Transforming IT: Key insights about Microsoft’s own digital transformation with the - BRK2380
All, right good afternoon everyone. Thank. You for joining us here I'm, Julia, white and I, my day job is to be as your business but I have the opportunity today to speak, an interview, Kurt del bene who is our chief digital officer, so. They give you the full background on Kurt before we jump in he's. Been leading, cutting, into technology, for 25, years now but you joined in 1992, actually in part of the windows business, and after, many years there moved over to be part of the office business and that's when I actually had the, pleasure of working, with you my mic is very hot I. Got. To know you well there and then after lying that you actually left. Microsoft for a little while did the opportunity, yeah ask. You questions about this when leading the. Healthcare gov. Technology. Under. President, Barack Obama and then rejoined Microsoft, as our chief digital officer and, then subsequently, taken on the strategy, team as well so that's the highlights, real but, I'd love to hear a little bit about your. Journey your background and particularly. Interested, in the comparison, of working, in the government for a few years versus back of Microsoft yeah it's pretty much the same thing. It's. Not anywhere near the same thing so. As you said I've been I've. Been at Microsoft if, you take out the 18 months that was gone about 27, years and mostly. In the product group so I started. On this ill-fated does anybody remember something, called Microsoft, at work oh. We. Got a few chuckles this. Was an early attempt to put a version, of Windows into fax machines copiers, phones. Printers, and it, was ahead of its time for sure and that's being kind to the project. But. So, I shut that down and then. Worked. On the exchange team for a long period of time particular on the clients, so. What. We call Capone at that time or the the mail client in schedule plus and then, moved, over when we combined those groups with. Outlook, and let Outlook, for a long time, and. Then kind of broadened up to the point where when Stephen left. Antwon, and I led office and then I led the whole thing after that so, mostly. In the product development teams but. I did leave in 20, 70, or in 2013. And what, happened is my as a member of Congress and from. The Washington first. Congressional district, what she likes to call the the better Washington. But. She's. Biased and. We. Were looking at healthcare.gov when, it crashed and looking, at the, New York Times coverage and I said this looks incredibly. Predictable and. You looked at and they had no telemetry, they. Hadn't actually gone through a beta test period everything, that everybody, in this room would never possibly, think of doing and not, telling truth to power in this case the president and the. Head, of a Kathleen Sebelius that of HHS, that this thing just wasn't ready to launch, and so. I she. Said well would you be willing to do any something about it and I, next. Thing that I heard knew I was sitting in the Oval Office with President, Obama saying I unabashedly, beg, you to do this and. I, learned later that you actually don't go into the Oval Office unless you're willing to say yes. But. I said yes and so I spent about seven months working on healthcare.gov, when, it crashed. It. Was a project that was very very, poorly. Done. What. Happened at, the root of it they, essentially, said Center for Medicare Medicaid is, under the HHS, or Health and Human Services which reports, to the president and they. Said we got this we can do this thing and it, was literally something, as complex, as building amazon.com. As a consumer. Website the first time and they basically said it we can do this we know how to build it they, were under incredible, pressure because, what happens is the law gets set and it, sets a timeline for implementation you, have this regulatory, creation. Period, where, you get feedback from him but everybody, and already they were crunched, and then, when it came down time, to to. Launch, basically. Nobody stood up and said this thing isn't ready to do to to, launch and so when it launched there was no it basically, nobody's. Applications. Went through almost nobody they couldn't actually tell if any, went through because they didn't have enough to lemon tree to understand if any of them went through. There. Are a lot of lessons learned on that one but at its heart there, are some lessons for our, field. First. Was that you. Can get into this mode where if you're a high enough leader you think you know how to do something and you don't know how to do, and you don't you kind of have the hubris of thinking you can do it and, the, second thing is you, surround, yourself with other people who think they can do it not, with a critical, person who's done it before and, that.
