Simon Witts: Worldwide Partner Conference 2008

Remarks by Simon Witts, corporate vice president, Enterprise Partner Group
Houston, Texas
July 9, 2008

ANNOUNCER: Ladies and gentlemen, please welcome Microsoft’s corporate vice president, Enterprise Partner Group, Simon Witts. (Applause.)

SIMON WITTS: Well, good morning. It’s great, my sixth Worldwide Partner Conference, got excited down there looking at the evolution that we’re going to have in our business together, and the only way I can really answer that core question is to focus in on a few broad customer priorities. And in doing so I want to tease out where I see the opportunity for us in this evolution of our business over the next few years.

I want to anchor it in two core priorities. The first one is customers wherever you go around the world are continually saying, can you help us with our processes and our people together.

Really if you look at it and ask a businessperson, they’d say their two key assets are their business applications, the SAP, the Oracle, the Dynamics, the line of business applications, or they’d say it was their personal productivity, the spreadsheets, their word processors, the e-mail. And really businesspeople want these things to come together, but in reality there’s a deep, deep frustration as these two worlds are actually quite far apart, where people spend most of their time in the personal productivity tools dealing with the ad hoc and the unexpected, that often does not get connected back into the core systems, the enterprise workflow in many senses is decoupled from the personal workflow. There is huge, huge upside to put these things together and truly automate the business practice in a real way. This is our opportunity, this is our proposition, this is People-Ready for a business.

And wherever you go and tell this story — is anyone here from Chile? I must have a Chilean. Yes, there are a couple of Chilean partners.

I was in Chile recently telling this story. I was kindly invited down by CODELCO, the largest copper company, national copper company, that really mines the largest deposits of copper anywhere in the world.

I was invited to spend the whole day there, and I was looking around the operations during the day, 50,000 people operating across this mine, CIO showing me around.

At the end of the day, we’re sitting down for dinner, and I know the COO wants a deeper partnership with Microsoft. And I’m wondering and struggling where we’re going to go in the dinner conversation, and I asked the key question, where is it that we can help you in the business? The simple answer was, I paid X billion for SAP; I’m hoping Microsoft can be a partner to me to make sure that more people use it.

You’ll see us continue this message of a People-Ready Business that connects process and people, and help people fundamentally change the return on investment. You’ll see us spend hundreds of millions on this message in the market, not just tens of millions, over the coming year, but I encourage you to deep root yourself in the story, because it is our core proposition, and it’s really meeting this very deep underlying customer priority.

Now, as we go down the path with our customers, you’ll find it takes you in to some opportunity areas that are very, very good for both of us, and I’m just going to highlight briefly four of them.

The first one Stephen talked about effectively yesterday when he talked about this strong desire to unify communications. And in business terms this means, hey, let’s make communications less networked and less device dependent. Let’s start to communicate around the task in hand. And I love the way Gartner described it: Let’s take out some of the human latency in business of how communications are done.

Now, if we look at the unification here, this is beyond the unification of messaging, where you might get voicemail in the inbox, and includes the unification of conferencing and all of the voice handling and routing.

In fact, Gartner will tell us that there’s only 20 million mailboxes, about 6 percent of mailboxes that are enabled for this full unification of communication. This 20 million will grow to 60 million over the next three years. An important thing is it will build on the Exchange base, and the 10 million communication Office Communicator users are the first right pull of users to become unified in how they communicate at work.

The second area, I’ve called it unification of collaboration, and it’s really taking the capabilities inside SharePoint as we integrate those and democratize them and make them ubiquitous across companies, a little bit like the personal productivity examples with word processors, spreadsheets, and e-mail. This will drive an understanding and a take-up of broad collaboration, predictable collaboration across the business, and bring these two things together, and we’re starting to bring the process and the people together in a more natural way.

The second one is this idea of fundamentally changing the reach and richness of the applications that we’re trying to get people to use. The average ERP (Enterprise Resource Planning) system only gets used by about one in eight people inside a company today, hugely disappointing, just like the CODELCO example. I mean, we’re seeing now you can deliver the applications through a rich Office client and through SharePoint. I thought Brad and Andy did an excellent job yesterday of covering the rich Windows client or mobile clients, and you’ll see after me Bob will talk through the rich Internet experience in particular through IE and Silverlight.

And for many of us who have been in this business, we’ve often thought of server-side design wins, but fundamentally the capability we’re talking about here now is the reach and richness or the user experience, and all of the activities client-side, and really positions us very, very well together to compete in terms of how applications reach users in a way that they’re actually likely now to get used.

Thirdly, it’s BI (Business Intelligence). Gartner will tell us for the third year running now this is the number one spend priority as people think about trying to connect applications to users in a more useful and usable way.

What you now see from Microsoft is a position here where we’ve got something that’s very familiar, again through Office, SharePoint and PerformancePoint, but incredibly complete in terms of the SQL data platform to do the integration services, the analysis, the reporting, the OLAP, the cubing, and so on.

So, we’re getting something here, but for the first time we’ve moved into the visionary quadrant and the highest in terms of ability to execute. So, for the partnership this is a huge opportunity for us to now capitalize on trying to connect users with the process through BI.

Then lastly, if you’re really going to ace — and I mean really ace connecting process to users, we’re going to do it in a way that’s specific to a particular industry, and even do it in a way that’s specific to a particular role. And here through the partnership we need to start to build on your domain and vertical knowledge, and we’re getting more industry aligned with more clear industry points of view, but also importantly we need to get specialist roles: What are we going to do for HR, finance, for sales and so on? And I’m massively excited here with the Office roadmap when we start to get add-ons to PerformancePoint, and add-ons to Office, to get this role-based or role specific productivity, and you’ll start to see more and more campaigns, and in particular this year driving towards finance and sales as we start to bridge this gap between these two worlds.

