and make good decisions.

You’ve seen us invest heavily in building out business intelligence and analytics capability across the Dynamics family, building on the strength of our SQL Server product. For those of you who build and implement solutions around Dynamics, you need to have a platform on which you can build, Web service-based, .NET-based development that is knowable and comfortable, and whether you choose to build the given component on top or, or on the side of our Dynamics product line, we want you to be able to live entirely within the .NET development environment.

Extensibility, business intelligence, user experience, portal, and collaboration, all building off of common themes we see across the Microsoft family, but then of course with a real depth and richness of functionality, in AX, in NAV, in GP, and in the SL product line. So across the Dynamics family we’re going to innovate in some ways that are common, and we’re pushing the envelope in some ways that Satya will talk to you about, in terms of individual capabilities, including in the Dynamics AX 4.0 product family.

Dynamics AX is the most recent entrant to the product family, and it’s coming on very strongly. We now have over 6,000 plus customers, we’ve grown since November 2004 by over 1,500 customers, 30 percent-type increase over that period of time. And this thing is ramping quite steeply. If we compare to the customer ads that we see for equivalent kind of targeted products from our competitors, we believe we have a number one position. We also believe we’ve got a whole lot further to go in terms of really helping you reach as broad, and as many a set of these kind of mid-market customers as we can possibly target.

Across AX we expect over the next year quite again another year of very, very significant growth. We think not only in midsized companies but in more and more what I would call enterprise class companies we see people adopting and using AX. Manufacturing companies, e-business companies, wholesale companies, and increasingly services companies are migrating to the product family.

But our particular strength has really been in manufacturing and distribution, and you’ll see in the capabilities set in the 4.0 release that we’ve made a point of really reinforcing the strength of the capability both in terms of new functionality and in terms of scalability.

I expect AX to remain the fastest growing part of our product line, in part because it’s the newest, and in part because we’re able to find a whole new class of customer in conjunction with some of the fantastic partner solutions that we see coming to market.

Today, we’re launching Dynamics AX 4.0, and in a variety of different aspects you’ll see I think fairly important innovations. We first talked about the product for North American release at our Tech-Ed conference earlier in the year, but today is really the day that we’re kind of bringing it to the fore.

We have .NET based customization now throughout the Axapta product line, and a Web Services layer exactly consistent with our overall strategy.

With this release we really build for the global business. We’re supporting over 36 languages in 40 countries, and we have much stronger support for multi-country, multi-currency operations than ever before.

The portal and business intelligence capabilities are built into AX 4.0, automating business processes and workflows, as well as the access and analysis of business data.

We’re optimizing for scalability and convenience from an IT perspective. We’ve unified the authentication and security system with Windows authentication, and earlier today in conjunction with our SQL team we announced a new benchmark, which I think is frankly very impressive, for AX 4.0 sitting on top of the SQL Server platform, a thousand users processing 55,000 sales orders per hour, which is really quite a scalability benchmark, and I think ought to give confidence to many of you that even the biggest customers that you see will be able to benefit and have Dynamics AX 4.0 scale up with them.

Today, we also get a chance to announce four new Industry Builder vertical solutions that will help all of us take Dynamics AX 4.0 into new customer types. With (CXCE ?) Solutions we have new manufacturing capabilities, particularly targeted at the fashion and retail and textile industries, which I think is very interesting. There are very unique requirements in that industry, and we think with the Industry Builder solution from (CXCE ?) Solutions we take a major step forward.

Just to remind you, an Industry Builder solution is one that comes from a third party partner, but Microsoft stands with that partner supporting the customer very directly.

The second solution that I want to mention today comes from WellPoint. It targets both the energy and financial services area, and has financial management applications for oil, gas and mining companies.

From (Athos Origins ?) we have solutions that really go and target the automotive supply chain and automotive suppliers very specifically.

