It was a tough introduction for the new Microsoft executive, explaining to some 12,000 channel partners the details of the vendor's hosted services plans. And yet Stephen Elop, who took over as president of the Microsoft Business Division six months ago, didn't sugarcoat the message.
"This really is a transformation," Elop said in a keynote speech at Microsoft's Worldwide Partner Conference last week in Houston. "This is hard."
Some solution providers have been skeptical of what Microsoft calls its Software Plus Services initiative, worried that the company's Online portfolio of hosted software—including SharePoint and Exchange—could hurt business and give Microsoft more direct ownership of customer relationships.
Elop acknowledged the debate over software as a service has created "tension" in the Microsoft market. But he also said there is no ignoring customer demands for more choices for deploying Microsoft applications and reducing complexity. "Every one of us has to embrace the fact that a lot has changed and will continue to change," he said. "As a partner of Microsoft, your business must change as well. We need you to be successful with online services in order for us to be successful."
Elop joined Microsoft in January, taking over from the retiring Jeff Raikes. He has held executive positions with Macromedia Inc., Adobe Systems Inc. and, briefly, before accepting the Microsoft post, was chief operating officer for network equipment maker Juniper Networks.
Elop may not have completely convinced channel partners that Microsoft's software-as-a-service approach is the best—applause after his pitch was tepid—but his straight talk was a marked departure from the chipper marketing-speak that infects some Microsoft keynote speeches. At one point he admitted that before joining Microsoft he thought the vendor's Software Plus Services efforts "sounded a bit like a rationalization, even a bit cheesy."
The executive's honesty extended to his own self-description as he introduced himself to channel partners. "I have led a remarkably stable, predictable, well-managed, carefully controlled life," he said. He has one wife, five children, and through his life has had "only three hair styles—and this will be my last."
But Elop said his well-ordered life changed when he received a call from Microsoft CEO Steve Ballmer inviting him to visit the company's Redmond, Wash., headquarters to discuss the Business Division post. In recounting the call, he did a fair imitation of Ballmer's rapid-fire, hyper-enthusiastic style. The call was followed by a three-hour interview with Bill Gates that Elop admitted was "intimidating," but notable for Gates' candid assessment of the company and what it had done right and could have done better.
Elop said his view of Microsoft had been influenced by his time in Silicon Valley "where you're pretty well trained from birth" to believe that Microsoft doesn't innovate. But he said his time spent at the company has convinced him otherwise, even in such unfamiliar territory as SaaS. "As it has in the past, Microsoft will lead in these disruptive times," he said.
