Jeff Raikes, group vice president for the Information Worker Business at Microsoft, is perhaps better known as the exec behind the Office juggernaut. After his keynote at Microsoft's Worldwide Partner Conference on Monday, Raikes spoke with CRN Editor Heather Clancy and Industry Editor Barbara Darrow about the company's Information Worker strategy and its reliance on partners.
CRN: In your keynote, you mentioned your commitment to get all partners to sign up for at least one Information Worker competency. What's your responsibility on that, and where are you with that effort?
RAIKES: First, it's very important in these big forums to have clarity of message. I'm still enough of a salesperson, I have to do the ask. The one thing I wanted was [partners] to be excited enough to make a commitment to go through at least one of the subareas of the IW competency. Where are we now? Frankly, the whole Microsoft partner program is just getting going. But I'm pleased that our team is one of the first to begin to deliver the IW competency stuff as part of the partner program. I don't know all the details. At this level, it's a new era. Come back to us in six months, when the program is rolled out. For any partner who makes that commitment, I want our team to circle back around to them and ask if they're satisfied from the go-to-market standpoint.
The exciting thing for me about what Allison [Watson, vice president of Microsoft's Worldwide Partner group] is doing is that it gives us a lot more clarity about who our go-to partners are. Sure I know Randy Schilling [president] of Quilogy and so forth, but now the opportunity is to know--not only for our customers but also our business groups--our go-to partners. There's an Information Worker Partner Advisory Council now that meets quarterly. I haven't met with them yet. ... Sometimes they think I don't want to be invited to those things, so they invite a senior manager. But I want to talk to those partners. The partners are a better conduit for information about the marketplace in the sense that you can get a wide swath of customer feedback clearly filtered in a shorter period of time. The amount I'll learn from an hour conversation with Randy Shilling would probably take 20 hours of conversations with customers, which are important as well.
What are the partners' obstacles? At the Q&A session for the partners after the keynote, a partner from Norway wanted to know what we're doing about [IBM/Lotus] Notes and Notes migration and prescriptive architectures. IBM's move to, in effect, force Notes customers over to WebSphere has generated so much customer interest in what we're doing.
CRN: I don't think IBM would say it's doing that.
RAIKES: You're right. They wouldn't say that. We'll agree on that. But that's how the customer feels. I'm going to New York City tomorrow, and--I won't disclose the customer--but it's a Big Four firm that's thinking, 'We have all this Notes stuff. If we have to migrate it, we might as well be looking at migration to Microsoft.'
It's the battle of the titans relative to Information Worker productivity, not just migration. The IBM strategy is--I'm trying to think how they'd say this--but it's kind of anti-partner. They won't say that, but it's all about moving people to IBM middleware and IBM servers for IBM Global Services. We shouldn't kid ourselves about what the grand aspiration is of the IBM Corporation. The opportunity here is to juxtapose the Microsoft strategy relative to information work as well as juxtapose the partner set. I'm positioning that in our favor, but I believe it's in our favor.
The IBM approach is, let's treat as many people as we can as a structured task workers, give them inadequate tools and tell them that's the way it should be. The Microsoft approach is, we want people to have rich tools to do the kinds of things I showed in the presentation. It's better for the customer and better for the user. IBM's approach is, let's move everyone to WebSphere because that's where we generate a lot of IBM Global Services revenue. The Microsoft approach: We're investing in Information Worker Competency, and we're creating partner opportunities, including the opportunity to move customers from Notes to Microsoft's SharePoint collaboration strategy
CRN: Exchange isn't in your group, but some would say Microsoft has confused the market with changes in strategy around collaboration and the foundation technologies for collaboration. Even Microsoft partners on development and VAR sides were flummoxed with changes in strategy on Exchange/SharePoint as the foundation.