And with (Infinizor ?) we have new capabilities that target dealers and dealer management, and particularly automotive dealers, which is a very large — if you take a look at the automotive supply chain, starting from the big automakers down to their tier one, tier two, tier three, tier four, tier five suppliers, and moving forward into the group of people who sell cars, who repair cars, who provide service, that whole supply chain we view as very, very interesting and an important one for the Dynamics AX family, and through the Industry Builder partnership with (Infinizor ?) I think we take another important set of steps forward.

So four key new solutions, all operating and available today, in conjunction with Dynamics AX 4.0.

I’d like to show you a little bit of a video. You could say it’s kind of internally focused, but it was easy to get our people to produce. We use Dynamics AX to produce Microsoft products. Our largest manufacturing and operations center for the Americas is in Puerto Rico. We’ve adopted Dynamics AX for our own customer operations, and we thought we’d give you a little bit of a sense of how and why we are using Dynamics AX internally. So roll the video, please.

(Video segment.)

(Applause.)

STEVE BALLMER: You could say, hey, great, Microsoft, you use your own stuff, but I think it’s also well-known that we started out many years ago using some other guys’ stuff, and we’re plenty comfortable running Microsoft on Microsoft business applications.

The real test at any product launch is actually to see the product itself and be able to understand from the people who built it what they think is exciting about it, why maybe you ought to be excited about it, and get a little bit of sense for some of the new capabilities. And to really walk you through Dynamics AX 4.0 I’d like to welcome on stage the Vice President who runs R&D for all of our business applications, please welcome Satya Nadella. (Applause.)

SATYA NADELLA: Thank you, Steve.

I was going to take the next 15 to 20 minutes and walk you through what’s behind Dynamics AX 4.0, but before I go that I wanted to sort of talk about sort of the last 15 to 18 months has been a fantastic ride for the R&D team. Ever since we announced our Dynamics roadmap at Convergence in March of ’05 we have had NAV 4.0 SP 1, we’ve had GP 9.0, CRM 3.0, SL 6.5, and now AX 4.0 is a major step forward, really representing the best of all of the wave one innovation.

So what I wanted to do is to really quickly walk through each one of the wave one innovations that Steve already referenced: roles-based productivity, how we can use the user experience to truly deliver that; second, how we are exploiting SharePoint and its portal and collaboration capabilities; third, how are we working with SQL and Office BI to bring forward contextual business intelligence for Dynamics AX; and lastly, how we are going to use Web Services as a way to extend Dynamics AX.

So let me walk over to my demo station here, and what you see on the screen is I’m logged in to Dynamics AX 4.0 as a production manager. The first thing, for those of you familiar with our 3.0 interface, is this is a major upgrade on the UI. It looks like Office. It’s got an Outlook-style navigation. And so this is something that right out of the gate will be really familiar to you.

The second thing is since I’m logged in as production manager you already have the menu structure and the navigation trim for production. So I have production, inventory management, shop floor control, and other relevant areas that I navigate to on a daily basis.

The other area we have is something called the favorites, and this is something that we recognize is what you do on a daily basis, which is you gain knowledge and insight in terms of which areas do I really want to keep track of, what are my favorite places to go to, how do I put to-dos on my task list, how do I sort of really create a favorites for my weekly, monthly tasks, and what have you. So you have a way to organize effectively your navigation and your priorities through the applications as a production manager using the My Favorites facility.

So now the other capability we have introduced is alerts. Managing by exception is one of the critical things that business systems really enable you to do. So now we’ve built in very rich notification and alert functionality across the entire system that you as an end user can go configure.

And right now as a production manager I come in, I look at the alerts I have. I have too many back orders, not the kinds of things that our production manager likes to see. So if I want to go ahead and look at the origin of this alert, I can go drill down on a particular alert, and it takes me to the next level. It shows me that this VPR 1000 product is where we are having this back order problem.

The next thing that we have done, which I particularly love, is search. You know, search is becoming something where people use search to navigate to applications, more so than even menu structures or other navigational help, so search is now a very first class tool in Dynamics AX across the portal, as well as the rich client where you can use it to be able to navigate to the information you want.

