Remarks by Stephen Elop, President, Microsoft Business Division
Microsoft Worldwide Partner Conference 2010
July 12, 2010
STEPHEN ELOP: Hey, good morning, good morning and welcome to Washington. You know, shortly after joining Microsoft two years ago, my journey began by standing in front of all of you for the very first time in Houston, if you’ll recall that, and that day, I spoke about the key reasons that I joined Microsoft, and that was simply this: Because we have the opportunity for impact, the opportunity to positively affect the lives of literally hundreds of millions of people who rely on our technology every single day.
And here I am, two years later, still, frankly, somewhat awestruck by the impact that all of us together are having on the productivity of so many people. Now, precisely one year ago at WPC in New Orleans, you and I embarked on a second journey together when we announced the public beta of Office 2010 and SharePoint 2010, and began a new era of productivity across the PC, the phone, and the browser.
We revealed an important step in our vision for productivity. And since then, we’ve ramped up the availability of these new products, we’ve focused on getting them right, getting them ready, getting them into the market, and boy, what a year. What a year it has been for all of us.
I think Steve may have mentioned this earlier this morning when he said 9 million people — 9 million — took the time to download the beta versions of these products. That is six times the volume of what we saw for Office 2007, and you, our partners, you took a bit of time. You said, hey, I’m going to tell you about a few of the bugs we’re finding along the way. And, indeed, you in this room submitted half of all of the bugs files against those 2010 products.
The good news is: 98 percent of those bugs have been fixed, 2 percent, we’ll leave to you to find along the way. But thank you, thank you for filling in that bug form. It helped us tremendously. So, a round of applause for all of you for helping us through this, thank you. (Applause.)
Now, the good news is customers out there are responding to the work that we all did together. For example, according to the MPD group, Office 2010 captured the number-on revenue spot for a software product at retail with this launch, number one, which is just amazing. It’s just rocketing off the shelves, we’re thrilled with that. So, again, thank you for everything that led to that, because we have retail partners from all over the world who have helped us deliver this in a new way.
But the work we undertook together was so much more than just kicking the tires on the beta code and filling in bug forms and submitting frowns and so forth. We actually all have had a tremendous amount of preparation work to do. I can tell you today that 64,000 people from this audience became trained on Office 2010; 62,000 of you trained on SharePoint 2010; and 63,000 of you trained on Exchange 2010. And in the last 12 months alone, we’ve seen 8,000 new individual specialists becoming certified on the latest Dynamics solution, again, huge amounts of work, training, reading, studying, testing — those are the types of things that get us ready for our customers.
But of course now comes the fun part. Now comes the moment where we, with these new capabilities, can solve our customers’ problems, where we can innovate in ways that were not possible before, and of course we have such tremendous opportunity to build great businesses together. But the drumbeat of innovation does not end with the 2010 wave of products you’ve seen so far.
Indeed, while the last year will go down in history as one of Microsoft’s biggest launch years ever, there is more opportunity immediately ahead of us. For example, today and throughout this week, we’re going to give you a taste of the next version of Office Communication Server, which releases later this year. This next release creates simple, visual ways for people to connect, and has enabled you, our partners, to extend your business by bringing Office Communications Server together with Office, with SharePoint, with Exchange, and so forth.
Second, to continue our tremendous momentum with Dynamics CRM, a product today reaching 23,000 customers with over 1.4 million seats. Today, I am excited to announce that Dynamics CRM 2011, as it will be known, will be available for beta in September both online and on-premises, and available by the end of the year in 40 markets in 41 languages. Just tremendous progress there. So, thank you Dynamics partners. (Applause.)
Now, I’ll give you a taste of Office Communications Server 14, Dynamics CRM 2011 in a just a few moments, and throughout this week, you’ll have lots of opportunity to engage with the product teams and learn a lot more about this.
And yet, with all of this technology and launches and preparation and all of the business challenges we face, sometimes, again, we have to remind ourselves why are we passionate about what we do? Again, it’s because of the impact that we have on the lives of so many people. The individuals whether use our products every day. We’re starting an advertising campaign right now around a number of our products, and some of the stories that come out of these campaigns really remind us of that impact. Take a look at this journey for just one family.
(Break for video segment.)
STEPHEN ELOP: (Applause.) Isn’t that great? So I’ve got to tell you just for a second, just a little bit of the back story behind that particular ad that we put together. First of all, those are like real kids and a real mother and everything, I mean, they’re not actors. They’re people — all they got for their trouble was a copy of Office 2010, so they just did it because they like what they’re doing.
But we sent the camera crew in there to film the mother and while we were getting ready with the mother, the kids were doing this on the computers. And the camera crew swung over, and the rest is history. It’s just amazing the impact that we have.
So it’s all great. We’ve got impact, feels good. The critical question, of course, is: How do we translate that customer excitement into opportunities to grow your business? I want to review a couple of examples with you from this audience of how the 2010 wave of products is having real business impact for you.
