Tech Update: In the keynote that Bill Gates gave at Comdex, it seemed as though he set a goal for Microsoft to improve the productivity of its customers. He said, "In the decade ahead, I can predict that we'll provide over twice the productivity improvements we did in the '90s." Can we improve on productivity? Is there really that much room left?
Raikes: The answer is, absolutely yes. But, we'd all admit that it's somewhat difficult to quantify. For example, if you step back to 1990, very few people were using e-mail. Very few people were able to communicate broadly across their organization or to easily collaborate with people outside of their organization. The 1990s brought a significant increase in productivity from being able to connect with people using e-mail. Was it two times or three times, or an order of magnitude? That's difficult to tell. It's the same with the Internet and intranets. Being able to have access to the vast amount of information resources absolutely made a difference in productivity. But it is somewhat difficult to quantify. In some cases, you'll see it's an improvement of 50 percent, and some cases it may be a factor of five.
Tech Update: Fifty percent is a lot, let alone a factor of five. Where do you think you'll be able to mine such dramatic productivity gains?
Raikes: In this decade, I think we'll see improvement across several core areas. One is personal productivity. A lot of times, quantifying it will be tough. I mean, what's the ROI on your phone? It's very difficult to put any number on that. Yet, I don't think you'd go to work for an organization that didn't provide you with a telephone. So, that's why I say that one of the things that a good CEO has to do in conjunction with the CIO is to make a commitment to maintain the health of the information utility. There will be significant improvements in user productivity. Some [will be] as simple as the way in which Outlook will handle the volume of e-mail that users are receiving. That's a very, very high priority. If Outlook 11 does a great job of that, it may be a 50 percent improvement in the productivity of handling e-mail, or a factor of five, depending on the individual. Take, for example, the collaborative environment. There's been a tremendous change in work culture in the last 10 years. People are working more remotely. You have virtual teams that span an organization, geographic boundaries, and time zones. Frequently, you hear people say that they don't have the tools that help them to connect and collaborate the way they need to. Innovations like Sharepoint Team Services, which is at the heart of providing a foundation for people to easily collaborate and use that as a basis for connecting Office to the collaborative process, can make huge difference.
Tech Update: For years now, companies have been saying that their groupware will be the one to break the next productivity barrier. On paper it sounds good. But, in practice, the returns sometimes don't pan out. Too often, the tools are either too exotic and specific to tasks we have no desire to automate, or they require too much massage by a developer to unlock their potential. And, they're usually expensive.
Raikes: Take meetings. Today, people spend a lot of time in meetings, yet there's not much in the way of software to help improve the productivity of those meetings; preparing for them, hosting them, doing the follow up and action items. That will be a key part of what we do in this decade. Take the convergence of audio, video and the network, which will provide the foundation for significantly changing how people can use the communications channels to collaborate.
You and I go into offices frequently, and there, on the conference table, we see a Polycom phone conferencing device. Most people do audio conferencing and not video teleconferencing. Why is that? Because video teleconferencing, relatively speaking, tends to be inconvenient, hard to use, and expensive. The convergence of the audio, the video, and the network can now bring new devices based on PC-scale economics so that you and I can simply plug a $300 device into the network, set it in the middle of the conference room, and now we can have a digital meeting. Not only do we bring in people that can get the benefit of that without having to bring a video teleconferencing specialist to set it up for us, but now we have a digital meeting record so that if Joe wasn't able to attend the meeting, you could forward the meeting record to him with your annotations and comments. This is an example of paperless workflow versus paper-based workflow.
During this decade, we'll look at bringing digital meetings to the forefront, business intelligence for the masses, office tools connecting to business systems and to business processes, advances in the ability to take notes and to repurpose those notes into action on behalf of the organization. Bill's point is that when you put all of that together, there should be, in this decade, a factor of two times productivity improvement in what it is that people can do in their information work. That is the challenge that I and my team in the Information Work group are taking on. We want to deliver on that opportunity.
