Steve Guggenheimer: Microsoft Worldwide Partner Conference 2007

Remarks by Steve Guggenheimer, General Manager, Application Platform & Development Marketing Division, Microsoft Corporation
Microsoft Worldwide Partner Conference 2007
Denver, Colorado
July 11, 2007

ANNOUNCER: Ladies and gentlemen, please welcome Steve Guggenheimer. (Applause.)

STEVE GUGGENHEIMER: Good morning, everyone. I want to thank you for this opportunity to spend a little focused time on the application platform side of the business. It’s a tremendous opportunity for all of us. So on behalf of my colleagues in Redmond, here, across the world, I want to thank you for the support you’ve given us in the last year, but more importantly for the feedback over the last two years.

We’ve really worked hard to take your feedback on how to improve our approach to the platform SOA side of the business and working with you. So, hopefully, today I’m going to provide some feedback based on the information and feedback you’ve given us, and hopefully it resonates a little bit.

So I want to pick up from where Andy started. He started with dynamic IT. And in this particular area, I want to focus on advancing the business with IT solutions, that’s an area we hear often from our IT pro and developer colleagues in your organizations and in businesses directly. We want to be a great partner for the business. It turns out that applications are the bridge between the business and the IT pro and developers. And our ability to provide the applications that help drive the business forward, that really creates that bridge, that really helps build the connection between the two sides of the house.

And then I want to spend a little bit of time on the investments we’re making in the services area, and in this case focus more on the application side of the house, this is such a big conversation in the industry today, and an area that we’re heavily focused on, and we see great opportunity in, as well as in the user-focused area.

Now, when we talk about the application platform, it’s a pretty big topic. By default, the application platform is anything you or your customers are using to build, run, deploy, and manage applications. So the truth is, there is no one platform. Our customers and all of you use different pieces or different parts depending on where you started and how your infrastructure is built.

But there are certain capabilities that are important for the application side of the house. These are things that go above the core infrastructure that Andy talked about, which is security and management and file and print, and our parallel is separate from the business productivity side. These are the things specific to the application environment.

So we start of with increasing agility, all right? Our thing — you know, sales and marketing partners can change their program much faster than the applications that go with them. So our ability to be agile is critical. And here, using Biz Talk and .NET and SharePoint and some of the other technologies, we want to enable service-oriented architecture, or better reuse of the technologies that we have on site already, and then take advantage of the emergence of services that are outside the firewall as well as business process management.

And then, of course, applications rely heavily on data, and our ability to manage that data, access that data, use that data to help drive the business forward is key. So, of course, SQL on the data management side. But then you look at business insight, right, and performance — to Excel to SharePoint to SQL and reporting services — we want to turn BI into a capability of a platform. So instead of buying some application you stick on top and only having it serve some parts of the business, we want to make business insight something the platform delivers to everyone in the company.

Then, of course, there’s the development side. And whether it’s enabling us to develop solutions faster, enabling the developers to build applications that are more easily managed, more secure, connecting IT and development together, or going into new areas like connecting designers and developers, there’s a whole range of work we’re doing on enabling faster solutions through the development capability.

And then last, but not least, connecting the end users back into the applications. If we don’t create a framework that allows the connection between the two, we’ll build applications that don’t end up being used. So these are the areas of focus for the capabilities. You gave us feedback on these along the way as we built these out.

So what I wanted to do now is focus on four areas: One, the question we get often is, “How do I partner with Microsoft? How do I connect into the engines that you’re building?” Two, where are the opportunities that you see? How are things evolving? Three, talk a little bit about enterprise credibility, right, how are we competing with Oracle and IBM at the top end? How do we scale into that part of the environment? And then, four, let’s spend a little bit of time on some of the investment areas.

So let’s start with: “How do I partner with Microsoft?” Right? Many times when I visit with partners, we end up starting with this particular conversation. So, Andy and Chris both talked a little bit about these infrastructure optimization models, or the optimization models. The app. platform’s unique. There are different capabilities. But the framework we use is very similar, right?

If you go with — to your local field office and you’re working with the marketing teams or your partner account managers, they will be executing marketing campaigns against these capabilities, the sales people will be doing profiling against these capabilities as well. And so, for example, we profiled over 12,000 customers so far. And there’s lots of information we learned that allowed us to go after specific opportunities. So 80 percent of the people who are in Basic development today are using older tools. So there’s an opportunity to move them to a more modern tools environment.

