CRN Interview: Microsoft's Jeff Raikes

Jeff Raikes, president of Microsoft Business Division, met with CRN Editor Heather Clancy and Industry Editor Barbara Darrow a few weeks in advance of Thursday's official Office 2007/Vista launch.

Raikes, a 25-year company veteran, spearheads the Office and business applicaitions effort at Microsoft.

An edited transcript of the interview follows.

CRN: This is a big launch. Can you hit a few hot spots about what's most important for partners?

Raikes: Clearly one of the most important [aspects] of 2007 Office System is the bet we're making on server and services support for information work--particularly Office SharePoint Server. I like to think [that] the Office SharePoint Server product introduction is equally important to the introduction of the Office suite of client applications in the early 1990s.

We are bringing together a set of core capabilities. That focus creates a set of opportunities that is great for our customers the flow of information, enterprise content management, search and finding information and frankly at the same time it opens up new challenges, challenges that our partners can work on and solve.

Just to give you overall magnitude, with 2003 Office System, at time of launch we had about 75 partners online. With the 2007 Office System we have more than 700 partners online with more than 250 or so solutions already in the works and I think that order of magnitude jump is indicative the order of magnitude increase in opportunity for partners.

When you look across broad spectrum of partner opportunities, whether that includes that's portals or enterprise content management or smart client solutions or business intelligence, you add up all the service opportunity associated, we think that's $150 billion on an annual basis of services opportunities, Unified communications-- I should say software and services, to be clear.

What we're doing with partners like Workshare, this company made a big bet on Office Server Systems and its workflow capabilities, similarly we've done a lot of prep of partners.

Checking the number I think we have more than 4,500 trained in the systems integration channel. There's both ISVs, and system integration opportunities.

When we met 16 months ago at our partner conference, I talked about our focus on the Information Worker certification, it was somewhat new approach. We went from 1000 to 2000 partners with the IW competency and we expect that to double in the next year. We're growing that at more than a linear rate

CRN: You are bolstering the server side of the business. How many servers are we talking about now vs. Office 2003?

Raikes: In some respects you can say there's more and less. Let me explain that. The more part is we now have a Forms server to support InfoPath, we have things that we've added on in that way. But we think most customers will make bet on Office SharePoint Server which brings together SharePoint Portal server, content management, Excel Services, the InfoPath or forms services, so it becomes a more complete solution.

And that's why I draw the analogy with the suite of applications. In the early 90s people said: 'People don't want to buy a suite, they'd want best of breed, they'll buy 1-2-3 and WordPerfect.' But we took the bet that actually people would want to pull those together into a comprehensive suite. We think the same is true on the server side. SharePoint has grown dramatically.

We're now up to 75 million client licenses of SharePoint out. But even more important if you talk to Gartner, you'll see how deployment has grown and actual usage of SharePoint Server has grown.

In some respects it's more servers, but in some respects I believe, people will gravitate to focus on Office SharePoint server as opposed to the individual server products.

CRN: Microsoft's own workflow has been fragmented till now. With this release you've coalesced around one workflow.

Raikes: Yes. It's based on the BizTalk technology [and is going into] Office SharePoint server and everywhere.

CRN: Where do you see the most upside in terms of vertical industries, do you see pockets where people will be earlier adopters?

Raikes: There will of course be lots of partners who will have an industry focus. Let me give you more the horizontal coverage. About 40 percent of scenarios partners focusing on involve collaboration and communications [that probably] reflects growth in Exchange and SharePoint. About 30 percent in areas of enterprise content management and e-forms. Content management server is now integrated in with SharePoint Server. About 20 percent in portals and business intelligence. Those are the big and multiple scenarios within each of those.

Server capabilities offered in services form. We're encouraging partners.to look at Office Live. Announced a year ago in the market now as beta since February. We'll have the complete launchalready more than 130,000 small businesses signed on to Office Live. That includes hosted web sites, hosted email and hosted SharePoint for collaboration and document sharing.

We have a whole partner strategy patterned around that, partners who want to build service-based solutions around that. Marja Koopman and Luis Salazar are well versed in that.

Some partners will offer in the retail context and OEM context. [There will be an] opportunity to build SharePoint solutions atop a hosted SharePoint server. We're going to announce that they will, in effect selling Office Live as part of what they sell and support.

And of course we have Dynamics CRM Live already announced, we're doing a lot in that area.

An opportunity to subscribe to the service right from the install. The OEM, the system builder channel is very important in reaching small businesses.

CRN: It seems that more and more Dynamics CRM stuff is being developed with Office in mind. Is that becoming more an Office product—will you put Dynamics CRM into an Office SKU?

Raikes: For small businesses we do that today in the context of Small Business Manager but it's dangerous to connect it too much. We still have go-to-market for CRM as part of the Dynamics product line although part of its appeal in the user experience is integrated into Office, particularly Outlook. But it helps underscore our commitment to Office and SharePoint for access to business applications. I want the CRM team to think of SharePoint as part of their platform. The best way to develop the platform tech is to think of one or more apps to be built on it.