Was One of the issues as well if you if you looked at folks at that higher level there's, nobody you know take your favorite, tech company that it actually built such a thing before that. Was involved and then the third thing they did is they said, they Specht out the top-level architecture, and then, farmed. It all out to contractors and so, literally, the. User experience, was done by a different set of people did the underlying storage which were a different set of people who did the identity, service everything. Was, done by a different contractor, and it all had to converge together and it was all being led by a set of teams that this is their 1.0. So. That is very very different hopefully, from the experience that everybody in this room and it's certainly different from how we lead things at all in, Microsoft. But. There's lots of lessons learned there's ways to do it in a good way and ways, to do it that aren't as good the last thing I'll leave you with is I, I. Say, this fervently, is that these folks, that are in public service are have. Incredible. Intentions. And good intentions, and are passionate about their jobs and so, there's this whole meme, that people that in government service are not as strong. Technically. Or not as motivated, that's totally, wrong there were so many people there that were passionate. About the, purpose, of healthcare.gov. And, just about doing their job well and so that is a place that the passion whether it's in the private sector public sector is there and alive. And. It's and, I always say it's about having that trusted adviser that if, they'd had one person, that could have looked at what they were planning to do in their identity system for example and said you just took, an enterprise-grade. And. Developed identity, system and you're gonna use it for an internet sign-in. Capability. You know instead of going miles, deep where they could tell you the, organizational. Structure of one of the sign of people which they'd never use that field to something where there's only ten fields, and it is just wicked, fast you. Know and so if there'd been that smart person there and it's true of all our jobs get surround yourself by people who've done it before. Effective yeah and different perspectives, right and say no to power, you know if the darn thing isn't ready you're ultimately going to suffer, if you ship the thing and everybody did everybody who is you, know it is that from, now on in terms of the, government they will know the importance, of getting IT systems, right. One. Of those projects where you only do it once because you remember and you're, like I'm not doing that again and there are projects that you do once and you don't get a chance to do it. Now. In your role, now that you come back to the company which I'm glad about you, actually have I was mentioned both corporate strategy, as well as our, engineering operations organization and, come from the outside you can be like why are those things to you together but it seems like you've actually found a lot of synergies interesting to see how you do that yeah, so I, came, back to I. Wasn't, actually thinking of coming back I was talking to Satya about some things that I saw that Microsoft, hadn't invested enough and and. Subsequently. We've we've piled a bunch of investment, in those areas which is great but, he said why don't you come back and I said well what would you want me to do and the first thing we settled on is looking, across the company at all the strategy, places where things didn't match up and, kind, of. Bring. Those to our attention as an SLT and kind of driving agenda, with that and so, the way our senior team, our senior and we need once a week for almost. All of Friday it's, a pretty arduous, task when we basically any, issue that you've got across you. May look at some of the things we do and say why did they do that why is that out of line trust, me we've looked at it and we're trying to fix it, most, the time we're looking at hey we we have this progress we need to do more we need to focus et cetera but, so we I started, doing that and that's, actually gone pretty well it's I I'm kind of a as, you know I'm a little bit of a worrywart a little bit of a highly. Organized person so I like the lists of things I really like to kind of drive things in a in, a clear direction I so I think we as an SLT have gotten a lot better as a result of, kind of driving a strategic, agenda forward, we we're always good about finding all the issues and driving, them into independently.
But, Now we have a kind of a group consensus, we have these things called in. Our solution areas we have the CSA, questions, the key strategic questions for each of our each, of the organization's you work with them a bunch. And we have clear dris, to, responsible. Individuals, and they drive that to a salute to a solution bring that to the SLT and we, talk about it make decisions, so I started doing that and then about two years ago he came to me and said you know we, believe, firmly in this digital transformation agenda. Sachi. Came to me and said I want you to take our. Internal. Systems and I want you to take business operations, and I want you to transform Microsoft, in and. Digitally, transform Microsoft and that. Was all the suggestions. You gave me and so I, started. Thinking about it and I said okay the first thing I want to understand is we we have about a two billion dollar budget that we have in IT systems, and operations, together. What's. The strategy behind that and that's where this pairing, of corporate, strategy with. Operations, starts to happen I what, I think happens too, often in IT and, business, operations, for that sense. Is we, think about we run a process or we run systems, without. You, know but if you were in the product groups which is where I spend most, of my time and you could just say I just have a hammer and all I thought everything's a product and so I think about it's a product I honestly think if you, recast, our. Interwork, of building internal systems, around. What is the business process, we're trying to enable and, you think of those internal systems as a product, you, can bring a whole new light to how you think about things and so I've, won, I reorganized the, team made it functionally, aligned so, we have dev, teams that are full of software. Engineers we have program managers that do specifications. We have operations, people although mostly would do DevOps now and we're, transforming, this organization, into a very, product, focused team that says here's. The vision of what the customer wants, in this customer that there may be an internal folks here's. What the business process needs to execute on here's the relative, priorities, we have for this year in the business and here's, our execution, plan here's, our metrics metrics of, success et cetera and so it's been and that then really does get you into strategy, questions like what, is it like interacting, with Microsoft, what are the key priorities you need to do to make that a better experience so the to actually do start. To come together yeah, so, jumping into that conversation. And we'll come back to some other ones around, that but because it on that topic so you might think makes, us a technology, company we have no legacy, when. You will laugh yeah, we knew we were a 40 year old company 40 plus year old company we've, everything on the planet that we've collected over the years and for many many of the years we were very different, business groups yeah we were all under the brand.