So, for example, as soon as we announced the public beta of Office 2010 and SharePoint 2010, Aspect, a global ISV and systems integration partner who’s focused on customer communications and collaboration, they were amongst the first to jump on the opportunity. They immediately tested and deployed internally, working with early beta code right across their company. It gave them a head start. And as a result of this early commitment and the in-house experience they developed, Aspect has already generated US$750,000 of incremental revenue just in the short time that those products have been out there. Very impressive results.
But it continues. Another example: Ontario Systems. They run a company focused on collections management, i.e., bill collectors and software to help those people. It’s been a popular application recently. In their assessment, Ontario Systems said, you know what? If we go with the Microsoft solutions, we think we can reduce our in-house development and go-to-market costs by a third. So, they selected the Dynamics product line and opened up to themselves new opportunities around healthcare, various government opportunities that they couldn’t reach before. Their strategy now is to release their debt management solution prior to the end of this calendar year and migrate 350 customers from competitive platforms onto Microsoft Dynamics. A great example of new revenue opportunity for Ontario Systems.
But then a third example: K2. K2 is one of our global ISV partners. They help automate business processes, work flows, and together with their systems integration partners, they invested in Office 2010 and SharePoint 2010, and they started to integrate Office Communications Server, enabling them to move into the legal, insurance, and some government markets that they hadn’t reached before.
But what they did was interesting. They really focused on the integration between unified communications, collaborative content management, and traditional business processes. And as a result, they’re standing up above the cloud, they’re having amazing success. So, since announcing their plan, their solutions business in North America has grown 80 percent quarter on quarter, they’re really starting to blow it out in terms of the opportunity.
Now, I want to drill on this one for a second. I want to think about what K2 did here, because I think it really tells an important story and lays the foundation for one of the most important messages that I want to deliver to you today. And that is, it’s not just about the individual product. K2 took a point of view that spanned our offering.
You know, a couple of months ago, I had the opportunity to sit down with a small group of some of our most successful partners. And these were small and large and mid-sized, but they were the ones that were growing the fastest, having the most profitable results. And the key question I asked them is: Why are you winning? Why are you growing when others are having a harder time?
And they were aligned very clearly around one point. And that point was that whereas previously they were focused exclusively on Exchange or SharePoint or CRM or a particular flavor of ERP deployment, and what they had all done is deliberately shifted their focus to delivering interoperable solutions. Today, those top partners are deploying multiple products — Office, SharePoint, Exchange, OCS, CRM, and sometimes ERP — all interoperable, all done in a way that allows them to focus on particular vertical markets and segments, allowing them to develop new opportunities in areas where they weren’t before, developing reusable intellectual property and so forth.
This, ladies and gentlemen, is a key point I want to stress with you today. The value we deliver to our customers and the key differentiator of our competitive strategy comes from focusing on innovation across multiple products. In this approach, the whole is greater than the sum of the parts, and no one can touch any of us in this room if we take that approach.
Now, our customers are asking for this. And this trend of selling, delivering, and building a broad offering on one productivity solution will accelerate, and it’s going to accelerate because we will accelerate it. And the cloud — the cloud is the catalyst for that acceleration. Increasingly, our customers are purchasing suites of online services, and increasingly, we will advance how we design, build, package, price, and market our solutions to support this customer trend.
Of course Office will often be the doorway to these services, made even richer by the cloud behind it. Those of you who take advantage of these trends will, in my assessment, be the most successful in the future. I want to reinforce this point, and we’re going to do this through a demo.
Please join me in welcoming on stage Mr. Kirk Koenigsbauer, corporate vice president of the Office Business Platform Group to the stage to help with it. (Applause.)
KIRK KOENIGSBAUER: Good to see you. All right, thanks everybody. Well, what I want to do is give you a look at some of the solutions opportunities that Stephen talked about, and at the same time give you also a quick sneak peek of what you’re going to see with Office Communications Server 14, as well as Dynamics CRM 2011. So, let’s get started.
STEPHEN ELOP: Go.
KIRK KOENIGSBAUER: And where I’m going to start is in the BI space. Now, in the BI space, Microsoft’s differentiation is in providing self-service BI reporting and tools capabilities that can be available broadly inside of an org itself, using Office, SharePoint, and of course underpinned by SQL Server.
Now, oftentimes, one of the most difficult things in looking and working with BI content is finding the kinds of reports and documents that are going to help you get business insight.
I’m actually going to start a search page. This is Fast Search for SharePoint. I’ll give you an example of some of the search capabilities that can be delivered to help you in the BI space itself. Let’s say I’m looking for a sales report. I’ll just go ahead and type in sales here, and you’ll see the results come back very, very quickly. Now, Fast can search billions of documents inside of an organization and deliver very, very rich results. You can see we have people matches here on the right side of the screen, people in expertise search, you get these nice faceted search results over on the left that can help you filter your result set down. So, for example, I’m looking at my set here. Maybe I want to just look for sales presentations that are PowerPoint and you can see that here.
You’ll also notice that you get these nice in-line previews, and in fact, you can take a step further — I’ll go ahead and bring this up so you can see it better, you can look at the PowerPoint presentation right inside the search results themselves.