So in this case, of course, I want to go ahead and navigate to the particular product, I go ahead and type in VPR, and it brings back all of the structured information as a result set back, if you will. And, in fact, if I want to go look at this particular item and item list, I can go ahead and drill down to that particular item. So you can imagine how fast I can get in terms of using search as a way to navigate to the right point of the application without even having to traverse any navigation or any menu structure.

Now that I am in this VPR 1000 line item in my item list, and my hunch is if you are back ordered perhaps you don’t have enough contract manufacturing capability or capacity. So I can go ahead and look at the trade agreements I have and the purchase prices, and it shows me that I have one vendor whom I have online but not sufficient. So I can go ahead and type in the name of the — ah, ASM, thank you, backstage, I forgot what I was supposed to type in, and somebody typed it in for me, which is always helpful. (Laughter, applause.) It’s a feature; we shipped a mechanical help in the back. (Laughter.)

ASM was a way for me to be able to go and get at all the sub assembly manufacturers that are in my system, and it shows me I have two, I have Northwind Traders and A-Datum. A-Datum is the one that I want to go ahead and add. And at this point I can go ahead and take action in terms of adding a vendor that I want to sort of go and have them do manufacturing.

So it’s sort of a very quick overview of how a roles-based approach, how an Office-based user interface with favorites, with alerts, with search can truly drive the productivity of an individual like a production manager, and help them guide them through the application.

The next thing I want to do is go and talk about our integration with SharePoint. SharePoint has been a major design center for us. Our entire portal is absolutely completely natively on SharePoint, and that has a whole host of advantages.

The first thing that we have is I’m logged in here as a purchasing manager, and I can now compose both structured information and unstructured information. So, for example, I have a document library, as well as a set of sort of information in terms of price agreement, vendor lists, item lists that are all coming from your Dynamics AX. So you really are able to build out this composite surface, which brings together both structured and unstructured information.

If I wanted to go ahead and open one of these documents, in fact, this has got an XML schema behind it, and it’s referenced, so therefore you can get this information from within your back office and put it into your document. So this is another way for you to sort of build in extensibility into the system by having documents driven out of business data.

So let me go back to the purchasing manager, and the other thing that you’ll notice is I even have workflow capability built-in. So, for example, if I go ahead and hit approve on a particular vendor contract, because I am running short on manufacturing capacity, and if I wanted to bring in an additional vendor, I need to go through a purchase approval or a vendor approval process, so that I can on-board them, and I can go ahead and use the capabilities of workflow that are built in to SharePoint to be able to do that. So I can go ahead and hit approve, it will take me through the fact that it will change the state, and you’ll see now that in the price agreement the new company has been added, if you will.

So the other thing that I also want to talk about is search here. I showed you search in the context of the rich client, but one of the things that we’ve done with SharePoint is because we have plugged an AX search provider into SharePoint, if I typed in vendor and hit search, what I get back is a result set, which has got structured information, which is all the Dynamics records, as well as all of your documents from your SharePoint, so we can deliver both unstructured and structured information in your result set, if you will.

So this was some rich capability — you can clap there. (Applause.)

So these are some rich capabilities built into our portal. The fact that we are based on SharePoint, and the fact that we are integrated with Active Directory for single sign-on, so you can have a single security principle that’s managing your authentication, both on the portal, as well as on the rich client, but more interestingly you can now take this fabric and expose it as an Internet-facing application.

So if you as a company wanted to have an Internet presence for your retailers, for example, to be able to look at your product, to know exactly when your shipments are going to arrive, we have done the interesting with ISA Server, and the setting up of networks and so on, so you really can take advantage of all of that and take the portal infrastructure without incurring incremental costs, and expose it as an Internet-facing application.