Of Microsoft we were totally different functions and running. Independently, and so when, you say you know hey, Satya, told you to digitally transform the company that. Looked like probably, anyone else's company that's deeply siloed running independently lots of legacy systems even though that most people might not know that about Microsoft that is our truth so, like, want to hear a lot more about that taking us from that world, to bringing, in a product mentality, and what did that look like yeah, so it's a good question and we do we are 40, plus year old company and we have a bunch of systems that are I know there are probably companies in here they're much longer, than older, than 40 years however, 40, years is long enough to get a bunch of detritus in there and you. Get into this world where, you, just say yeah it would be too hard to just kind of. Retire. That system we'll just run it and, we, just won't improve it and by. The way maybe we can save our some money by outsourcing, it and so outsource, to the operations, for that is the worst possible thing to do and what, we found is that you outsource, something you. Don't, understand, how the secure, what the security, posture for that system looks like all of a sudden you got a problem on your hands and so, we, as. Bart a part of kind of transforming, and getting to, be very vision. Led of like as, I said where are we taking these business processes we, also start looking at what are the things we have to stop doing and. We have, retired, like. Over. A hundred systems. As a result of that effort I'm just saying not, only we're just gonna put, them on life support we're actually gonna take away the life support and get rid of them now one of the things that helped there was we move to the cloud at the same time and, so we are now running. 95%, of all of our workloads on Azure and, literally. The. Stuff that's left is stuff we are in the process of decommissioning or we, have we there are some systems we chose to, to. Redesign, as we move to the cloud we went through a very deliberate, process of, saying there's, a bunch of things we want to then. There's a bunch of things we can just we. Like the way they're structured we just want to make them a VM in the cloud and then there's a bunch of stuff we're gonna do we're going to make to third party so we're actually going to go and you take, this as an opportunity to go from bespoke, systems, to, actually a third party that's a cloud provider that's a state-of-the-art cloud provider. We. Want to we're. Going, to host SuccessFactors, as our HR system in the cloud on Azure. Exactly. There's a number of these cases where we have. Chosen to really rethink things and and and go with a third-party provider it also gives the opportunity to rethink of you know there's a couple of people in that HR space for instance to choose from both, of them we so we did a head-to-head. Comparison than a few were a very heavy si P shop we're, probably one of the largest instances, of sa p on the planet and there was a nice synergy there but it's it's not an obvious solution you know there's there's, other great players. There as well but. We so we took this opportunity we, actually, the other thing you had learn is that when the first thing if you host it without thinking about one getting rid of systems, but. Also figuring, out how do I reduce, my consumption. Of. Resources. You will you, won't get all the savings and so we spent a bunch of time saying, process. By process what do we want to, snooze. At the right place how to do consolidation. And and now we're saving actually a fair amount of money as a result but. A big part of this process was you know basically, getting. To that point of getting rid of those things and using that movement to the cloud as a way that we get rid of I, want to go back to the decommission, process what so, I know that something I'd talked a lot of customers struggling about how do you decide to finally pull the plug on something and where do you do it wait so what process, did you run or how did you evaluate, what got decommission, versus what migrated. Versus what transitioned well, a lot of what we did was we actually, found out how many users were left on some of these systems as well there's a bunch of them that are just there the walking dead and those, are really easy to decide you, know you basically got the walking dead that you want to get rid of you've got a bunch of stuff where you say wow, it is amazing that, these things are different systems.
And. And it's clearly historic, fact that they're different systems, so, we have a new vision of what we want to do in this space we're, going to take all of those systems we're going to decommission, them and we're collectively, going to build or. I a system, that takes those things together so, there was a bunch of that and then there was a bunch of stuff we just said you know these as I said these things run perfectly well we're, just gonna move them to the cloud as an i ass thing. One. Of the systems that we spent a bunch of time working on is what we call ms sails which you know well Microsoft, sails is. A massive, system that sits on top of sa P and pulls, data out of s AP and then massages. It into data that makes sense to Microsoft, so it looks at all customers, and says this, is what the sales for this customer, aggregated, across all of its subsidiaries look, like it, then pumps it into another system, which does our financial, reports we, were running out of scale on. Our on-premises, solution, so this was an opportunity and we look there and said we, know we're gonna be on the biggest possible boxes, and we're not going to meet our our, SLA. To Amy. Hood's Finance Group of churning, out the numbers in a certain period of time so, we're gonna take the opportunity to actually redesign. And assails as a past past, based product, platform. As a service based product on Azure so, it's really a little bit of each thing but the other thing you have to do is you just have to say we're. Committed to go there it's gonna be everybody, and there's not, gonna be any excuses, for who goes the quad that or, doesn't, and the final thing I'd say is the in parallel. With that we've, done a massive decommissioning. Of data. Centers and so, we're now in only two data centers and we're gonna go to zero we're gonna be obvious, we will be in the azure data centers even, if we have something bespoke but, we have reclaimed, a massive, amount of just real estate and, some, of we sold off in other we've just said hey we're out of office space let's, reclaim that for, to, use as office. Space moving forward. It's. A little chilly until, we decommission, that's yours. One. Of the really big projects, I know was moving sa P to run an answer I mean we are I think literally one of the world's largest sa P instances, and you. You know you were all in and honest, and so a little bit of how, that went would it look like learnings. On that cuz I know a lot of people are so. We are a hundred percent in the cloud on sa P today we, run sa, PR three we're, in the process of moving to s4 HANA whereas, we speak. We. Took and the. Solution we came up with is there's. Our core ledger and that's kind of the brains at the heart of SA P and we built a ton of stuff around it and the, first thing we did we said there is a strategy, that says we can move a bunch of those pieces in turn, to the cloud and they could still communicate back on premises, to sa P for the, general ledger and so we started this by the. First thing we can do is take test environments, and move then we can take some of those peripheral, products and we can move those over as, well and then, we finally got all of that done and, then we said okay now is the time to stand up the the separate, parallel version. Of r3 in the cloud we ran that in parallel for a period of time and then we shut off the one on premises, we haven't we're just about to decommission, that it was February this year we, went to our master, being in the cloud so literally the one that's on premises now does nothing, other than being a thing, for us to compare against and then we'll eventually we'll just shut it off got, it okay and just, curious of, how long did that from the when you first started migrating the beginnings to where you to now I guess for, us because. We were we were kind of setting, direction as we're you know kind of uncharted. Territories, if we started this three years ago and, we but. By the time we actually started. Going with all the tooling existed, on the azure side and all the we, were prepared, it's about 18 months so, we we estimate that any customer of. Our size could do it now in, about 18 months. Oh. That's. That's, actually I presume, people who run sa P that actually feels like a pretty good. Time liner a pretty aggressive timeline, it's it's a big task yeah. Living. Proof it works yes, now.
