Microsoft Exec: Services Success Hinges On Change

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Stephen Elop, president of the Microsoft Business Division, runs a $20 billion operation related to information workers and business applications, and has been on the forefront of Microsoft's efforts to articulate the changes partners will need to make to follow Microsoft into cloud services.

Elop sat down with ChannelWeb at Microsoft's Professional Developer Conference in Los Angeles to discuss the of future Microsoft's Software Plus Services strategy, how the current economic situation is shaping its conversations with channel partners, and how end customers will benefit from the coming wave of Microsoft services.

How do you see the economic situation impacting Microsoft partners in the coming year?

ELOP: No one can predict what's going to happen in the economy. But in our last quarterly results, what we signaled for the year ahead is that there's ambiguity, and it's hard to predict things like that. What that means is some degree of uncertainty for all our partners and the channel at large.

What we're deliberately trying to do, therefore, is to communicate with channel partners -- and the field teams working with them -- that this is a time when you're out there trying to help the ultimate customers, save money, derive greater value from what they're doing, and focus on the areas of greatest return. Hopefully, that will help our customers deal with their business challenges in the short term.

And also this is time when you build share and great relationships with customers that will last for a long time. Customers are wondering, should I be dealing with this company or that company in the ecosystem around Microsoft.

Microsoft is going to make it through whatever financial challenges come to pass, so we're seeing customers and partners having people trust them because they know they're going to be around.

In the year ahead, we're heavily focused -- and already messaging -- about value, about helping customers save money, and about helping them deploy software they may have already purchased, but may not know how to gain value from.

During the opening keynote at PDC, David Thompson (corporate vice president of Microsoft Online) said that in the future, all of Microsoft's enterprise applications will be available as services. Should partners be surprised by that statement?

ELOP:No, it's really just a continuation of what we're doing. For example, if you think about the major applications in the Business Division, like Exchange, SharePoint, Office Communications Server, those are all either in the cloud or coming into the cloud shortly.

Everything will end up being in the cloud. It's hard for us to imagine any of our applications that don't have a strong client, server and cloud story to tell across the PC, the mobile phone, and the browser. I'm responsible for Word, Powerpoint, and a whole ton of other applications, and that mandate applies to these, too. Even for applications that people wondered if they would ever see in the cloud, that's what we're doing. We're definitely changing it up in a big way.

Everyone gets excited because one of our competitors adds bolding or underlining to a cloud based application, but we're running entire corporate email systems, collaboration systems, communications systems, at scale for large organizations in the cloud -- that's already happening.

What Microsoft technologies are going to have the biggest impact on partners in 2009?

ELOP: Companies are realizing the need to focus their limited IT resources on issues on which their businesses are based. And they're looking to Microsoft partners, or Microsoft, to help in offloading certain tasks, to free them up for more strategic tasks. So, in Software Plus Services, we can take SharePoint and Exchange and deliver them for you as a service, which is a powerful message to companies of all sizes.

Some partners have wondered: If Microsoft is running Exchange in the cloud, for example, is there still a role for us? At WPC, I was there to deliver a very powerful message: Microsoft has been deliberately dependent on the partner channel. It's a competitive asset, and it's how we go to market.

So, regardless of whether it's software in the cloud, ultimately run by us, or however it's done, we need our partner organizations involved.

Economical models may change: We may have to collect money one way, and pay partners another way, and do different things. But nonetheless, partners are a critical part of that whole strategy.

We hear people telling us: We want software in the cloud, we want to take advantage of someone else's even larger economies of scale, and we want to take advantage of the fact that you built a data center right next to a hydroelectric dam to drive the price of power down. Microsoft is one of only a handful of companies that has the scale to do that type of thing. So we're doing it, and we're trying to bring that benefit to our customers through partners.

NEXT: How will channel partners need to adjust?

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