So to just give you a feel for that, I will go ahead and log in here as a retailer, in this case Kontoso is a retailer dealing with Fabricam, and what I see here again is a very role-based experience or a portal that’s personalized for a retailer. You have production allocations that are due to you and to be shipped. You have your purchase order history, so you can look at that. You also have the unstructured information, all the purchase documents that you have, all the vendor documents that you’ve signed, and what have you. So you have a good way for you to be able to get at all the information that you have with your trading partner.

So if I wanted to change the shipment of VPR 1000 from Cleveland to Boston, I can go ahead and do this, hit submit, and it automatically triggers the appropriate changes in the business system.
So this is one way for you to think about how every company deploying Dynamics AX can effectively have a live presence on the Internet, but not just content but really expose business process and business logic.

The next thing I want to talk about is business intelligence. It’s been another area where we have invested significantly in terms of improvement, but we’ve capitalized on the great advances in SQL BI and Office BI.

The first thing we tried to tackle was reporting. The age old problem of business applications has always been that it’s very easy to go ahead and enter a lot of information into business applications, all the transactions, but the data models are fairly complex. I mean, AX has anywhere about 2,000 plus tables. So how do you really extract information out and really make the facility or the capability of extracting information out available broadly to end users as opposed to just a few.

So that’s something we tackled by taking advantage of SQL Reporting Services and the Report Builder capabilities, which is an end user ad hoc reporting tool.

So, for example, here I actually am looking at a SQL Services report that we created, but the interesting thing is if I go ahead and wanted to edit this report, what it does is brings up SQL Report Builder, which is an ad hoc reporting tool. And as you can see, this is a fairly straightforward reporting tool with a WYSIWYG interface. The other thing is we generate the necessary metadata in the context of this report. So since it knows that we are trying to create a report in the sales forecast space, it brings me all of the fields, all of the data that is relevant for this particular report. So this is something that we call perspectives. We think it’s a very good innovation to be able to allow end users to navigate complex data models and create, if you will, reports on an ad hoc basis.

So beyond reporting, let me go ahead and log in as a CEO into my dashboard again or the enterprise portal here. So what you have here is a CEO dashboard. So you have a set of reports. We have this fantastic Windows Presentation Framework control, which allows you to visualize, in fact, all of the SRS or the SQL Reporting Services reports. I can go ahead and toggle, I can do all kinds of things like zoom in and this is gratuitous stuff, but I love doing it. (Laughter.) I love that. (Laughter, applause.) They tell me it’s a favorite feature of CEOs or something like that.

So the other thing that we have is the ability to drill down into your reports. So I can go ahead and look at this VPR 1000 product, and really look at what’s happening, what’s driving demand here. And I can go ahead and click this, and this decomposes into the two additional reports, if you will, that drove that pie chart. It shows me that fact that I’ve got this product, which is really selling well, and it dropped in June. And then I can see my forecast, as well as production, and I have a problem basically that the fact that the production or the forecast is higher than production.

And then even I go back and look at the scorecard. Now, the interesting thing about scorecard here is we generate out of the box many cubes of SQL analysis server support. So the fact that we now have SQL analysis server support and cubes, you can now integrate with things like the Business Scorecard Manager.

And so what you see here is actually Business Scorecard Manager lighting up with Dynamics AX and showing the CEO all of the KPIs and scorecards that they want to stay on top of. So right, as the CEO I was able to come in, look at my reports. I also can see now that vendor performance, given that I’m running low on production, is an issue that I need to go deal with.

So that gives you a very quick feel for how you can use the capabilities of SQL BI, both on the reporting side, the ad hoc reporting tool, SQL analysis, Business Scorecard Manager to truly drive contextual BI in the context of a day-to-day Dynamics AX experience.

The next and the last thing I want to talk about is Web Services. Now, again this is another thing that’s very near and dear to my heart. We have set out on a path to really make the middle tier fully Web Service capable. And with Dynamics AX 4.0 we introduced a facility or infrastructure called the Application Integration Framework. So this is the list of all of the Web Services by default that we expose, or documents that are exposed as Web Services out of the box.