When I go back for a second you started talking a bit about the, transformation, of your team right and going from kind of a service organization to, being a pro have that product mindset, I know that was a very intentional, thing you brought but. That was a non-trivial. Change. And shift. To what you've done so love to hear you talk about more yeah again. It comes down to this whole notion that people say I always, said that if, somebody comes to work they run they're on the system and at the end of the day nothing broke and they think that's a good day then that's not some I'm not very excited about running I mean I again, coming from the proc mentality, you want to be ambitious, about where you want to take things and so, one of the things we did was we really, put the first thing we did was we pushed the entire team to be vision led and that, there are obvious places like our financial, systems that that's a natural thing of like how do we want to transact, in the future how do we want to move from enterprise, agreements, that everybody sees today that, care reams of paper to being fully digital and then there's a clear, assertable. Vision, and if you go from notions. Of I want to you, know update, si P to where, am I on this path of where digital. End-to-end, lives, that's a much more exciting thing to be involved in it. Goes all the way down there is not an element of what, we work on that doesn't have a vision associated, with it our, security, we. Very much have a vision it's, it's founded on some very specific pillars, it is embodied, in like in the software that we use for Microsoft and if, you talk to Brett Arsenault who's doing presentations, there he'll say here's. Our vision around security, here's a roadmap around security it's founded, foundational. On things, like identity, and telemetry and securing, content, but he will be very clear that those are the pillars of our security, story. And that cascades. Into product plans and cascades and mission it even goes down to things like our networking. Team I was. Amazed when I started talking to the folks who run our network and says well you, should have a vision - and these are people that just provision, routers not just it's a really hard task but, that's their core responsibilities, keeping our network up and then and the person said, well I do have a vision I said, I want to be internet first and Internet only and. I said well tell me more about that he says well we all know that basic our Internet's, are just festering, hives, of, security, - security, vulnerabilities. And decreases. In performance, I want to get rid of our Internet I think, it'll make us more secure it'll make us more performant, it'll be faster, and. I said great so that sounds like the foundation of a vision now tell me how you're going to get there and now the whole running, of the network is just a piece of the the. Process, of getting to the ultimate vision and now I've got my network people talking, to bread my seaso and saying, yep we are completely aligned between our security posture where identity, is the core stone of our security, and what we're doing with the network we then even gone so we're now piloted, in multiple offices where there's no intranet, the. Performance, of accessing, office 365, is better because, they're not going through this this network and so, it really changes, the way people think about their jobs they think about their mission it is all about executing, the vision you also, have to change what your team looks like because, you now go from teams that think about success, as running.
Systems, To, thinking, as a product team and so the whole we we basically I now, have five folks that are part of the LT and each of knows that they run a portfolio. Of products, that have, a vision associated, with them I'm, moving, many more people, towards insourcing, instead of outsourcing we're, about two-thirds, out sourced, when I took over we were moving to be two-thirds in sourced and one-third, outsourced I mean that comes from office we always said we, would never outsource, anything that was critical to who. We are and what we did and so, that's the mantra where I'm not going to build a bunch of software with third parties when I'm gonna have to depend upon that aphromoo some of my core functionality. There, are some very fine. People. Who buys, and is fees and so I think you basically, just have to focus those those. Efforts, on places. Where you are collaborating, with them so we we're not immediately, gonna go towards two-thirds insourced. We're but we are immediately going to the point where, I have developers. Immersed, in all projects, even the ones that I'm out sourced so that I know exactly. What the status is and. Then you get to this point of why okay now I'm just hiring SWE's I'm hiring, software, developers and I'm hiring program, managers we, have a massive hiring, underway, to because it takes a lot of people and, and, we're again. Defining a functional organization. We. Are, making. It clear what the latter levels look like to become a developer, we're going to fully DevOps because, we you basically run the system and you operate the system and you fix the bugs that you introduced into the system doesn't. Ask you and I know you're hiring so many people because of that shift yeah as you're hiring, and looking for new talent are you looking, for different things or what's your you know what you are we've we. Have gone much more towards college hiring now college, hiring pipeline is only so large and so we basically, want to HR and our recruiting folks and said we'll take everybody you can give us and, obviously the, azure guys want everybody they can give them and the office guys want everything better so, we're in line with a lot of very August.