RAIKES: It's a fair question. At the end of the day, the proof is in the marketplace. The question will be, 'Are we as successful as we believe we are in getting partners on board with the Exchange and SharePoint strategy?' Some of that past criticism is fair, but we're always trying to move things forward. It's an interesting cycle. There was a time where we may have wished we'd done more of what Notes did, except it turned out that most of the world voted on high-performance electronic messaging and all the proprietary protocols moved on to Web protocols. I wish we'd been smarter 10 years ago, but if we had been we'd have invested in things more similar to what has now been obviated by market trends. It turns out there was a silver lining in the cloud, which is that the Web wins. Therefore, SharePoint is built on Web protocols, and that decision has gone well.
CRN: The other thing I hear about Exchange is that it's now a non-starter and messaging is becoming a commodity--that Oracle is low-balling pricing and Microsoft will throw in the towel and offer messaging for free. True?
RAIKES: Not true. Exchange is still very important.
CRN: How much of the Office installed base is on the 2003 version?
RAIKES: I can't talk about specific numbers--that's a general rule with Sarbanes-Oxley regulations--but I can give you comparisons. [For example, let's] look at the uptake of Office 2003 in the retail channel, which is important for both consumers and small businesses, and in the OEM channel, which we sometimes call COEM, or the commercial OEMs, the system builders. If you look at the combo of big OEMs as well as system builders, and if you look at what's at retail, we're at twice what we were with XP, about nine months into it. That's very good news. What's harder to pin down is the actual deployment within large organizations--software bought as part of a bigger deployment decision within the organization
The other good news in volume licenses is that deployments look pretty strong. The Unisys example is a good one. They see the opportunity to move desktops. Probably half or so of the enterprise channel will choose annuity, and half won't. There's always an annuity and a transactional business. I think the transactional customers are pretty excited about Office 2003, meaning customers said, 'I won't do an [Enterprise Agreement], but I like Office 2003 and will go ahead with a Select license transaction on that.' I can't say how much of that is driven by the Y2K boom five years ago. I think it's a refresh, maybe an echo of that. I would have thought that would have been last year, but we didn't see much of [a refresh] then. I don't have precise data, but I think there are a lot of PCs that are long in the tooth. People are going to upgrade them with XP Pro and Office 2003. I'm not sure how much of it is just great enthusiasm for 2003. I think it's some of that and some of the Y2K echo.
CRN: Do you have zero touch install for Office?
RAIKES: Where customers have SMS in place, we can have very easy deployment. Check back in six to eight weeks and ask again. We're doing a lot of deep dives into customer deployment into Office. I think we'll find we could do some subsegmentation of deployment behavior on the basis of customer type. Some won't upgrade anything until they upgrade PCs. Some want to do a core software sweep--not just Office but Windows--that gets deployed to everybody. And some are more heterogeneous
CRN: What about operating system support for Office 12? Most people seem to think it was the Longhorn release, and now it appears that's not the case. Was that just a perception?
RAIKES: That [Office 12] required Longhorn? I don't know how to answer this. We never did say if Longhorn was required or not.
CRN: Well, it appears that Office 12 will be out before Longhorn.
RAIKES: Well, at the last Q&A, I said we're pretty good at delivering on schedule. [The Office group is] one of the best software development units, with 24- to 36-month life cycles. In every positive sense of the word, [Steve] Sinofsky [senior vice president of Microsoft's Information Worker Product Group] runs a machine. He really does. I have so much admiration for the way in which he pulls the team together. Picks a date and a focus, and he brings the team together to envision what the future and the themes should be. I know they started on the vision work in January 2003, and we released the previous version of Office 2003 in October. Basically, by the time people are coming off their Service Pack 1 work, he gears them up for the next. They are very predictable in that 24- to 36-month range, and that's something I think our customers appreciate.
CRN: How well is the small-business version of Office doing vs. the other SKUs?