STEPHEN ELOP: Wow. How about that?
KIRK KOENIGSBAUER: Very, very clear. (Applause.) This can become particularly useful if you’re looking particularly for a data-oriented type of report. We scoped a special set of reports that we’ll click through here and give us a look at just BI-oriented data searches. And so in this case, I can see different Excel files and I can look at data sources and see where they come from and so forth. I’ll go ahead and just do a quick preview here just like you saw before.
Now, when you find the file that you want, I’m just going to go ahead and pop open this one, you’re going to see that I’m going to open this up in what’s called the Excel Web App. Now, we have — this is a browser-based version of Excel. We have Web apps for Word, Excel, PowerPoint, Microsoft OneNote, and they work entirely in the browser. No footprint on the client itself. They work in IE, in Safari, in Firefox, and this is a wonderful way to be able to view and edit documents in a lightweight type of way. They’re designed to be companions with the Office client themselves.
So in the case of Excel, you can see things like charts and graphs, and I’ll just click through the workbook tab. It looks a lot like Excel itself. And you can take advantage of nice features like co-authoring right in the Excel environment itself in the browser. You can take advantage of things like pivot tables. Or in this case here, we’ve got some data slicers, a new feature in Excel 2010 that can very quickly let me filter out this particular pivot report.
So lots of capabilities inside the Web applications themselves. And the last point I’ll make about these Web apps that’s super, super important is that as you move from the Web app to the same document in the PC experience or even on your mobile phone, we do a very, very good job of making sure there’s true file fidelity as you go across these different experiences. And that’s something that competitors like Google just don’t do.
So another area in the BI space that I wanted to spend some time on is that we’ve added PerformancePoint Services into the SharePoint platform itself. Now, PerformancePoint does a wonderful job of creating scorecards and dashboards across content anywhere in the organization — ERP data, data from CRM Dynamics, data from different databases, and you can bring it all together to create these rich dashboards or scorecards that you see here.
So you can see, I get this nice, nested Excel approach, I have these wonderful data visualizations here for target and trend. I can connect it to a chart, you get the idea. But what’s great about PerformancePoint is that you can drill into data as well. So, if I go ahead, say, and update this chart and say I want to drill into sales return information, let’s say I want to learn a little bit more about what’s going on in the computer space here, I’ll go ahead and just select the Decomposition Tree.
Now, Decomposition Tree is a new capability that allows me to just drill right into the data itself. So, I’ll give you an example here. I’ll pick a couple different dimensions that I want to get some information on, perhaps different channels where I’m selling computers.
Maybe I want to see specifically how my online stores are doing in promotions that I’m running. I’ll keep drilling in here.
STEPHEN ELOP: Continuing to decompose all the way down.
KIRK KOENIGSBAUER: You’ll continue to decompose all the way through the board here. So, you get the idea. So, really, really great capabilities in the BI space that can deliver these self-service tools.
STEPHEN ELOP: Beautiful. Beautiful. Well, the interesting thing is when you look at business intelligence all up, and this is, you know, take note from an opportunity perspective, for five years running, business intelligence has been the number-one technology spending area for CIOs. It’s a huge opportunity for partners, and now a natural and beautifully interoperable component of what we’re delivering with 2010.
KIRK KOENIGSBAUER: Absolutely. Let’s shift gears a little bit. I want to show you another solutions scenario that’s really taking off quite a bit, and that’s in the collaboration space. And as many of you probably know, in the consumer world, lots of people are taking advantage of social networking. And we’re seeing businesses racing to keep up to try and bring these capabilities into the business, into the enterprise type of environment. So, I’m going to give you a glimpse of some new social networking techniques that we have, one in particular called the Outlook Social Connector. So, we’re bringing social networking right into the familiar, easy-to-use Outlook experience.
Now, here I’ve got an e-mail message open in Outlook 2010. I’m just going to go down and show you the Outlook social connector by clicking here on the lower right corner, and you see these wonderful pictures. Very, very simple concept, but it’s great, particularly if you’re in a larger type of company to be able to connect the name with the faces of people, really makes it much more approachable.
At the same time, if you select any of these individuals, you can learn a little bit more about what they’re doing with your communications in the social network itself. So, I can see things like recent e-mails that I’ve done or attachments or calendar requests or whatnot. But I want to show you, and let me hold this up a little bit so you can see it better, we also are aggregating social networking information from a variety of different sources, in this case coming from Paul’s Facebook page, but it could come from Linked-In, it could come from SharePoint sites. You can see status updates and pictures and so forth all in the comfort of the Outlook experience, which is great.
If I click on Molly, I can see her different social networking feeds right here in Outlook itself.
Now, I’m going to click on one of these social networking feeds, and this is going to take me to SharePoint 2010. Now, in SharePoint 2010, we’ve done a tremendous amount of work in the social networking space too. This is a concept called the My Site, very similar to say Facebook but in an enterprise-controlled type of environment. And on Molly’s My Site, you’d see information about her phone numbers and where she works and so forth, but you also see a lot of rich Web 2.0 type data.