Groups. But. It's amazing, the quality of the development. Team that we have got weird get people from all the top schools and we, basically say the only difference between me and the azure team is he, build you, know Scott Guthrie's team they build it for externals, um we also become a funnel, to other parts of the team so, people will start in my organization, they'll move we I don't also become a funnel, to other parts of the team so, people will start in my organization, they'll move we I don't add office, and you, know from a Microsoft perspective, that's a good thing it. Has fundamentally changed the kinds as you say the kinds of people were looking for as well now, I want to go right to that Network thing you talked about in terms of the vision for it I remember I recall, you saying you know that person there and your networking team had been there for you know 20 plus years and no one had ever asked him what, the vision right networking, was he was like I just provide, Network right, when you went and asked and he had this robust, vision but no one had ever nobody was listening to it and. It wasn't that mentality, and a leadership wasn't looking, for that insight and looking right and the other thing this, person in particular who led this team I'm like, holy cow here's a gem and just nobody asked, this person like what, do you aspire to and he runs, our network incredibly, effectively, and I. Promoted. Him very early on in my tenure because, I thought wow here's a guy I can really count on, and. You. Know you find these gems along the way the people that wow they really got it together but they've been kind, of it's, been an old-school environment, and they're they're kind of you. Know beavering away down in the depths. Of the organization so you have to find those places where that's the real talent yeah and I find that truth and a lot of organizations I think they have to shift, all the towel and hire only people and I'm like oftentimes, they've never been given permission to, do, these kind of things or think a different way but they have all the talents and skills it's about tapping into them and I think all of us who lived, through between Steve and Satya felt that a little bit of that too of like a lot of mindset was there just no one was asking but you can also low yourself, into you know you set the course for the team you say we're gonna be vision lived we're gonna be a product development, team and you, can get into this point where you convince yourself that all it's all about just pivoting them onto the right there is a development. Of a, new you, also have to infuse it with people that.
Know How this is done so we've taken a bunch of people from other parts of Microsoft, that had product development experience, and infuse. Them into senior, leadership roles and then you. You hope that the team starts getting it from ops osmosis, you, look and you say oh this person you know that's a really critical role and so. Far I don't see this person kind of stepping up and getting the transformation, that's going on and so maybe I have to think about making some moves it's not an easy thing it's, a set. The vision set. Everything aligned set the expectations. Sit, back see if it's working see, where the holes are and it's it's kind of it has to be an iterative process as, well so one of the the great debates kind of in a related, topic is should, I t be more centralized, or, sir be decentralized in the business groups and, you know lots of opinions or points of view I'd love your perspective on that. There's, I I do have a strong opinion about this and I'm not sure it's. A, hundred, percent true so it is a little bit situational, we have, we. Are fairly, centralized, in our core services, and I like that model I like, that model from the perspective, of. You. Really if you're gonna be a dev team you're. Gonna have to build, pipelines. For people to grow in that in that you know in their roles over a period of time and the. Other model and and you know digital transformation. There's pieces of it that are cliche, but the whole notion that. The core, elements. Of what constitute, our products, that all of us are building is changing, and that the software, component of, it is becoming larger is true, just. Take the example I love to use is that during one. Of the hurricanes actually down in Florida somebody was trying to get to st. Pete and their. Tesla ran out of juice and so they called Tesla, and said I need. You to tell, me where there's a charging station and Tesla guys did one better they unlocked, extra, juice in his car and let, him get to st. Pete and they did one better still because they found all the other ones. That were in this. Area in this situation, they unlocked it for all of them too and so, this whole notion that so is Tesla cars. At a software product well it's really both and so, the question I think for everybody becomes, well, you want to have software-development. Existing. In all of the product teams or do, you want to have at least some, level of centralization, because, what you want to build is excellence, in software development and so, I don't you, can think of it balanced both ways I like the model where we at Microsoft have the center of excellence around building, systems, for our internal. Processes. Now there are certain things we are very much of a if, we build a product we should use it ourselves as well so we by nature have. Software, development, going on in the core systems going on in other places in the company but, if we were not if we were just we if we were solely, a product, team, with an IT organization I think there's a lot of merit in that coming together if you do it great the. Other thing we've done is we related. To that and are part of our transformation is we've.