Or on the BI side, there’s no database source scorecard. Which means every time they’re building a new scorecard, they’re going out to the database and having somebody do that. That’s a good opportunity for advancement. We see the same thing at all levels. The trick is, our field will do marketing campaigns, do profiling and do work against these particular capability areas. So your opportunity is to make the connection and then find a way to plug into the framework because over the course of the next year, all of our field teams have put together their roadmap of the campaigns they’re gonna run. They’re doing the profiling today, and they’ll be looking for opportunities for partners to help them drive the business forward because you have the expertise against these specific capabilities.

We have the technology, but you have the relationship and the expertise to help drive these, either on your own, because many of you do this already today, or in partnership with us. So here are some examples, right?

Let’s start with a very large SI, one of the global top SIs with Fujitsu. In EMEA they’re running their (Trioli ?) applications offering. What they did is they took the capability, so in business process, data management, they looked at our framework, then they added their own unique IP on top of that, and are offering service offerings that map to the capabilities, but with their own IP involved for both horizontal and vertical, their own practices associated with that.

So when we’re running marketing campaigns, we can work with them together. They can partner with us if we’re doing a business process conference. They’ll have an offering or a capability that will go with it, so it ties in very closely. And in that case, because they’re large and because they have IP, they can do unique work on top of the framework.

Now, we go down and see gold and certified partners, right, in cycle? This is a partner that looked at the opportunity around application lifecycle management. They built a tool that allows them to assess where a customer is in the lifecycle for the development capabilities specifically. And so now what happens, they can partner with the local team, and they can offer those assessments. So when we go out and do profiling and customer says, you know, determines they’re at a certain point, we can say, “Hey, I have a partner that has a tool that will help you figure out sort of where you are in the profiling and how to move forward.” We can hand that off. And it turns out they’ve done some assessments, and for every assessment they’ve done, that’s turned into an opportunity. So that’s a clear one-to-one mapping, and that’s a really good way to connect in.

Triology, another large partner that we work with, gold partner that we’ve worked with for a long time — in this case, there’s a lot of mid-market customers, medium-sized — that we will never tough, right, in terms of being able to have the conversation with them. Profiling is probably a little too heavy for a medium-sized company. So they’re doing lightweight profiling via telesales crawl-down, and using that to drive opportunity. They’re doing that in partnership, right, with the Microsoft side of the house. And in that way, we’re reaching more customers, we’re using a consistent model, and we’re driving opportunities directly, all right?

And then HP. HP, right? We’re going to talk a little bit about SOA later on. They created a unique SOA business practice because we’re starting to dial up our energy there. They’ve used some of our technologies internally, so they have their own internal case study. And then, of course, they can turn around and provide an offering.

So when you think about partnering with Microsoft around the platform, really, and of the capability models, it starts with understanding that our field is executing against these frameworks and then figuring out what’s the unique thing you can do to plug in. Because we always need help in these areas. We can never reach as many customers as you can, that’s what you guys do, right? We don’t have the same voice and credibility and sort of depth of knowledge that you guys have. But we do have a consistent framework that we used last year, that we’ll use this year, that our field will operate on.

So if you can find the ways to connect into that framework, that provides the opportunity for building that bridge. So know your local team, they are willing to listen, they’re there to help out, and they need help along these particular areas. And to the extent that you can line up, that’ll help drive the partnership.

Now, the second area, then, is where are the opportunities in this part of the business? We have a complete platform offering, but we also have the individual components underneath, because very few people buy everything together. So if we look across the individual areas, let’s start with SQL, right? It is the fastest-growing database on the market, it is also part of the fastest-growing BI solution on the market, as reported by Oracle, there’s a good slip. I’m going to make an Oracle point, but that’s not it. As reported by Gartner in their latest study, right? We’ve got more units out there than anyone else, and there’s a ton of opportunity coming forward.

So let’s talk about some of the different opportunities. As SAP moves to its new cycle of offerings, the opportunity to replatform SQL underneath SAP is a huge opportunity. We’re both focused on it, it’s an area where we don’t have enough expertise, and there’s a large opportunity there because those are big offerings that are going on out there.