So, for example, areas where she’s an expert which can be used in expertise search, activities where she’s adding content to SharePoint sites or adding new colleagues or changing her status. I can see where she sits in the organization by clicking on this org chart, we have a new Silverlight org chart viewer, really easy, just simply clicking through here, I can see who her peers are, I can view peers of other people and so forth.
And then I’ll also point out content in terms of tagging. So, in SharePoint 2010, you can tag anything. And, in fact, you can tag external content as well to see the types of content that people are looking at inside of the organization. You can see Molly’s tags here in this nice tag cloud as well. So, really, really rich Web 2.0 capability, big companies like Accenture, Sony, Shell Oil, all moving to the SharePoint platform and Outlook using the Outlook Social Connector.
STEPHEN ELOP: And that’s really a strong message here. The next generation of collaboration, very much includes social networking. And as we’ve shown here, somewhat legitimizing it for the purposes of the enterprise. This is all good, this is somewhat working from your PC and so forth. You know, a lot of workers moving to working remotely and so forth, so why don’t we talk for a little bit about Office and the mobile device?
You bet. So, with Office 2010, we launched a couple months ago, we also introduced new versions of our Office Mobile Applications, so Word, Excel, PowerPoint on the mobile device, including SharePoint. I wanted to give you a sense of what those looked like today. I’m going to use a Windows Phone 7 to give you a sense of how these applications will work with the new platform here.
Now, hopefully you all can see on the screen, I’m going to go ahead and just swipe up and give you a look at the Office hub. I’ll go ahead and click on the Office hub here. And this will take me right to OneNote. You can see the OneNote mobile application. Great application for you to be able to take notes on your mobile device and then have that synch back up with your PC or whatnot.
STEPHEN ELOP: I’m not sure it’s coming through.
KIRK KOENIGSBAUER: Oh, interesting, all right. Can you guys get the mobile phone up?
STEPHEN ELOP: If not, move on.
KIRK KOENIGSBAUER: All right. Well, we’re going to move on then without the mobile device.
STEPHEN ELOP: I think the link from the phone to their system — okay.
KIRK KOENIGSBAUER: Great, thank you very much.
STEPHEN ELOP: Try that.
KIRK KOENIGSBAUER: Oh, baby, demo recovery moment! Okay, I’ll show you the Office hub. There you go, the Office hub. This is OneNote, again, I’ll just pop this open so you can see at this time, here. Beautiful. I’ll swipe over again. This is a list of all the different documents that I might have downloaded on my phone.
Here’s the SharePoint mobile application, so I can take documents from SharePoint down to the mobile device itself and then I can actually go ahead and view my SharePoint sites here if I’d like.
I’ll go ahead and open up the file just to give you a sense of what the PowerPoint mobile application looks like. I’ll turn this so you can see it. Notice the transition effects right on the mobile phone. I’ll swipe again. Look at that, very clear, clean.
STEPHEN ELOP: Beautiful.
KIRK KOENIGSBAUER: All on the mobile device itself.
STEPHEN ELOP: Very nice.
KIRK KOENIGSBAUER: So we’ve seen examples of the PC, we’ve seen examples in the browser, nice example here on the mobile phone.
STEPHEN ELOP: And a key theme throughout 2010, PC, phone, and browser.
KIRK KOENIGSBAUER: That’s right.
STEPHEN ELOP: The best experience across all of those.
KIRK KOENIGSBAUER: That’s right.
STEPHEN ELOP: So what’s next?
KIRK KOENIGSBAUER: That’s right. I have two last demos I want to do. I want to give you a sense of what the CRM Dynamics 2011 platform looks like. This, by the way, is the first time that anyone has seen this platform. We’re really showing it for the first time, and as you mentioned, we’ll be in beta in the September time frame.
So in CRM Dynamics 2011, the key theme or the key focus of the release was the power of productivity. We talk about the power of productivity, what we mean by that is you’ll find a very familiar natural extension of things like Office. So, first thing you’ll notice is the new ribbon inside of CRM Dynamics, and it works just like the Office experience does.
You’ll find that we have these new, rich charts and graphs inside of CRM itself. This is a little like Performance Point Services, I can click here and drill down right into this kind of data that you see.
If I want to go ahead and show you how we can use the ribbon and manipulate some of this content here, let’s go ahead and update this particular order. I’m opening up a new canvas, a customized page here. You can see we’ve got the ribbon, of course. If I want to add a new opportunity or new product to my opportunity, note the ribbon update. I’ll go ahead and click on that, obviously not final design here. I’ll just go ahead and type — notice the type ahead capabilities in the form itself and we’ll go ahead and add ten quantity to that. Save and close, and you’ll see that update here in our in-line grid. You’ll see it update here on the chart itself. You can also add Silverlight to the new canvas, really, really great capabilities here with CRM Dynamics 2011.
STEPHEN ELOP: Yeah, so we’re very excited about that. There’s going to be a lot of additional information. Karill I think is up tomorrow, is going to spend more time on that, so a quick sneak there. You know, we’ve got one more thing we’d like to show.