Changed The funding model at Microsoft, so, it used to be that the IT teams, basically got their funding from all the different teams and. I, said this causes, all the wrong behavior because, basically if you don't have a project and you get somebody that's in one of the product teams or one of the other divisions, to if, you can get them to greenlight, the project, and to give them the funds necessary you're, off to the races and yet, your priority, goes straight to hell because you've now got stuff that's way down on the priority list you know like why in the world are we doing that with scarce resources, they said well it got funded and, on the product, side we know how we could game it exactly. Show up with a big check they'll prioritize my stuff exactly, and so we took all of the cross charging, that occurred and we, took, it all away from the other groups where any hood was a big supporter, of this CFO, I'm, sorry our CFO, and we put it all in my team and now it's our responsibility, to. Say what is the priority list of projects that need to get done do we agree with that does. The product team door the you know the other parts of the company agree with that and then we go towards a prioritized, list and we're trying. Really really, hard not, to do cross charges, except for those places where it's, a central function and we need to account for the cost that that is in each, of the orgs like if there's a desktop, image that you in a desktop service. You have to provide you're gonna allocate that out across the teams and that's perfectly. Logical on. That so you have an interesting position where you actually report to the CEO which, are sometimes rare for the deceased. Officer and you. Have worked with Amy our CFO from a funding perspective so, how important, do you think that positional, power and kind of getting to the place you are I think, it's it's really key that's, not to say that it can't be it can't work just as well as somebody being you, know reporting, to somebody who reports to the CEO but, I. Have, a very good relationship with all the different peers in the essel team we collectively, say for instance I'll talk to Scott about here's. What he needs to, run his business and to be effective and how you purchase, as you're moving forward and how does that relate, to our digital, and. Dense systems I will, take certain, topics, as the. Internal. Person. Who works on internal systems and I'll work that for the entire SLT. And, so in a lot of the business transactions they did the digital, pipeline, we're working for transactional, some of those pieces are in Scotts world but all its Sasha will look to me as that, member the SLT that, will dog that and actually say do, we like this is this a plan you need somebody who's going to be that person that helps give the CEO and CFO, kind, of that scale by saying yep I'll take that one it's, funny the, last talk I did Bob Jean said yeah yeah people, like you because you're personally, given anything - and you'll go get it done and, that is a little bit of you know it's like pull, these things together and actually, come up with a solution it's that whole right, list make things things come, off list that kind of, obsession.
With Kind. Of process good fit and that exactly, yeah, it can work both ways I guess I would say but. But if I was like the funding was an important, the. Funding was super, important, that was that, made whole the importance, of our internal organization. I also changed the name we used to be called Microsoft, IT I hated the name I think that, it kind, of connotes, that old way of thinking we're, now called core services, engineering and operations and, that basically says we build the core services, that we run the company on the, operations, is the business operations, piece which is all of our transactions, stuff which Mary, Ellen Smith as you know runs my, team all, right so we've talked a lot over the past year and here at ignite - about digital, transformation, and what it means and all these conversations with everyone digital, transformation, and you've really been at the heart of Microsoft's, and then. Talk to me sometime to talk about that kind of the, flywheel these things coming together when you get better, so you know you get better partner, signal and getting a better business string so you'd, love to hear what it looked like from the core of it yeah. So we've done a few things. For. Me there is this flywheel that occurs where if you get it right you. Come up with a vision that vision. Then gets shared with the business leaders and it's. A different, interaction there's, this phrase that that, has. Been big in our industry around I want to partner with the business and. I honestly don't know what that means. Like what do you you know what's the partnership, that you're gonna build with the business I think what you need to do and, again it's mine it's Kurt's opinion I think, what you need to do is go to the business owners and say we think we understand, but, would like to understand, with you what the priorities, of the business are we think we have a vision for where the business needs to go now, what does present, that vision to you and see what you think about it what, let's come together on, a shared, vision and then, we'll go execute to collectively, with that so you come in as a as a partner, in the sense of an equal you, bring, a set of capabilities to them and they bring with them as well it, also means so we. Can then go to the product teams and I. No longer the, the discussion, that I have with you with the windows team the office team isn't what, it used to be which was here, here's, a piece of software we want you to dog food it so, we dog food and stuff at Microsoft, that we had no business running internally it just didn't fit our use. Case and so, now the, product team leaders. Realized that we're, only gonna dog through the stuff that actually is part of our vision and, we're gonna but, the flipside is true as well one we. Can be the use case that shows hey, here's, here's, how we secure, Microsoft, here's, how it, relates, to the products we build we. Can also partner. With them and say you know if you just added these three features this would be a much more effective set of capabilities for us so, for instance and the migration to Azure we. Built a bunch of tools. That, help us figure out whether we're effectively, using Azure we then went to Jason Zander, and said hey, here's the tools we built we're happy to give you the code we're, also happy to just tell you this is how it needs to work for our case and we think it's pretty generalizable. So, you get this kind of flywheel that happens if we're able to tell customers how. We use things that gets us into a good conversation, we're able to tell the product groups hey this is how your products could get better and then the stuff that comes back to us is more tailored to the purpose. Give, you another one example is, the announcement you did around virtualization, in. Your, talk with Scott, Windows. Desktop, Windows, franchise desktop we'd love it and the, reason we love it is actually. Maybe not, immediately, intuitive at least not to me in, our journey to get multi-factor, authentication, and, then attestation, that all of our devices are secure the, first thing we did was, we, made sure that somebody couldn't use any microsoft services on their mobile phone unless, we could say we could assure that it's a it's a good device and so, we have now sent. A hundred. Percent of our fleet of personally, owned phones now run into a stop, on that one because there, was you know when we were working on this for.