The move to SQL 2008. There’s a lot of customers on SQL 2000 today, right? The best way to get to 2008 is to move to 2005. Do that in the next six months, and then we’ll work on an in-process upgrade to 2008. So it provides a great path for 2008 to move to 2005 now.

On the BI side, we just had a BI conference with about 3,000 customers. We’re the fastest-growing vendor in the space, it’s a very hot topic, we have no intention of slowing down there. We’re continuing to invest in the CAPMI or the 2008 wave. We’re investing heavily on the data warehousing side. So a lot of opportunity on the SQL side. This is a multi billion-dollar business growing in double digits, and a lot of opportunity to work with us and you in growing your business here.

Then there’s sort of Biz Talk, SOA business process. Biz Talk is growing faster, but on a smaller base. It is the most widely deployed SOA solution out there. When the analysts do their reporting, they look at revenue and not units. So in revenue, we’re not the highest because we don’t charge as much, but in terms of absolute units, we’re growing the fastest, and we have the fastest footprint. It’s a great, low-cost entry to solve a real-world problem.

Taking an old Legacy system and moving the code off of that and being able to connect to it, you know, Biz Talk does a wonderful job of that. Fifty-seven percent of the deals this year are with first-time customers, right? So that’s opportunity. We’re seeing more and more interest in trying it to use it as a way to get in from a platform basis.

I also know that when you get a two-proc deal or a four-proc deal, a large percentage of those scale over time, 16-proc, 32-proc, 64-proc, those deals scale. So it’s a great beachhead into an account. With Biz Talk R2, we’re going to enable RFID, we’re going to build an IDI, so the markets continue to grow in terms of this particular area.

We look at the development platform — all right, Visual Studio has been a standard for a long time, with Orcas. We have all the tools now to build in Office and Vista and Windows Server 2008, so an opportunity to move that part of the business forward. VFTF provides an entirely new opportunity in terms of lifecycle management. And then we continue to move the tools business forward in terms of support for the rich Internet application side. So the work we’re doing with Silverlight and then Expression as a toolset for designers.

And then, of course, SharePoint, connecting into the SharePoint or the front end into the back end. With 85 million SharePoint licenses out there today, building on top of SharePoint is a key opportunity for all of us, and we’re getting great feedback.

So if we look at the opportunities, SQL is growing, right? Dev tools is growing. Biz Talk is growing. But there are new areas: application lifecycle management, RFID, business insider, business intelligence, designer tools, rich Internet applications, SharePoint or composite apps. So the opportunity space continues to grow and this business, therefore, is growing very fast. And for all of you, there’s a great opportunity sort of to grow into new areas and new business — new parts of the business from the platform.

Let’s take a look at how customers are starting to use these technologies to drive their business forward, and how these opportunities materialize in real-world situations. Let’s start with this video from Virgin.

(Video segment.)

STEVE GUGGENHEIMER: So a great example of using a platform to help drive the business forward, right? Great business results, it’s all based on the platform and the technology and it’s connecting the front end, the store, to the back end, and making them much more responsive to customers.

So the next question that we get into that I hear often is how are we winning in the enterprise, how do we grow into the enterprise space? And there’s no sort of quick answer for this question. There’s three areas that we’ve been focused on heavily. First, having products that work — SQL Server, Biz Talk, Visual Studio — and having them scale up, right? Whether it’s the size of the data warehouse, the number of transactions, right, the number of customers supported, we basically use a lot of case studies to help tell this story because, ultimately, customers will listen to other customers.

And we post these case studies on the partner portal. We’re always looking for new ones and working on new ones, you know, Lloyds Bank is one, if you look at the London Stock Exchange, or Mediterranean Shipping Company, or Virgin that we just saw, I’m going to show another one in a few minutes, these are the things that help customers understand how the technology is being used. And we’ll work with you to continue to try and provide more and more case studies that are the references. Because at the end of the day, customers will listen to other customers. And the more that you have your own case studies of implementations you’ve done, the more you’ll be able to help drive your own business forward.

The second is getting the analysts involved in the discussion. There’s a lot of key conversations in the industry: SOA, application servers, other things that the analysts write about. And in two of the most recent reports, one from Gartner that did an application development and a SOA quadrant graph, Microsoft was in the upper-right-hand side on both.