You can go ahead and add additional document classes and generate the WSDL and the Web Service infrastructure and really keep extending it, so there is really no limit to the infrastructure in terms of the surface area of the service here.

So in this case suppose one of the things I want to do is add a Web Service such that I can perhaps go into Visual Studio and write a simple RSS generator. So just imagine I could take all the business data and expose it in a very secure way to my retailers so that they don’t even have to call me about back orders, they can actually get an RSS feed in their Outlook, and they can absolutely look at what’s happening, what’s the status; if the status changes they can get notified using RSS. That’s a simple app that you could write in Visual Studio, provided you have Web Services exposed.

So what we have done here is gone ahead and taken the sales order document and hit generate, and what it does is it creates all of the WSDL definitions for you, so that you have a first class Web Service exposed from AX that you can then program against using Visual Studio.

And so we went and did that, and now in Outlook, if I’m Kontoso or a retailer, I get the status through RSS feeds. So the first thing you will see is I sort of say this is the quantity I ordered. The next feed tells me I changed the quantities coming in, in this particular shipment, and it even gives me a confirmed receipt date.

So this is a way you can think about how notification, alerts and so on can not just be artifacts inside the enterprise, but you can use the Web Services infrastructure and extend it beyond your enterprise.

Now, the capabilities that we have built in to AIF and AX and Web Services is not obviously just to be RSS generators and so on. So we have used this internally for multiple other purposes, and I wanted to show you a couple of screen shots.

The first thing we built was what we call a Dynamics snap, and think of it as a mash-up of Office and Dynamics AX. In this case if you wanted to enter in vacation information, you can go ahead and enter that right into Outlook and it gets posted back into your back office.

The other one that we built using again the same Web Services infrastructure was time entry. So if you’re a consultant on the road working in Outlook, you have all these appointments that you use as a way to keep track of your time, you can go ahead and enter all of this back, if you will, into your back office using the time entry snap for Outlook.

Another one which is a pretty powerful snap is this thing called the Business Data Lookup. There are so many times that you are writing letters in response to customer inquiries around customer orders or customer cases, you want to be able to reference real business information in that context. We have a way for you to navigate the entire data model in context of a document and in context of a customer or what have you, and really drill around through just the use of the task pane in Word.

So this is slightly blurry, but what you have is basically a way for you to be able to look at all of the relevant business information in AX, reference it, drag it in, and put it into your document. And not only that, you can save this as a document of record in your AX system.

The next thing that we are doing is allowing you to be able to take business entities offline with you. We have this concept — the three that I showed you are all shipping, they’re available on our community site on gotdotnet. The next two I’ll show you will ship shortly. They’ll be in beta in a couple of weeks’ time. This one is a way for you to take business entities with you on various offline activities. So in this case suppose you’re going on a customer service call. This is a snap that we built using InfoPath. You can take a bunch of business logic and business data, which surrounds a service call, and take that offline on your Tablet PC, and then come back online and then commit that data, the transaction history back into AX.

So these are some of the innovations of how you can take advantage of the Web Services and the extensibility that we have built in to build in solutions that span Office and Dynamics.

The one other thing that I want to talk about very briefly is SharePoint. We think that this is one of perhaps the best partner opportunities out there. You could think about compliance, you think about PLM, you think about product design, or vendor on-boarding. So the scenario I talked about and referenced in my demos, how do you really on-board a vendor, because most of it is an ad hoc process perhaps best suited for something like SharePoint.

So we are building a composite app which takes advantage of the SharePoint capabilities there, capabilities for Office business applications, and to be able to talk to structured informationand business logic in Dynamics AX so that you can do things like vendor on-boarding.

We think that many industry partners will be able to take this, many customers will be able to take this and extend it to additional scenarios. So with all of these Dynamics snaps we’re going to release them to the community using our community site, and really foster a lot of innovation around Dynamics AX using the extensibility mechanisms we have built in.