So I can say this everybody, lives within title a few people, who feel a sense of entitlement as developers, right and we. Got that at Microsoft too so we got the product curbs comings you cannot do this how can you run software on my device and I'm, sure you can do all these horrendous things despite the fact that we told them exactly all the limits of anything we can do in the fact there's a great secure, process etc it. Took us months to get through that we, got through it and part of the way we got through it is to say if you really, don't trust us we, will buy you a phone and your, phone will, work in parallel with your you can have your own personal phone but anything that connects to Microsoft is going to be a business phone and we'll provide that to you and two, people have taken us up on it so far two, people have one hundred and one hundred and seven thousand people so so, good, data point you can you have faith if you're trying to drive device. You know only healthy devices connecting, it does work but getting back to VDI then we've. Been working with the windows guys to say what we want to do next is if you have a personal, device like your PC and you connect to work we want in tune to run on that as well and that is even a more sensitive. Topic and, so one of the things we've done is we're saying but. We're going to provide an escape valve so we'll use VDI, and, anybody, keep connecting, to the enterprise and have a full, virtual, desktop, if they don't want Intune running on their but, we've also talked to Brad Anderson's, folks and said for in tune to work great for us to manage the entire fleet we need these features etc so it's been a really good relationship there, as well. Guinea, pig in our first best customer exactly, not. Everyone is running a software company obviously, right but you certainly have that additional, opportunity, in that one yeah. Let's. See now, you back to the product you think running is a product team have you actually taken it to the next step of productizing. What you've done you've talked about handing some code over to like the azure team and whatnot but are you literally running a product team and the way you do it now we do a couple of things one, we. Do code dev so, we will for instance in our identity service we are very, forward-looking. In terms of we're, all standardized, on Azure Active. Directory and, there are features that we have needed to move to Azure Active Directory we've, actually done some code down there we've done code dev in Dynamics. Two we, were probably the largest consumer, of dynamics. Dynamics. 365. We have about a hundred and three thousand, users and. We use it as our CRM system, we, also use it on for, it to process all of our EAS enterprise, agreements, and so when an enterprise, agreement comes in to us it, will go through a proscribed, workflow, that is managed, by Dynamics, 365. It's a system we call cosmic and. We've, taken that solution, and then, we presented. That on the app on App source and said hey if you do business process optimization. Or, automation, this, is a great kind of work queue, we've, added the ability like if an email comes in to us from a seller that says I had this problem we're, actually working on the ability to auto detect what we think the issue is up front and send, it into the right queue we're, taking other. Queries, that come with us in, physical.
Form In a letter that's that's a PDF, and we're, using cognitive services, to do OCR on, that and, then we can again detect, exactly what we think the state of that ode the purpose of that is and, then shoot it into the right cue so, you know we we're, going digital end-to-end but we're even within, there we're trying to figure it we're figuring, out what is the incremental improvement. That we can make in our core processes, as they exist and then we just say what's the tool that we think we can use for this and it, was done am dynamics, has been really great for that and we, then do incremental, improvements, where we see the need, so. But an opportunity to continue to iterate, well. We haven't done so far but I hold out certainly, the possibility is if there's a fully unique solution, that, we pioneer, we, could just go to Scott got three or we could go to Rajesh Shaw and say hey we'll, do this one end-to-end the, only way we they'll they'll. Get to the point of doing that is that you show them the credibility that you you, run your own systems, incredibly, well and so it just feels like a natural extension, of the product team all right last question I will open it up for you guys to ask questions so I know there was always lots of those so. Just, around the partnership, with the business leaders yeah that's an area where I think you've been able to establish with credibility and Trust and that scenario I get a lot of questions about how you, do that what it looks like so thoughts on that area yeah I think, posts, if you go and you say to. Your peers or the people you know in the in the businesses, and say here's. My vision for what I want to do with the organization, and you get them to buy in on that and you have the credibility of having, you, know been in their shoes and understand, and be there by the way you're. Gonna make them more successful, and you tell them specifically, how and it's not just a platitude you say look let, me show you these five ways that things are not working the way I think they could let. Me tell you how I think this business process, really ought to run like this and they go okay, that makes sense so, you build that trust I think over a period of time by, making, their job more City job. Easier, making them more successful making, the business more successful as well and. Then I think there are certain partnerships. That you sometimes. You just need reaffirmation, from, a product leader that says oh yeah Kurt and his team they're doing a great job there and and. We get that too but. It's it takes you know credibility. Building over over a long period of time you know I'm back to your here you know checklist manifesto approach, of you deliver right yes I'm gonna do it and then you deliver and then oh I can trust you more once I see that you've actually the. Other you know the other thing is Amy again. Our CFO has been very clear, that. We're. Trying to stay pretty. Thrifty, on cost and, so as. I make this transformation, from outsource to insource, I have to self fund that, and so we have a general model that says for every two external, developers, we will have one internal, developer, and we think we can make the efficiency, work there, you know you paying benefits yeah, from a cost perspective and. Ami, basically, says everything, you're, gonna have to stay within this budget and. Even. What we call bow wave which would be the term you know well but basically salary, increases salary. Increases have to be self funded by my team so, you know my number next, year is good it is pretty predictable it's the same number that I got this year despite, hiring, more people, there. Are ways to do that one if you're more efficient you prioritize, things that the highest you know if you're just doing the highest priority work you.