Tech Update: How much of that productivity gain will rely on greasing the wheels on the backoffice side? It seems like you could make an organization more productive on the backoffice side. Not just purely on backoffice applications, but on how the backoffice provides infrastructural support to edge technology.
Raikes: Absolutely. We're big believers in that. That's why we talk about how office tools can connect to business systems and processes. When you can get at the information you need to make an important decision or to gain an important insight into the business, you can make a difference on behalf of the company. It's one of the reasons we like to talk about the information work. The historical focus in this area has been on the knowledge worker. That's important. That's at the core of what we do. But our aspiration has to be to make sure that the information workers --- the people on the front lines --- have access to the information that they can use in order to make a difference for a customer.
For example, take deregulation in the financial services industry. I should no longer think of my bank as just a bank It's my financial services partner. When I visit with somebody on the front lines of that organization, they not only need to see my bank account, but they may need to see my insurance, my portofolio, etc. They need to have an integrated view of the services that they're providing to me and that means you have to equip that person on the front lines with the right kind of tools. They ought to have software support that will help them to identify the right kinds of opportunities for their client. That is the kind of bleeding edge work that we want to do in how office tools connect to business systems and business processes. If you have smart clients that connect into that backoffice, then we can do a lot more to improve the productivity of the people who are on the front lines and improve the productivity of that business.
Tech Update: Part of what you're doing to facilitate those front to backoffice connections, and perhaps a seminal moment in Microsoft Office's history, is Office's support of XML in a way that opens Office up. In some ways, the proprietary nature of Microsoft Office has protected the crown jewels. Were you reluctant to go down the route of opening Office up?
Raikes: I wouldn't say that. Our company is quite committed to the vision of XML and the potential that we see. For years we have supported Rich Text Format (RTF) or things like HTML and now, XML. Supporting those kinds of industry standards helps our customers and that's a good thing for us. The value in Microsoft Office as it relates to those industry standards is really how we take advantage of them. Just because you support XML doesn't mean another company can come in and provide the rich capabilities that we provide with MS-Office. For example, in Office 11, our customers will be able to use what is technically known as arbitrary schemas. That's a complex technical XML concept. But the important thing to know is that customers will be able to use XML-based solutions as a part of using Office for information work. They'll be able to use extended business reporting language. XBRL is becoming popular in the financial reporting industry. Obviously, there's a lot of interest in that area. Having companies map their financial data into schemas and then to have that kind of a schema supported within Excel will be an incredible advance in how financial analysts will be able to look at companies and evaluate them.
The fact that we're using XML is not a fear of ours. It opens up new value for our customers, and we know that we have more of a commitment to write the software that will provide that value than companies that are just trying to clone our previous capability. Our job is to take advantage of XML on behalf of our customers, which ties back to my original point: Customers want to bet on technology providers that have an ongoing commitment to advance the capability of the software that they use within their companies. They see that in how we build MS Office.
Tech Update: Earlier, you referred to the fundamental infrastructure as a utility. We're starting to hear more and more discussion of technology as a utility like a plug in the wall. Scott McNealy talks about Webtone. It's like dial tone. You plug it in and it works. IBM is talking about autonomic computing. Are you taking the same sort of view that technology is a utility and you plug the device in and it just works?
Raikes: The framework is such that there's a foundation of information technology investment that has that characteristic of being an information utility. We've believed that for a long time, as have other companies in our industry. Being able to have the technology provide that kind of a rich but simple-to-use foundation is an important part of what we will do to further what computing can do for those people and companies. Once you have that foundation in place, you can build specific initiatives on top of it. When a company has a worldwide high speed network, or the people in that company have up-to-date personal computers and up-to-date tools like Windows XP, Office XP, or Office 11, these provide a foundation for them to put in a customer service system that will improve response time, or a project management system that will improve the way customers are satisfied. To take on such initiatives, you've got to have that foundation in place. That's why the CEO has to see that investing in the ongoing health of the information utility is fundamental to providing those opportunities for those business initiatives.