KIRK KOENIGSBAUER: That’s great. The last thing I want to show is Office Communication Server 14, and as Stephen announced, this will be available this coming fall. With Communicator 14, we’ve done a lot of work — as you’ll first see, in the Communicator client. And so right away, you’ll see we’ve got a new user experience here, we can have things like status, we can have things like location-aware services, you can see we’re in the Verizon Center here, that’s automatically updated. But of course the first thing that people connect with right away is they see pictures on the contacts. And that’s the wonderful way, just like the Outlook Social Connector, just to bridge that and make that really clean.
Now, there are some other new tabs here. You can actually keep track of status of all the folks right in Office Communication Server itself. I’ve got communications history, and then this new dial pad. Increasingly, we’re seeing people want to make phone calls from their PC. This is the new dial pad inside of OCS 14, it can also sit side by side and enhance an existing or legacy PBX system that folks might have, so it can be a great soft phone in the PC-based environment.
Now, that’s a little bit about the user experience. I want to talk a little bit about how you can use collaboration inside of Office Communication Server. Let’s say I’m trying to find someone in the org that can help me on a sales call that I need to go at. Now, I don’t have somebody in my contact list here, so I’m going to do an expertise search right from within the Communicator client.
I’ll go ahead and type “sales” and then look for skill here. And as Stephen mentioned, this is another example of where we were having integration between, in this case, OCS as well as SharePoint using SharePoint’s people and expertise search. So, just like I would in SharePoint, I can go ahead and add some other fields here. And let’s say the person may be on the west coast, I need a west coast sales manager, and I can narrow down my set right inside the OCS client itself.
STEPHEN ELOP: So SharePoint and OCS working together?
KIRK KOENIGSBAUER: Absolutely. That’s right. Rich is available, so I’m going to just pop him up on the screen here, do a quick IM with Richard. Are you there? Great. Now, IM can be a wonderful way to have a very quick ad hoc type of conversation. But oftentimes, you want to just elevate that right up to either a phone call or to a video call. I’m going to go right to a video call to show you some of the new video capabilities that we have inside of OCS. There’s Richard. Richard looks like he’s living the dream that England is still in the World Cup.
STEPHEN ELOP: Hey, Richard, it’s over. (Laughter.)
KIRK KOENIGSBAUER: Got to have the typical British person here in the demo for the accent. So, this — what you’re looking at right here is high-definition video in OCS 14, very, very crisp.
STEPHEN ELOP: Beautiful.
KIRK KOENIGSBAUER: You can see the plants in the back, the nice dimensions there, obviously really, really clean perspective here.
Now, Richard, besides just showing you in HD video, why don’t you talk to me a little bit about some of the collaboration capabilities that we can do? Let’s share a file back and forth.
PARTICIPANT: Sure. Let me share this PowerPoint with you. I’m sure you’ve got five minutes to quickly review it now.
KIRK KOENIGSBAUER: All right, I’ll accept your sharing request here. So, what Richard has done is he has decided to share with me a patient presentation that he is working on, and right now you’re seeing him advance through the presentation itself. If you’re going through a Live Meeting experience like this and you want to move ahead or move back, you can actually take control for just your own view —
STEPHEN ELOP: You’re actually moving different than he is?
KIRK KOENIGSBAUER: That’s right. And you notice that by the yellow background in the back. You can see he’s done some annotation on this slide, which is great. I can move forward and back. And when I want to sync everybody else up with where I am, I can just go ahead here and click “share my view” and that will synch everybody back up on the page itself. So, you can share files, but you can also share things like — let me just go to the sharing button here. I could share my desktop, I could share things like — I could create a white board session, even programs, I can pick any of these programs, give control to Richard, and we can work together.
STEPHEN ELOP: Fantastic. Fantastic.
KIRK KOENIGSBAUER: So, big, big release. (Laughter.) Go, Richard. Go, baby. Hopefully you’ve got a sense of what we’re doing here, and we’ve got a really compelling —
STEPHEN ELOP: The whole is greater than the sum of the parts. Kirk, thank you very much. Good job.
KIRK KOENIGSBAUER: Take care.
STEPHEN ELOP: Good job. (Applause.)
Now, as you continue to hear today, the advent of cloud computing is redefining our industry. It is changing how each of us get our jobs done, how we deliver software and solutions, and unquestionably it changes how many of us will make money.
We at Microsoft, just like all of you, are already seeing this impact. Just a few days ago, our fiscal year ended, 2010 came to an end at the end of June, and what we saw in our numbers was amazing. We substantially exceeded even our most optimistic estimates for online services contracts. It was amazing the amount of support we had from you, and what we’re seeing from our customers.
Already we have more than 40 million seats of online services, including Exchange Online, SharePoint Online, Communications Online, Forefront, Live Meeting, and others, all of those, more than 40 million.