So that was a very quick whirlwind tour of all of the innovation and the technology themes that are part of Dynamics AX, the role-based user experience to drive productivity, SharePoint based portals, both internal as well as Internet facing portals and applications, SQL BI capabilities from reporting to analysis to Business Scorecard Manager, and how you fundamentally use Web Services as a way to really extend the system, build these composite applications in Office, in SharePoint, and even the Web 2.0 type of Web applications.

So that’s a rich set of features. What I wanted to do, I’ll just not only — well, that’s a slide I must have seen before.
I talked a lot about technology themes, and I’m constantly reminded by my team about it’s not just technology, at the end of the day business applications are about business functionality. Dynamics AX 4.0 has a lot of business functionality across manufacturing, around project manufacturing, around CRM, around supply chain, financial, financial dimensions and so on and so forth. So we’ve really done a lot in this release not just with technology and the technology innovation, but even the feature innovation, and that will be something that we’ll continuously do with each release. We’ll have the right balance between our product technology innovation and product feature innovation that speaks directly to business process.

So with all that, what I wanted to do is it’s one thing to hear from us, one of the big changes we made with this cycle was we wanted to have a TAP program wherein we could engage with customers early on, we could use their feedback as, in fact, the gate to be able to ship the product or the right quality with the right performance with the right stability.

And Greg Lush, the CIO of the Linc Group, was one of our TAP participants. They’re already live in certain parts of their business with Dynamics Axapta 4.0. So I wanted to bring Greg up on stage and have him share his experience as a customer with this product. (Applause.) Thank you, Greg.

GREG LUSH: Thank you.

Hello, everyone. It’s great to be here. I’m sure all of you know who the Linc Group is. Well, maybe not. We don’t make chain link fences, if that’s what you’re thinking. We’re a mechanical and technical service company operating in 43 states and four countries. All we do is fix stuff. We’ve got a bunch of people out there working, and our application of tools is simply just that, technology tools that we apply. You could call us pragmatist technocrats. Everything we do is based on a solution, the combination of tools together to give us a solution set.

And I thought I’d take a few minutes and just kind of share with you what we do as an organization. Of course, we sell a lot of maintenance contracts, annuity business. We start with Dynamics CRM. Our salespeople go out and close the deal. They process that information and it automatically flows via Web Services straight into SharePoint.

SharePoint is the environment that we use when we need to modify anything. We leave our applications out of the box. Any modifications occur down there in the SharePoint area. That information travels straight from SharePoint right into our customer built SharePoint resource tool. When it kicks out of there, it flows straight into Dynamics AX 4.0.

The contract is made, but, of course, that’s just a financial part of it. We’ve got to do the work. So that information automatically flows again via Web Services straight into field services for Dynamics AX to the Pocket PC.

Coincidentally, we have three times the number of Pocket PCs that we have PCs, which makes sense from a field service organization.

The guy does his work, and I coincidentally came from the field, so we’ll be out there doing our work, compelling an outcome at the point of service. Information flows back after we capture the customer’s signature certainly, flows back into Dynamics AX and gets applied for either job costing or invoicing.

I know it sounds kind of mysterious, but customers do use this stuff holistically. And the only way that we can make it work is to use it in that manner.

When you think about Dynamics AX and what really makes the Linc Group different than other mechanical and technical service providers, we have put ourselves in the position to scale easily by leveraging the Microsoft stack. Simple things in 4.0 like Active Directory, the use of SharePoint, which is pervasive in our organization to have financial dashboards, as well as Business Scorecard Manager; alerts, heck, we’re familiar with those, we get them from both SharePoint and Groove — yes, we use Groove for our project management. And talk about our users; they use Outlook as much as I really don’t like e-mail, they do use Outlook and they love the interface. It was an easy stepping stone in a familiar interface.

And then you take field services for Dynamics AX; well, I don’t know if anybody has seen that Industry Builder product by iteration 2, but it is fantastic, looks just like Dynamics CRM.