Tech Update: To the extent that a utility's reliability is related to how secure it is, Microsoft is publicizing its efforts under the auspices of a "Trustworthy Computing" initiative. Microsoft makes a lot of noise about this initiative. At Comdex, Gates talked about how the largest portion of Microsoft's $5 billion-plus R&D budget is devoted to Trustworthy Computing. But bulletproof computer security remains an elusive thing. Do you worry about the specter of failure and what could happen to the company if the initiative isn't perceived as being successful within a reasonable timeframe--say, five years?
Raikes: Well, first I'd like to address how you phrased the question. Our Trustworthy Computing initiative is about a lot more than making noise. It's a huge investment on our behalf. The Windows group stopped all of its activity for more than a month just to focus on that area. Microsoft Office, on an ongoing basis, has specific people who are totally focused or dedicated to security in each of our core areas. And then we have a galvanizing effort across the Office organization where we continuously test our dedicated experts on the latest issues in security. So it's a very significant commitment on our behalf. Also, you shouldn't think of this as a destination. It's actually a journey. You can't say, "OK. We're trustworthy. We're done."
Tech Update: It's a moving target.
Raikes: That's right. It's like law enforcement. Unfortunately, there are criminal minds in the world and one of things that you have to do is to continuously use your expertise to keep ahead of inappropriate behavior. That's an important thing to emphasize. The third point I want to make, and I mean this very sincerely, is that failure is not an option. If we don't deliver on the ongoing need of Trustworthy Computing, people will not be able to invest in information technology to make a difference in their business and their personal lives. Our industry would come to a halt. People won't have the confidence to invest in information technology that can make that positive difference. So, the way we think about is, failure is not an option. We have to dedicate ourselves, great resources, great I.Q. to make sure that we're improving the reliability of systems, the security of systems, the support for privacy, and the work that we do with government on policy. It's a very broad-based initiative that demands our ongoing attention. So, I think, five years from now, we'll still be talking about those elements of Trustworthy Computing.
Tech Update: The latest round of antitrust proceedings has just wrapped up. When you read through the remedy and think about how your organization behaved before the remedy and how it must behave after the remedy, is there a difference in how your organization will work? Have your business processes, the approach to product design, and your business policies changed in a way that produced a palpable change in how the company conducts its day to day business?
Raikes: We are absolutely a changed company. First of all, I want to emphasize that anybody who goes through the process --- if I can describe it that way because the word "process" doesn't capture the intensity of what we went through --- is forced to look deep inside and reflect upon who you are and what we need to do to do a better job. We are an intensely self-critical company. A lot of that came out of the trial. In the sense of wanting to improve, we are relentless. It's very important that we move forward. A year ago, we had to swallow really really hard and come to a settlement with the Department of Justice. We worked extremely hard on that. That was a settlement that by its terms, necessitated significant changes within our company. Significant changes in terms of how we think through what is a part of the Windows product line and how OEMs and partners can adjust. Significant changes in the way we create and manage our intellectual property and then the way in which we communicate technical information. It's extremely important that we more than fully comply with the terms of that settlement.
You should think of the recent decision by Judge Kollar-Kotelly as reinforcing that tough but fair resolution or settlement that we came to a year ago. We have challenged ourselves throughout the last year and will do so into the future to live by the terms of the settlement. So that necessarily impacts our day-to-day business process, because of the requirements of complying with that. But, in addition, I think we learned a lot about ourselves. Effectively, we had a mirror held up to ourselves as a part of that legal process and we have to improve the way in which we communicate about our company and what we're trying to do. Those are things that, while they may not be as explicitly prescribed by the settlement, have to be a part of how we carry ourselves as an industry leader going forward. I think you hear that very clearly in how our CEO Steve Ballmer talks about our responsibility moving forward.
Are we a changed company in both a sense of the business processes as well as the way we have to carry ourselves? The answer is absolutely.