And the interesting thing is when you look at what customers are doing, certain customers are now committing to and deploying hundreds of thousands of seats at a time. We had one education customer that over the course of a weekend moved over something like 400,000 seats to the cloud in one shot. It’s just amazing the momentum that is building, and clearly it is no longer a question of if but when one of our customers should move to the cloud.
Now, I know a year ago there was a lot of discussion about the competitive dynamics, particularly as it related to Google’s aspirations to somehow trans-mutate itself into an enterprise provider. In other words, they wanted to move to a world where customers actually sign a contract, pay money, and therefore expect results.
A year later, customers are speaking, and they are speaking with their wallets. Unambiguously, customers say they value companies like Microsoft and all of you who do understand what businesses need, who do recognize what it means to provide real customer support, who do worry about accessing documents created with the previous version of their software or who do preserve critical features from one day to the next, not having them disappear.
We understand that. With our shared experience we do understand what it means, and more importantly what it takes to be a trusted provider.
And the customers, customers like Starbucks and Kraft, Serena Software, the University of Arizona, and many, many others have looked at and some even went over to Google, but you know what, today, they are all Microsoft customers, full stop. The competitive success that we are all having is unambiguous, it’s amazing.
You know what, it turns out that businesses really do value services from companies that understand what it takes to support the enterprise, and they are willing to pay for it.
The question, of course, can you as a partner participate in this revenue?
Well, we recently conducted a survey of 40 partners exploring this very question, can a partner make money from Microsoft Online Services.
Now, as you can see here, the average Microsoft Online Services deal size of the partners we surveyed was about 141 seats, with average revenue per seat of $167, yielding total revenue of $24,000.
Now, where did the revenue come from? Well, it came from the provisioning of the managed services, things like end user support and desktop management. It came from business consulting and customization services, including moving companies off of Lotus Notes over onto Exchange Online, definitely money to be made there. It came from migration and integration fees. And, of course, it came from the partner of record fees.
Now, this is our survey, but very soon in the days ahead you will see IDC publish their results where they did a similar survey, something called the global BPOS partner study, exploring the opportunity to partners to make money with Microsoft Online Services.
The good news is, and we’ve seen a sneak of the report, we saw $167 per seat, they’re seeing $181 per BPOS seat. So, the opportunity is definitely attractive, and you see that already from some of the commentary we’ve heard from partners.
Bottom line, the bottom line — yeah, a round of applause for making some money with the cloud, which you were not sure of. (Applause.)
The bottom line for Microsoft and all of you is that the cloud is a revenue and profit growth opportunity, and when that’s the case you understand why we moved so aggressively on it.
Now, make sure you attend Chris Capossela’s presentation. He is going to go into a lot more detail about the cloud, these numbers in more details that are very valuable to hear.
Now, this message of profit opportunity is not lost on many of you. Let me give you a few numbers. Two years ago, I announced the Online Services Partner Program. Since that time, 16,000 of you have signed up. And it’s not slowing, it’s grown 300 percent in the last year alone.
Today, we are pleased to announce a series of additional partners who are communication service providers. Today, we’re pleased to announce that Bell Canada, British Telecom, Telenor, TDC, PGI, and a number of others have all signed up to offer Microsoft Online Services to their business customers.
Now, they join some other communications service providers who have already been doing this: Telstra, Vodafone, Orange. These companies are focused on expanding the services that they offer to their customer base.
The early adopters like Telstra are having some great success. Telstra, as you may know, is the leading telco in Australia. They have seen sales of cloud-related services grow by a factor of five in the last six months alone.
Similarly, since launching very recently in Germany, Vodafone, the largest telco in the world, has signed more than a thousand customers. It has already launched in Spain and the UK, and will be rolling out around Europe in the months ahead.
So, lots of partner activity, but it’s not just that. It’s also how do we increase the diversity of partners who can participate. We need distribution capacity. So, we’re also pleased to announce today that we’ve signed up Ingram Micro and Tech Data as distribution partners to help with that diversity. So, a lot of partner momentum.
But you know what, it’s great to talk about all of these individuals and the large numbers and everything, I want to make it just a bit more personal for you. I thought it would be helpful to hear it directly from one of our partners that has been working with us in the cloud for, you know, some period of time, actually some number of months. Please welcome Myles Jeffery, who is the founder and managing director of Thinkscape, onstage here to share some of his experiences and give us a little bit of a demo. Myles, welcome.
MYLES JEFFERY: Thanks, Stephen. (Applause.)
STEPHEN ELOP: Okay, so that was a pretty tepid welcome and everything. I want to ask you a question, just to put this in perspective. Have you ever presented to 13,000 people? Is this something you regularly do in your business?
MYLES JEFFERY: Not so — (Laughter.)
STEPHEN ELOP: So, how about a warm round of applause from your friends and colleagues for getting up here on stage? How about that? (Cheers, applause.) That’s better, that’s better.
Okay, tell us a little bit about what you’re doing here.
MYLES JEFFERY: Okay, well, I am really excited to be here and share our experiences with online services.
So, Thinkscape started as an IT consultancy in 1998, and we have seen a massive transformation. I knew that if we didn’t react and embrace Microsoft’s cloud technology, our customers would move on to a partner that did.