So for us when we think about the future of mechanical contracting, we think about the application of Web Services to our disparate applications. It’s critical for us to be able to have that flexibility to move in and out of products as we acquire companies, and integrate them into our environment.

And at the end of the day the most important thing for us is to be respected by our customers, admired by our employees, and feared by our competition.

Thanks.

SATYA NADELLA: Thank you. (Applause.)

So that was a firsthand feel for how Dynamics AX is being used, and what customers are beginning to think about it.

The next thing I want to talk about is Engineering Excellence. We have had significant focus on Engineering Excellence all around on this particular release. Hal Howard and his team were really the leaders of the Dynamics AX R&D, and have had a significant emphasis on making sure that we start setting the bar super high in terms of how we think about performance, how we think about stability and quality.

The first thing we did was did significant amount of internal training to make sure that we as developers were all prepped to build products that were secure by design, because security is not a feature, it’s not something that you go add at the end of a product cycle. So we have done a significant amount of investment on making sure that we have the threat models that cover the entire surface area of the application, and make huge improvements on making those applications secure by design.

The second area is on performance. I think that we have talked quite a bit today already on performance benchmarks, but we are super excited about the thousand concurrent user benchmark, the 55,000 sales order lines an hour, and these are some big numbers, and we think that we have now a way to even start scaling this fairly linearly with improvements both in the SQL side as well as on the business logic side. So we feel very good about where we are with performance.

Documentation. We really realized that at some level the right strategy is not for us to sort of say, look, here is documentation that was written perhaps four or five months before we hit RTM, and then have that documentation basically be the full reference guide for the lifetime of the product. This is something that we want to be able to improve with user feedback.

So we now have a continuous publishing methodology and model that we are going to use to be able to do upgrades or updates to our content on a regular basis, and it will all be a part of our customer store that you will be able to get these updates.

And lastly, we are focused on really reducing the implementation time. Again, it’s something that’s driven out of a lot of the feedback from the partner channel. We are going to be able to sort of deliver best practices that will help us collectively as an ecosystem do much better when it comes to implementation, the cost, the efficiency and the time.

So these are some of the things that we have done from an engineering side, and I want to sort of bring up a partner whom we’ve been working with to take all of this innovation and really expand the opportunity. So to talk about the overall market opportunity, I would like to bring up Simon Thomason From Capgemini, who leads the Dynamics practice, to give you a feel for what it is like to be able to work with Dynamics AX and build out a business. (Applause.)

SIMON THOMASON: Good evening. I’ve been given a few minutes tonight to provide an insight into why Capgemini is moving to the Dynamics marketplace. Capgemini is a global provider of consulting, technology, and outsourcing services, with local professional services provided by Sogeti, a wholly owned subsidiary.

And recently there’s been a noticeable shift in requirements from our clients from the spoke development projects purely focused on spoke developments through to where we were I guess about six years ago with packaged led implementations, and using development tools such as Visual Studio .NET to create Web Services and service-oriented architectures.

We’re also being asked to advise on suitable alternatives to the historic ERP solutions, based around total cost of ownership and flexibility. Dynamics AX 4.0 is ideal for this because it provides a flexible platform, which adapts to the changing requirements of our clients own business processes.

And we saw this recently in a recent win with an organization called Moto, who are the market leader, and the largest provider of motorway services in the UK, and they’ve recently — and this was in the last three weeks — selected Dynamics AX and (LS Retail ?) as their strategic platform of choice for over 50 hybrid sites in the UK. This is a large scale implementation.

And we win those kind of opportunities together not because we massively undercut on price, and not because we take a classic cookie cutter approach or a templated approach. We win because we provide an innovative and flexible solution with you.

And we need to be able to replicate that. So today Capgemini is announcing its new partner solution framework for Dynamics AX. It’s called Power Train and it’s specifically designed to win more business with Microsoft and ourselves. Partners such as MBS Dev here in the U.S. and Touchstone in the UK are already taking advantage of Power Train and working with us on a number of extremely large scale solutions together.