We want SharePoint to be the centerpiece by which people access business information and business process. We think there'll be a whole set of applications will be built atop that. We announced Office Business Applications Services, a way to make it easier to build composite apps atop SharePoint and Office as a platform. You can think of CRM in some respects as an example of composite applications. These applications tend to surround core business process systems like ERP so I want the R&D group to do the product design and development that keeps that in mind. That's an R&D move more than a go to market move.

CRN: Getting back to SharePoint, some of the core services ended up in Windows SharePoint Services and I'm wondering if more of what's now in SharePoint Server will end up in the operating system over time?

Raikes: It's certainly possible, although I can't think of anything today that's obvious, at least not at the component level. There may be some technologies. Forms Services--do I think that will be part of Windows SharePoint Services some day? Probably not, but who knows? It's possible. We tend to think more of things like information rights management, pushing that down. That started more in the premium area of the suite and pushed that down.

CRN: Have the delays to Vista affected customer adoption plans?

Raikes: My experience would suggest it's not so much a customer issue as a partner issue. It creates a challenge for OEMs trying to plan their releases of machines. For customers for the most part, it' s not like: 'Oh we've been waiting to do our Vista upgrades.' It can happen but it's not a predominant issue. They will plan their deployment Vista and/or Office 2007 deployment to meet their goals.

[But] partners identify an opportunity and get excited about it. The Windows team for example has looked at feedback from the TAP customers and done analysis on savings for Windows Vista and estimate $35 per PC per year in terms of IT labor savings. That's about $18 for management, about $13 for support and about $4 for improved security and virus protection. So a customer who latches onto that value proposition, might want to get moving. They'd probably put a higher priority on the availability and deployment dates. Customers wanting to address issues on information security might put higher priority on deployment on Office 2007 and Exchange [is] big in terms of improvements, managing messaging, growth of Frontbridge services to help in that. Number of accounts switching off of Notes, that's a huge thing. We've seen 500 in the last 12 months. IBM's confusion about Workplace, they're now backing away from that and that will further fuel customer concern. All of that leads to pressure from customers wanting to get off Notes onto Exchange 2007 and SharePoint but fortunately most of them are part of the technology adoption program [TAP].

CRN: To recap, what's the big opportunity for partners and for those pushing the Microsoft TCO message?

Raikes: If you think of it as the Office System, the complete product line, it's very extensive I think it's 20 products being launched, maybe 26, but to your point in particular, our focus has been focused on partner opportunities around Office SharePoint Server.

If you look back the question about CRM, we want to further success of SharePoint as the platform for how people access business information, business process, including how to get to business intelligence, to manage workflow or manage content. Having partners geared up for that opportunity is extremely important. That would be the number one thing.

You'll also see new areas of investment we're gearing up for partners. HP and I were on stage in San Francisco at the Unified Communications event what we're doing with Voice over IP, where people will move away from buying PBXs and think of this as being software to go on their servers, in each of the new big businesses. There's also a set of partner opportunities that are extremely important.

We've announced PeformancePoint, that's our set of BI applications, we're already in the market with Business Scorecard Manager, you'll see us as we move up to that launch next summer, a large number of partner activities associated with BI applications. But at this point in time, because of broad usage of Office SharePoint, we're focusing on how that ties into client applications, how that will further opportunities in services world with Office Live. We'll do updates on unified communications, updates on business intelligence [opportunitiesthroughout the year.]

CRN: You're not selling the operating system or the apps, you're selling the solutions, you're selling the solution to business problems?

Raikes: Yes. The great news for the partner channel, is the best way to solve those problems is often in conjunction with significant partner opportunities. SharePoint for enterprise content management is extremely important and many will want to enhance that for secure content compliance, meet Workshare as a way to do that. Broader solutions but the reason we're emphasizing partner opportunity with you is this by far is most significant. Just take Vista in isolation—what you can do with Office is a bigger overall partner opportunity because of the breadth and depth of solutions. Vista will be important because a lot of people doing core infrastructure work, but if you look at how people do information work, that's Office, and a range of solutions in itself, Excel Services as well as in the additional solutions built atop Office. It's more of a platform today. If you go by partner metrics, we're an order of a magnitude more of a platform today than we were three years ago. The evidence? More partners building on the Office System platform.

CRN: Have you looked at Google's Docs and Spreadsheets?

Raikes: I've looked at a lot of the other stuff out there.

For a significant majority of the people, the functionality isn't there for what they want to do. It's very trite for somebody to say that nobody uses all the functions there, sure but 100 percent of the people use 100 percent of the functionality of Office. Your functions might be slightly different than Heather's which might be slightly different from mine. While the concepts are interesting, I actually think I think people get a little bit confused over what's actually important. The idea that you can run a word processor over the internet—well how attractive really is that? On the other hand, the ability to store content in the cloud, use that as a way to share content and do collaboration. The best way to do that is to have scenarios that extend and enhance information worker scenarios which is the reason we took the approach we did with Office Live. The initial focus there is small business, but we intend it to get much broader. The people who like to say software is dead forget the power of having software at your fingertips. The real solution is to optimize the use of the horsepower at your fingertips and the horsepower in the cloud.