Now, this I think is a proposition that’s fundamentally different than the way you evaluate, for example, Fusion or NetWeaver. What we’re essentially saying as we evolve the partnership let’s bet on .NET and let’s bet on the Office System, and I think that’s going to hold us in very, very good stead to capitalize on this number one customer priority.

The second one is probably the biggest single opportunity of all is how do we help customers adopt in business terms what they have. It’s really extending this idea of connecting process and people. But if you look, for example, in Microsoft in our business now, 50 percent, a full 50 percent of our business unit IT business is spent on connecting people with process: scorecards, portal, dashboards, connectors. If you look at someone, a business exec like myself who runs sales, we’re now in a position where we fundamentally change the delivery of the applications my salespeople use — Siebel, Clarify, and SAP — and we deliver them through role-based portals and dashboards, and we’ve taken the utilization or the adoption up of the systems from the low 20s to the high 70 percent. And I can actually track that back to pipeline, velocity, close rate, and we’ve been driving sales productivity a full 12 to 13 points a year based on how these systems have now been adopted, and being used; huge business ROI.

The reality is though it puts huge pressure on IT. IT is basically asked to do two things. They’re asked to deliver more for less, and get this richer platform and infrastructure in place for us all to use, but they’re also asked to spend less time in owning and operating, and more time on getting and using them, because there’s huge ideas and creativity on the business; now we’re automating the practice and adopting the utilization of these technologies in such a richer business sense.

This gives us three key opportunities to work with IT to deliver more for less, and to spend less time on existing things, and more time on new.

The first one is this shift where IT is incredibly happy now to take advantage of the integration inside the infrastructure and the platform. This is really a big shift from saying point solutions or best of breed; this is a shift, we all see it in the marketplace, of essentially fewer vendors and fewer technologies. And the quid pro quo of this is as long as we can demonstrate interoperability, a customer is very, very happy to use this to get more for less. And I would say in our own case we’re very, very well positioned through the partnership and through the rich platform in terms of how we do this, you’ll know it through application platform optimization and infrastructure optimization, to prove out the IT value or the cost of ownership for standardizing and rationalizing the technology set.

Many of you may not know the amazing work we’ve been doing broadly with interop. We’ve actually now announced some interop principles around some of these core technologies that deal with data and interchange and standards, and I’d really encourage you to look for the outcome of our vendor council and our customer council that are really steering us here.

We’re also doing some very specific things with Cisco and SAP, again, and IBM, as the market consolidates, really allowing IT to do integration through the commitment of interop, and I think it’s good for business, good for our partnership, and a great opportunity for us to capitalize on what IT needs to do next.

Second, virtualized and managed. IDC will tell us three-quarters of our customers either own or are evaluating server-side or datacenter virtualization. It could include the storage in the network. But actually in reality only 10 percent of the servers have been virtualized so far.

Now, as Microsoft, we also see huge activity on the desktop side for the application and the system or the presentation, and in particular through the optimization desktop pack with enterprise Vista that Brad went through yesterday we’re seeing huge, huge activity. There’s only one percent of desktops that have been virtualized so far as well.

The one thing you do see though is beyond customers wanting virtualization both in the datacenter and the desktop, they absolutely do not want to have it intrusive of the management schema or inherently more complexity and cost.

So, what we have here is an opportunity to partner on essentially the hypervisor in the Windows Server, on the Microsoft Desktop Optimization Pack for the desktop through enterprise Vista, and through the Virtual Machine Manager in System Center is really very, very powerful, and this market, as you know, is super hot and a great way to evolve the partnership.

And then finally, we have this situation that we’ve covered well I think at the conference of software plus services. I’ll just reiterate Stephen’s point yesterday: This is a market growing at 30 percent per year. It’s a market that will be 21 billion just three years from now, and in that intervening period one-quarter of the decisions for applications will be taken that were hosted.

I’m super pleased with the strategy of customer choice, and I’m super pleased with the strategy of win through partners. Whether you’re an outsourcer, an integrator, an enterprise software advisor, or just going to get on the online service program with us, I think there’s great feedback here at the conference, and we need to continue it as we get ahead of this market with essentially our strategy of partnership and choice.

So, if this all works, where do we end up? I mean, I truly believe we’re at a situation where we’re quite uniquely positioned together to help customers connect process and people. And it’s that way around, because we’re asking them to bet on people and software, and ultimately that’s what People-Ready Business is that will take us down this path of role-based productivity within an industry domain, and I think it’s super, super, super powerful as we capture the new business unit IT spend and the adoption and the upside in ROI that companies like CODELCO and others need and want now.

Then we get this situation where we’ve got to get IT to spend less and do more new things. Ultimately it’s the more dynamic IT. I think we’re very, very well positioned together through the steps we’re taking to evolve the partnership to respond to this, and really help It respond to this great day.

I’m immensely proud to partner, immensely proud to partner. I love Stephen’s quote yesterday: “It’s a deliberate dependency” And I just thank you for the time here at Worldwide Partner Conference. I hope you’re as energized as we are about the evolution and the opportunity. I think ultimately this partner model is differentiated positively for Microsoft, and it’s one that’s ultimately going to be tested in the market: can we exceed, continue to exceed, beating customer expectations. And with your help and your passion and your energy, and your investments and your interest, I believe the answer is yes. So, thank you. (Applause.)