RAIKES: It is doing well. Historically, the small-business edition was treated as a 'de-featured' version for the OEM market. You could buy it with your Dell computer. Our aspiration was to have more of [a dedicated] small-business edition. We achieved that. The key thing we did was include PowerPoint, Publisher and Business Contact Manager. What I was looking at is how many bought the base version for OEMs, which at one time was called Small Business Edition. That's a little confusing. Let me do revisionist history and call that the base edition and say we really didn't have [a small-business edition] before. Looking at the new model, how many will buy this higher-value, higher-priced Small Business Edition and/or the Pro Edition? What happened is that more of our customers are buying the combination of Small Business Edition and Pro, compared with the basic version. That was my goal, to offer more value in the hope that they'd want to pay a little more money.
CRN: We hear all the time that Small Business Server is doing well, but not so much about the small-business version of Office.
RAIKES: Yes, I think the new version [of Small Business Server] has really kicked up. Frankly, we ought to do more thinking about the relationship between Small Business Server and Office Small Business Edition, and that's one thing [Microsoft vice president of small business] Steven Guggenheimer has been pushing on. He's a big believer in that. It's nice to have someone with that passion thinking about cross-product groups.
CRN: There's been news about new search technologies going into Office. Is Microsoft focusing on one core search engine for all its offerings going forward?
RAIKES: Of course we work on search. In fact, the SharePoint Portal technologies are part of the overall search-code base in the company. The interesting thing is that users want to search across all their domains--not just Outlook and Word documents, but in SharePoint, intranet and Internet. So that shared search is what's interesting. The Office team collaborates with other colleagues in our company. There's no new news there.
CRN: Your team is delivering on partner competencies. Some things you showed this morning depend on developments from other Microsoft product groups. How dependent are you on things not delivered on time by other groups?
RAIKES: It isn't too much of an obstacle, in this context. After all, partners really only want to build on what's available. They're interested in what's coming, and we share that. But the solutions out there are built on Windows SharePoint Services in conjunction with Windows Server 2003, which is available, and Office, which also is available. One thing they're on the edge with is early work with Information Bridge Framework. That's really more a component technology in solutions, and now we have general availability. [Editor's Note: Microsoft announced delivery of the Information Bridge Framework at its partner conference.] It would be to the disadvantage of our partners if we did competency work based on things coming down the road. Our work is based on what's available.
CRN: In other Microsoft keynotes, there were messages calling for partners to concentrate on one product and one technology, whereas what you're doing requires a lot of cross-pollination of products. How do you balance those messages?
RAIKES: This is why I don't think of myself as the Office guy but as the Information Worker guy. It was a conscious choice to go more to where the audience was vs. what my specific product development responsibilities were. Paul Flessner [senior vice president of Microsoft's Server Platform Division] will say his team and my team have very close relationship when it comes to business intelligence because of SQL Server and what they're doing with Reporting Services is very important in business intelligence. But with any business intelligence out there, the No. 1 customer request they get is to have Office--specifically Excel--as the front end. So I like to think of the end-to-end scenarios and how they come together, even if we don't deliver all the components. It's a little bit of my own personal interest. One of the reasons [Microsoft Chairman] Bill [Gates] wanted me to do version one of the Tablet PC is that you have to think of the end-to-end scenario, the so-called platform side of things as well as the application side of things. That's also true in the Information Worker business. I have to think of what we'll draw upon, whether it's from Eric [Rudder, senior vice president of Servers and Tools], what we'll draw upon from our own development and what we'll draw upon from our partners. Or take the work with Doug [Burgum, senior vice president of Microsoft Business Solutions]. With MBS, I want to make sure Office is really an extension of the platform for business application systems.
I'll use Randy [Schilling] as an example again. For Quilogy's service-engagement system, they bring information about the client out of their ERP system, CRM system and SharePoint system. When you put things in SharePoint, you can surround them with metadata. You can take the ad hoc stuff and surround it with metadata--structured. So Quilogy can be looking at ERP and CRM information, status reports, escalation issues, e-mail messages, Word documents, etc. That's a big theme, and I think our partners will be right in the middle of that during the next five years.
CRN: From an investment perspective, solution providers can go two ways: Get five or six certifications in different areas, or partner with other solution providers that are experts in other areas. How do you help partners get knowledge and have the ability to express it?