So, we’ve been working with online services for 15 months now.
STEPHEN ELOP: Fifteen months, so from the early days.
MYLES JEFFERY: Oh yes, yeah.
Well, I can tell you it hasn’t been a walk in the park, and we’ve had several false starts, but we’ve now got a fine-tuned range of services covering migration, deployment, and support, and we’ve also leveraged our existing software development integration expertise.
And most importantly, we have learned how to make money from the cloud.
STEPHEN ELOP: That’s important. Good.
MYLES JEFFERY: So, what I want to do is show you an example of what we did.
STEPHEN ELOP: Excellent.
MYLES JEFFERY: Now, Royal Aero is a company that manages the maintenance of aircraft engines on behalf of their customers.
STEPHEN ELOP: So, Royal Aero is one of your customers.
MYLES JEFFERY: They’re one of my customers, that’s correct. But each project they manage involves sharing documents with internationally distributed suppliers, and with dozens of these projects ongoing at any one time, they just found e-mail wasn’t cutting it as a way of sharing those documents.
They were looking at an on-premises document management repository. They were concerned about costs. In fact, cost was such an issue that they were going to can the idea altogether.
But that’s where I saw an opportunity. SharePoint Online could give them that document repository they needed, but with a cost benefit that worked for them. So, SharePoint Online literally gave me a business opportunity where there would have been none.
So, let me show you what we did. Now, this is the collaboration portal for Royal Aero, and we set one of these portals up for each of their customers. And this particular one is for North American Airlines.
STEPHEN ELOP: Okay, so just for clarity, I know North American Airlines, they’re a charter organization based here in the U.S., a real customer, this is live production code on SharePoint Online.
MYLES JEFFERY: Absolutely.
STEPHEN ELOP: Okay.
MYLES JEFFERY: All live.
This portal helps North American to collaborate with Royal Aero, and we built this using SharePoint Online.
So, if we check the browser URL, that has the MicrosoftOnline.com extension, and that proves this is running on SharePoint Online.
STEPHEN ELOP: I see. Yeah, this is coming from Dublin I think.
MYLES JEFFERY: Absolutely, yes, good old Dublin.
And so branding was a really important feature for Royal Aero. They wanted their public facing website to have the same look and feel as the portal. And we found that really easy to do with SharePoint Designer. We could leverage our existing web design expertise.
So, I’ll just give you a quick tour of this page to show you how Royal Aero stays connected with North American Airlines.
Now, this area here, recent activity, that helps Royal Aero push out news and up to date status information.
STEPHEN ELOP: For each of their customers.
MYLES JEFFERY: That’s right, and it keeps the portal fresh. The “have you considered” area, now, this is great. It helps Royal Aero advertise their other services.
STEPHEN ELOP: They’re marketing to their customers.
MYLES JEFFERY: Exactly, to North American Airlines.
Now, we’ve found these areas really easy to implement using SharePoint Online’s content management features. We just use a couple of lists and a data view web part with a little customization to present that data.
Now, in the center of the portal we have the technical documents areas, and this really is the centerpiece of the portal. It was important for Royal Aero that the online version of navigating documents is the same as on-premises. So, we implemented this bread crumb trail, and I can just click to go back to the root of my document library, and there we go, we’re on Dublin.
Document sensitivity is very important, but North American Airlines still needs to share their documents with suppliers. Now, this area down here helps North American Airlines know who’s got access to their documents.
And critically they also need an audit trail of who has done what with their documents.
STEPHEN ELOP: You know, the audit trail is a very often requested feature around SharePoint, who is accessing the documents and for what.
MYLES JEFFERY: Absolutely. You know, I’m not surprised. And this e-mail report here shows North American and who’s done what.
This is very easy for us to do with Azure. We use the SharePoint Online Web Service APIs to retrieve portal usage information, and the Exchange Online APIs to send that formatted e-mail out.
STEPHEN ELOP: So, an Azure app reaching into SharePoint, generating over in Exchange Online, all in the cloud.
MYLES JEFFERY: Absolutely, all those technologies.
So, this portal has proved a big success for Royal Aero. It’s helped them build stronger ties with their customers, and it’s also helped reduce their burden on their technical consultants by 15 percent.
Now, we’ve found customers just can’t do this kind of customization themselves, which creates a great opportunity for us. So, we took SharePoint Online, which is a highly available, scalable and secure platform, all ready to go, and we built our own customized, multi-organization collaboration portal for Royal Aero on top. And we’re looking to take this same portal model approach to other industries.
STEPHEN ELOP: Very cool. So, you’re doing this all with Microsoft Online. We all know there’s a few things you can do right now in SharePoint Online and others. There’s more coming very soon. Why don’t you tell us a little bit about what you’re planning for the next release in the online environment? I know you’re going to be going on-premises to do this.
MYLES JEFFERY: Absolutely. Yeah, well, we see a lot of other opportunities in the future features of SharePoint Online.