And the same thing for Forrester who did an application server platform study, we’re also in the upper part of the study. So we’re working closely with the analysts on the platform all-up, how it works, and so those studies are available as a second reference, along with the customer case studies.

The third thing we’re doing is working on the non-product side of the equation, working with you, working with our own services organization to make sure on the pre-sales side and the post-sales side we’re having the right conversation, right? So part of the reason we moved to the capability framework was to move up from having the product-by-product conversation, because that’s the feedback you gave us: Move up the conversation, more of a capability discussion. Talk about the platform holistically, how the pieces connect. So we’ve been doing more of that. Making sure after the sale we have the right support offerings in place.

So we continue to drive forward on the enterprise side. And we get more and more requests now for Oracle accounts, specifically, and other shops at looking at our offering. And whether you start at the middle tier or the data tier or up on the front end with SharePoint, we have a lot of conversations we can have and in roads into those larger accounts.

We’re competing more effectively. I think it will be a very competitive year next year. I think Oracle is now going to focus more heavily on SQL. So we have a great opportunity, but we’re going to continue to have to work hard for those offerings, and we’re going to have to continue to compete effectively. I think all three of these investments will continue to pay off.

Now, let’s look at some of the areas where we’re making the investments on the technology side. There are two pieces I wanted to focus on for a little while, one was services. There’s been a lot of conversation around software plus services, around services and the cost. I wanted to focus sort of the services behind the firewall, or service-oriented architecture. That’s a very large conversation going on in the industry today, and it provides a lot of opportunity.

We made a bet as a company about seven years ago on some key standards, XML, WXR, and we integrated all of those capabilities and standards into all of our products. So things like InfoPass and SharePoint and Office and SQL and Biz Talk, they all work really well together to allow you to take better advantage of the capabilities that are in an organization today.

So we talk about services. One of the most fundamental things to do is to take a very standard business problem, a real-world, you know, issue that’s out there, and use services to help make that problem or make that opportunity better. So, in this case, we’re going to go build a little composite application or corporate mash-up. I’ve got an accounting department that uses SAP. Behind my firewall, it’s what they work with.

I have a sales force that uses CRM Live, they really liked Brad’s demo yesterday, so our whole sales force uses CRM Live. For the accounts payable and accounts receivable department, I want to basically go build a composite application that allows me to bring those two worlds together, but the people doing the work don’t have to go live in SAP, they don’t have to go live in CRM Live, we can build a simple composite app that allows them to do that.

So I’m going to invite Joe Klug out to the stage with me. Here he comes. Hello, Joe, where’s your —

JOE KLUG: Nice to see you.

STEVE GUGGENHEIMER: Nice to see you. Joe usually has a demo machine to go with him. So one of the things we would normally do with the demo is have this machine to watch the magic of modern science here.

JOE KLUG: That would be a good demo, without a machine.

STEVE GUGGENHEIMER: Here we go. So that’s how demos are done. You didn’t see that, it was all magic behind the curtain.

Okay, so I’m going to hand it off to Joe, and Joe’s going to sort of take us forward with the demo.

JOE KLUG: Thank you, Steve. Today, I’m going to build a composite application that combines data from CRM Live with SAP. Now, when building a composite application, the first step you have to do is actually go out and find or even build the services you need to talk to your business applications.

One way you can do that is actually use a tool like this one, which was developed by a partner. This tool uses the new line of adapters that will ship with Biz Talk Server R2, and they’re based on Windows Communication Foundation. In this particular case, it’s using our new SAP adapter, and it allows you to go out and search or browse the meta data in SAP.

In this case, I can browse through my BAPIs or my IDAPs to find some functions I want to call, or I can do a direct search on, in this case I searched for my invoicing functions, and I have an invoice create and an invoice retrieve function.

Once I’ve selected the functions I want to execute, the tool would then turn around and generate an entity model and import it directly into SharePoint’s business data catalogue. And after I’ve done that, I can actually go into SharePoint now and start building the composite application. And while I’m building this, Steve is going to explain to you what’s going on.

STEVE GUGGENHEIMER: So what Joe’s basically gonna do right now, he’s gonna go out to CRM Live — the only thing we want our accounts receivable people to see from the customer side is the customer information, what orders they have and what do we need to invoice. They don’t need to see the history of purchases, they don’t need to know where they live, they don’t need to know all the other things that people might keep in the CRM file.