RAIKES: It's a tricky issue. I'm not sure we have it totally right yet, but I'm not sure anybody does. The first thing you have to do is really think about the customer. What problems are you solving for the customer? That can sometimes be hard for Microsoft. Paul [Flessner] wants to make sure people do Windows Server. I want to make sure people do Office. You learn from your partners. Randy [Shilling of Quilogy] has built a multimillion-dollar business doing Information Worker solutions, whereas three years ago he didn't have that at all. He'll be the first to tell you that what he is doing has gone from focusing on the IT infrastructure guys to focusing on the business decision guys. Look at his [marketing collateral], which is all about manufacturing solutions for Jack Daniels, Apollo America, etc. He's talking about business problems they solved. At first you might think it's an e-commerce case study and then, oh, it's a business solutions case study and then, oh, it's a mobile case study. I know there might be some folks at Microsoft who might be offended to see that tiny little [Microsoft] logo on there.
CRN: So the message is, on one hand, to concentrate and specialize, such as on manufacturing solutions, and on the other hand to get many competencies?
RAIKES: Well, the No. 1 focus we have right now is this connected productivity go-to-market--in particular, team collaboration. That's a very broad area, if someone really gets the expertise in Windows SharePoint Services, document workspaces and meeting sites, or I should say team sites. As Randy [Shilling] would point out, that foundation that opens [Quilogy] up for lots of things. He may tune it for a manufacturing customer vs. a health-care customer. In health care, such solutions would improve something related to HIPAA. The real answer is to take the lead from the partners. We have to enable them to do collaboration solutions, portals and enterprise project managers. Partners then take those capabilities and determine how to add their additional technical expertise in a given industry as well as sales and marketing expertise, because they will know how to talk to customers. That's why I really like the approach of being connected with the partners.
There are probably three levels. The lowest level--and the one that should be most insulated from the customer--is Windows Server System, Microsoft Office System, Windows SharePoint Portal Server, SQL Server, etc. At the next level, you have those products assembled into common types of solutions--such as collaboration, with connected productivity, portal, enterprise project management and mobile productivity. At the third level, which should get exposed to the customer, the partner understands the customer pain point and opportunity to add value. Take that middle tier and then product-specific capabilities at the lower tier and turn that into solutions for the customer. Randy [Shilling] had a good example with a military customer. [Quilogy] put in place a way for an organization to be able to automate the process of getting time off. What that meant was SQL Server going into about 70 bases around the world. That foundation led to another thing related to payroll, which led to another thing. By doing a certain type of workflow solution--a connected productivity solution--that put the technology in at the lower tier. Because Randy--or the partner--is close to [customer] issues, they see the opportunity.
CRN: So you're talking about partners being more front-and-center with the customer and, perhaps, sublimating your own brand? Can you sell that to all of the midlevel Microsoft people?
RAIKES: In some respects. Our brand is powerful with customers. It gives them the confidence that what the partner is offering is going to be a solid foundation and is something they can count on for the future. I'm absolutely certain that one of the first things Randy [Shilling] tells people is that he's a Microsoft Certified Partner. Last night, he was talking about how Quilogy has 45 people who passed the SharePoint test, and the next highest partner had half. He was using that fact to promote the Quilogy learning platform. He has taken SharePoint as the foundation for a learning system that they use internally to train their folks, and now he's talking to customers about using it for their people.
CRN: You and [Microsoft CEO] Steve Ballmer are good about getting up there and promoting partners, but it's hard to envision midlevel Microsoft people doing that. That's a big cultural change.
RAIKES: First of all, I'm really confident that the Information Worker marketing group gets it. [Microsoft's] Rich Glew is a great person to be working with. I gave him some guidance. They told me the standard thing, 'We can have billions of dollars in deployment services.' And I said, 'Rich, I want to talk about what this partner did and that partner did.' And Rich did all the work. It's a transition that's under way, and some of us are maybe a little bit farther along.