So no matter what the size of your organization, and no matter where you’re based geographically, if you’ve got a solution that you think fulfills the needs of our clients, then we’d like to make a unique offer. We’d like to work with you on a global basis, but in terms of the industry grid we’d like to work with you exclusively within your solution area globally.

If you want to learn more about Power Train, then you can come and see us in the red lounge on Wednesday at 2:15. Thanks a lot for your time. Hopefully we’ll be working together soon. (Applause.)

SATYA NADELLA: So I wanted to end with where I started. Dynamics AX 4.0 is a major milestone for us on our Dynamics roadmap. Our roadmap remains the same. We are going to have upgrade releases for all of our products across two waves. With each wave and each release we will have more and more shared technology and shared design. Any customer of ours across any of our product lines can look forward to the innovation across all of the things that AX 4.0 today represents, from the user experience to Web Services to BI to portal capabilities. And in wave two we will take what we built in 4.0 and go deeper in terms of more immersive experiences around roles throughout the application, more in terms of process. So we’re going to take what we started with workflow on the edges and drive it to the core of the applications. We will do more in terms of the metadata associated with these new abstractions of process and the tooling around it, so that we can allow you to change business process more efficiently; and then, of course, bring the best of functionality.

So as I said, we’ve got a lot of traction in our roadmap, every release of ours will represent progress on this roadmap, and you can measure us by that.

Thank you very much, and with that I’ll want to turn it back to Steve. (Applause.)

STEVE BALLMER: Well, I hope that gives you a little bit of a sense concretely for what we’re trying to get done, not in a sense just in Dynamics AX 4.0, but really across the Dynamics product line, because it’s the same philosophy of the kinds of capabilities that matter technologically and the same focus on depth of business application functionality really permeates across the product line.

We’re all here today because, as I said at the start, we go to market together. We have a very large business out there. About 62 is most estimates of the size of the business application market. And in some senses this is an area in which we see customers actually increasing their budget as more and more applications that were done or were managed or developed separately wind up converging on the core base of ERP, supply chain and CRM functionality.

We see an incredible opportunity out there. I mean, literally it is our belief that within ten years, as opposed to seeing a market of small and mid-market companies in which perhaps nobody has over 5 percent market share, we see a market that really will consolidate ERP around a very small handful of players. And our Dynamics product set is really participating now in about, and we want it to participate in about 50 percent of the ERP selections or more that get made. From planning and implementation to customization to support and education to Industry Builder applications sitting on top, we see great opportunity in front of us.

As I said at the beginning, we know you have to allocate your most scarce resource, your time, your people’s time, what are you going to train them on, what are they going to do. And certainly this is a market that has competition. It’s a very fragmented market. We’re clearly one of the leading players. SAP aspires to be a leading player, Oracle. In the large enterprise market it’s already been reduced to a handful. For the rest of the enterprises, for mid-market companies and for small business this is not exactly completely open territory but pretty close to it. And certainly as you’re making your decisions on where to put your time, your energy, rest assured we’re going to make sure we’ve got a leadership product that we drive to market with great energy from the sales and marketing perspective, and that the best opportunities that you’ll have to serve customers and make money will really be with the Microsoft Dynamics product set when it comes to business applications.

I hope that through the course of my comments and Satya’s and our partners and customers that you had a chance to hear from today you really get a sense of how critical this business is, how committed we are to important technology innovation, how serious we are about building our work together to really take these products to market, and hopefully you’ll absolutely agree with me that the time is now, the opportunity is big, and that with us and you together Microsoft Dynamics and the partner community we can really go out there and transform this marketplace.

Thanks for your time, thanks for your support. Good luck, good selling. We don’t need to wait to the end of the fourth quarter. Let’s get back out there right after the Partner Conference and make some business. Thank you. (Applause.)