So Joe’s gonna go out, he’s gonna attach that. And you can see here, he can pull from CRM Live, he’s also going to pull from SAP. We have adapters for Oracle, there are adapters for Peoplesoft, JD Edwards, all types of back-end systems. And there are partners who build additional adapters for other types of systems. So we can go and connect into a hot of back ends.

He’s going to pull the customer information from the CRM Live system, and he’s going to pull the invoicing information from SAP. And he’s actually going to take SAP and turn that invoicing information to a service that he can call directly from within a different application without having to go into the SAP user experience. So you all set?

JOE KLUG: Well, I’ve developed most of my composite app already, but one of the things you noticed, I didn’t get any data back from SAP. Well, one of the reasons is is because I want to associate the account ID that’s in CRM Live with the account ID for my invoices in SAP. So the last step I need to do is go and get my related item from CRM Live account list. And when it refreshes, it gives me a bunch of radio buttons.

And so if I select “Adventure Works” here, it’ll go out there and actually from SAP, using the account ID, it will pull back all my open invoices that Adventure Works still has outstanding. Now, I can build the entire composite application here, but that would take just a little bit more time than we’ve been allotted today.

So I want to show you a finished portal. Once your portal developer goes out there and applies maybe a style sheet or a SharePoint template to it, and this is what your accounts receivable employee will see when they log on to do their job in the morning. You can see I’ve got an account list, a sales order list, an invoice list, and — so if I come and maybe select Fabrikam, I’ll get all their open orders from CRM Live, as well as their open invoices.

And I need to submit an invoice to these guys. Maybe I’ll select this first one for the 500 bronze widgets. Over on the right side of the screen, I now have my sales order detail information. Well, from here, normally, what your accounts receivable employee might have to do is actually go into SAP and type in that invoice. What we’ve enabled with this particular application is the ability to just submit directly to SAP. So if I go ahead and click that link, my invoice has not been submitted directly to SAP, and I get invoice number 1104 back.

I can refresh my portal and reselect Fabercomm from the list, and you’ll see that invoice 1104 has now appeared in my SAP invoice list. But now I’ve got this other customer out there called Adventure Works, and they’ve got a really large outstanding order for $250,000. And sometimes they’re historically slow in paying and we really want to push them along a little bit.

So I want to customize their invoice. Normally, we do — we bill at net due 30 days, and this time I’m going to change it to 15 days instead. So I have this other link that will actually open up an Office business application, in this case an invoice template, and it pre-populates all the fields on this template with data from the sales order detail piece in SharePoint. You can see all my bill-to information and description and amount. And here I’ve got a date ticker so I can go down and change my due date to, let’s say, July 26th.

So I’ve got a custom invoice, but I still need to get this information to SAP. Well, with this Office business application, we’ve developed a custom ribbon button which will submit my invoice directly to SAP. And when I click the button, it pulls the data off the form and submits it straight into SAP, giving me invoice number 1105 back now. If I go back to my portal and refresh again you’ll see that the SAP invoice list for Adventure Works, not Fabercomm — I have invoice number 1105 there.

And that’s really how easily you can build a composite application using a lot of different Microsoft technologies.

STEVE GUGGENHEIMER: Excellent. Thanks, Joe. Thank you for that demo. (Applause.) So that’s a demo that doesn’t take that long to build, right? It’s a real composite application. We use Biz Talk to connect to SAP and pull data out. We connected to something over the firewall, in this case CRM Live, we built the application, we used Office and Visual Studio tools for Office to modify the Office template. So when we submit that order or that invoice, it goes into SAP and the invoice, that document, goes directly to the customer via an EDI offering or a fax or mail, however they want it.

So a very simple example of a real-world SOA application that can be built using the technologies that are there today, SharePoint in the middle of it, and a real good example of an Office business application on top of sort of a service-oriented application or service-oriented architecture. That’s the type of things that we’re trying to enable and working on when we think about services. It’s not just the stuff outside of the firewall, it’s the stuff within the firewall.

Now, in support of this, we have Biz Talk R2 coming out, but we’re also going to do a SOA and BP offer for the next six months as a trial with SharePoint and Biz Talk and SQL tools, along with some of the OBA templates that are out there today, as well as our patterns and practices guidance around how to build sort of SOA infrastructure or build out SOA infrastructures, and enterprise services busses and the rest of it. So we’ll do a 10 percent discount on a bundled offer to give people a chance to play with sort of all of the technology for a complete sort of SOA implementation.