So, what I’ve got is a prototype I’ve brought along to show you what we’re doing in the future. It’s running on a SharePoint 2010 server backstage. But this is an example of what we’d like to do with SharePoint Online in the future as the features evolve.
So, this is the prototype, and every hour that an aircraft engine spends in the workshop, that’s time and money lost in North American Airlines.
Now, with this process flow diagram, it can help Royal Aero track that engine through the shop visit process, and that’s less time the engine is out of commission.
Now, this diagram is implemented using Visio Services, and it’s all data driven. So, these status indicators and the milestone text and the due date, that’s all driven off a SharePoint Online list, a SharePoint list. So, as the data behind it changes, the diagram updates to reflect that.
So, I’m going to just show you what’s behind this shape, and I’ll scroll down so you can see. Okay, this is playing, and yeah, I agree, it is very boring.
STEPHEN ELOP: It’s not boring. That’s the inside of an aircraft engine seen through a boroscope.
MYLES JEFFERY: Well done, Stephen. Well done, Stephen. You’re quite right. This is actually a critical piece of footage. It is a result of an engine boroscope inspection. And this footage helps identify problems with engine damage such as a bird strike or strain damage.
But the problem is that the engines are often thousands of miles away from the engineers who make that assessment.
Now, with this system Royal Aero can save their customers thousands of dollars, because as soon as that boroscope video is recorded, it can be uploaded into SharePoint and streamed out to those engineers who can make those critical decisions, faster decisions, but less time the engine is out of commission.
STEPHEN ELOP: Oh, the bookmark feature there.
MYLES JEFFERY: — in the video — yes — and that’s great for the engineers.
So, I’m just going to type in a new bookmark here.
STEPHEN ELOP: The good news is SharePoint 2010 Online and the other online products are already rolling out to some of our largest customers. You’re going to see that continue to roll out through the balance of the year and so forth.
MYLES JEFFERY: That’s great. I can’t —
STEPHEN ELOP: I know there’s a lot here we want to get into the cloud.
MYLES JEFFERY: I can’t wait to see it.
So, I’m just going to return to the shop visit here, and there’s one final thing I want to show you down here, which is the engine parts marshalling, and this shape, we have a warning symbol here indicating something is up with that shape, and the toolkit tells me that the parts are overdue. So, I know those parts have arrived, and the form that we’ll — okay, we have a form problem. Anyway, the form — oh, it’s coming. There.
STEPHEN ELOP: Dublin.
MYLES JEFFERY: There we go.
So, this dialogue was implemented using InfoPath Forms Services, and I can tell you it’s really easy to use InfoPath Forms Services. Part selection here is a lookup list, and that would have taken quite a long time on SharePoint; InfoPath Forms Service very easy. I’ll just put that in, and there we go.
STEPHEN ELOP: There you go.
Now, what’s interesting is you’re using SharePoint, Exchange, Visio Services, Azure, Silverlight, InfoPath here at the end, bringing all of those pieces together for one great solution for your customers. That is amazing to bring it all together.
So, a final question for you to finish off. You’ve got a lot of people, 13,000 people here, and thousands more worldwide. As a partner out there, making money with this opportunity, what’s your advice to them today?
MYLES JEFFERY: Well, I’d just say get on and get out there. You know, this cloud technology is here, and customers do want it. Companies like mine have made money from the cloud, and I know that you can, too.
STEPHEN ELOP: Excellent. Myles Jeffery, thank you very much, and a warm round of applause.
MYLES JEFFERY: Thank you very much, Stephen.
STEPHEN ELOP: Thanks. Good job. (Applause.)
Now, like Thinkscape, you all have the opportunity to build on your foundation and transition to the cloud.
Now, I have the honor of closing this morning’s session, and I want to take a moment to summarize the overall big picture of what you heard here today. First, let there be no ambiguity, Microsoft is all in to cloud computing. That was Steve’s clear message, and it rippled through every one of our conversations. That’s number one.
Second, there is an abundance of new opportunity because of the cloud. Bob described how the Windows Azure platform can help you and your customers stay focused on business goals rather than infrastructure. Tami highlighted how Windows Intune can bring more value to you and your customers.
And third, there is an even larger opportunity for each of you because of the breadth of Microsoft’s portfolio. From the platform to the applications, from on-premises to hosting to the cloud, there truly is an opportunity because the whole is greater than the sum of the parts.
You know, every day in my role I am faced with the challenges and contradictions that arise in an industry experiencing a rapid period of change, and that is what we’re all going through right now. And frankly it’s hard. It’s hard for every one of us.
But I am also reminded that this is an opportunity to challenge every assumption that defines our business.
So, what I tell my team and what I would suggest to each of you is step forward and challenge the assumptions in your business. Embrace the technological and social trends that are driving these changes, and please, please continue to challenge us. Keep us pointed in the right direction. Because together we can maintain and build on that mutually beneficial and deliberately dependent relationship that exists between us and has served us so well for so long.
Thank you for your partnership, thank you for helping us lead our industry through this change. Have a great conference. Thank you. (Applause.)