So we’re heavily focused on this area. I think it’s a good opportunity for the business. It’s also part of the on-road to software plus services. Before you start doing things over the firewall, there’s a lot of good things that can be done behind the firewall, and there’s a lot of customers that have existing data or existing applications that we can make better utilization of based on the technologies that are out there.

Now, so the second part of this, then, is as we’re building these applications, it’s creating a great connection to the end user. You saw in this case we used SharePoint as the front end for that application. Chris Capossela, yesterday, used Office. There’s a lot of things we can do with Office as a front end. And it’s not just the user experience, but it’s pulling in the data or the documents to create a great user experience.

Now, we could just as easily build a rich Windows application, and Sanjay’s going to show us an example of that in the next session, or a rich Internet application. We saw a lot of Silverlight examples yesterday and, again, Sanjay will show a little bit more later on. So there’s a plethora of user interfaces you can use, all of those are supported by access to the data, pulling that BI in, as well as documents on the portal side, and then a tool set from Visual Studio to Microsoft Expressions to VFTF that allows us to connect that front end to that back end. And that’s a key part of building applications.

So I want to do another example, in this case another video, that takes all the pieces and puts them together. It starts with a traditional application, an HR-type of application with SQL and SharePoint. It then uses services, building block services, to complement the application they built to make it richer. It also uses a very unique rich Internet application-style user experience, in this case it’s going to be a map, and so it pulls together the different capabilities for a real-world solution that BP needed in terms of what they were doing. So let’s take a look at that video.

(Video segment.)

STEVE GUGGENHEIMER: So a great real-world application. (Applause.) Yeah, especially for IDV, the partner that built that, they did a phenomenal job. I know they’re here, so you can chat with them if you find them in the hallway.

But a great example of pulling together lots of different data, right, keeping track of people on the platform so we don’t lose any people, that’s pretty important application for any company, using services to provide virtual earth the front end for that, but also they can track currents so they can see what’s going on in the water. They can track storms coming in. They can pull in other views onto the maps over time, they have a very rich user experience for the application that’s very usable. And then it also connects into a traditional application supported by services.

So when you look at the platform all-up, we have a very rich and full platform, right? One of the things about building and running and managing applications is there’s a lot to it. The good news is we have lots of pieces of the puzzle that work very well together. In addition, we’re extending that for services.

Steve talked yesterday about service enablers, right, making things in the platform like IAS and Silverlight that make the platform better for services. There’s also building block services, things like Virtual Earth that you can use as a building block when you’re developing your own application, things that developers would use to extend it. Things like relay, things from Biz Talk that we would use to extend an application that a development would use.

Attach services. Andy talked about security for Forefront, things that take something you have on-premise and make that better, right, services that attach to an existing offering, or completely finished services like CRM Live that Brad showed yesterday. So we have a complete platform, it’s already capable of doing services from an infrastructure standpoint with SOA and Office Business Applications, and it’s being extended for the software plus services world in a very complementary fashion.

So, all up, there’s a lot of great opportunity next year. This is a high-growing business, with a lot of opportunity for all of you and for us collectively, with new opportunities as well as existing ones that are growing.

My key follow-ups or the things to close on, leverage the application platform optimization model. It’s the best way to connect with the subsidiaries in terms of marketing, and there’s a bunch of materials you guys can use. I know you guys do this in many cases much better than we do, and you have your own models, but at least you know what we’re going to deliver and how it’s going to be framed so that you at least know what’s coming, and that’s always one of the key parts.

Two is getting ready to launch. Andy and Kevin and everybody else talked about that. Don’t forget the Biz Talk R2 launch in September and October, Kevin and I are going to go out and do that and we’ll start kicking off noise around RFID and providing air cover for that new segment of the market.

And then start thinking about software plus services, but start with the services that we can do today, right? The things that are available for better utilizing products that are, you know, platforms and data and applications that are sitting in companies today that they want to better use. And use service-oriented architecture to do that, and we have the technologies for that, and then extend it with services.

So with that, I look forward to another great year with you. I thank you for your time looking at the application platform, and have a good rest of the show. Thank you. (Applause.)