Can You can save that money and I think you can you can stay within the boundaries but it's a it's a win-win in that sense as well there will be a time and I've told us that there will be a time I'll come back to you and say I can no longer stay, within, those parameters but, then she will know that I've done everything humanly possible to, get my cost down and I'll be able to show her look like, I know I, have, these tables and numbers that we as a leadership, team went through that, says where every, single head is allocating. The organization, and, I say people, are saying surely you don't want it down to like ten people or five keep on ASE you, tell me where I can look at a number and I can I can intrinsically, no or in kind, of intuitive, we know that, feels like the right number or not and then you've got it the right level so we've gone through through these reviews, very, deep in the organization, with the notion of we need to pull people from here we need to put them there that investment. Seems too high this one doesn't seem high enough etc, so getting the other, way you drive credibility, is you're deep in the the details, and I tend to get, pretty deep in the details, you. Always buttoned up when there's questions around what happening and where or I say I have no idea I'll. Go back and find out. Exactly. All. Right we definitely have time for lots of questions so there's microphones, on both sides up here so feel free to make your way on up if you have a question, or an area you'd like to get some more insight about. And. While people to get brave. Otherwise. I'm asking you feel more questions. All. Right I'm asked one more why we would no come on up all, right got to. Folks, they're always try at the beginning yeah that was amazing, by the way thank you thank you very very valuable. So, just a question as you talk about this transformation, they had with your team to more of a product, view. I'd. Be curious to hear how you measured, success right, so from, making. Sure all the trains are running on time and watching the blinking lights - what. Are you delivering where's the innovation, yeah are we moving things forward like. What were some of the measures and things that you did to drive that. Kind of behavior in that performance, well, part. Of it is the visceral feeling that you get it does the team feel different this has been an incredibly. Energizing. Transformation. For our team because they see that oh I understand, what you know what I'm contributing. To Microsoft, it, is more creative to think from a vision perspective, so. First in fundamental ways just the organization, feels well we actually do polls and you, can find out we're pretty. Numbers oriented so I can say we, have an Ellie I or leadership, quality. Index and it's rated to everybody at a certain level of the organization, so people feel free by, the way they're not shy about telling you when they don't like what you're doing so, there is that whole you, know the feel energy.
Feels Better and it's tied to some, the poll that happens, but, the second thing we've done is every in every area we have done a very clear, connection between the, goals that we have and the metrics, that will measure success, and so, friends we've gone down to the point where meetings, we, know we have something called the healthy meeting index which, says how often were people able to call that a call was not dropped, that, people were able, to enter, the conference, within a period of time that, goes all the way up because we said in the collaboration, space we, have these priorities, of improving, the quality of meetings improving the quality, of finding, information at Microsoft, that was another piece all, those things came from a, poll that we do to everybody, in the or in, the organization. That says how do you feel about the services that are being provided so it's all about being really clear on what. The needs are in the organization the, vision you're trying to to, deliver, the, product roadmap and getting, really clear on the metrics, that are going to measure your success ultimately, and. We've been very focused on that thank. You appreciate it. You. Chipped around the edges on this a little bit earlier but could you talk a little bit more about how. Your journey to the cloud impacted. Your organization. Right so did you have a vision for the organization before. You started, that and is it this line. Yes. We did we so, one. We just wanted to be modern we wanted to say that, the, the systems, that were running are systems that we need to absolutely run for the sake of our business second. You know coming from Microsoft, we believed, that, the cloud would May would create better operational. Rigor and. Better. Scale for us think about none of these these workloads it's crazy one you know we have this thing called MS sales and we're running we just can't buy boxes, big enough to run this thing under our SLA, and the SLA is what we give to the into. The teams that need Ana, sales numbers, to come out in a certain period of time so, partially, it was around an operational, rigor partially it was around security, we, firmly believe in also I'll debate this to anybody we will be more secure when we move - sure because, we have all of Scott's team that, they're maniacally. Focused, on making. Sure that's a secure environment they're providing, better tools than we would do ourselves it's kind of like the difference between you know like are. You gonna be an ant and this is not meant, for pejorative. But conceptually. You think about it we're.
Amateurs, At some of these things that there are other people that are being that that's all they think about a hundred percent of the time and so I inherently, believed that we would get better security at, it out of this as well and. So those are those. Are a lot of it around scale, around operational. Efficiency, and, effectiveness and, around security, we're kind of the key things we also in our particular case we needed to be the hallmark of running. On a hazard - so that that probably doesn't exist for you guys and. Then there's a bunch of you know in the operational, rigor area we get to see like here's a dashboard of every single processes, running across the company we get to see all the hackls. And the credentials, that everybody has and we can manage those central a bunch of those things were just added benefits all around kind of operational, rigor but, why not just add. On your question because I get it a lot is what, happened your team like what they do their, roles like, their functions. On the people on the organization yeah we. Were if, yeah that's part of the question we were able to attract. People, who were basically rack, and stacked boxes. Internally, but we'd also out, sourced a bunch of that so, a lot of the attrition that happened you'd outsource anyhow and so we actually have not had, a. Huge, amount of turnover some, people are pretty energized, about it and we have a I have a core platform, team that, runs for instance RS APM fomentation, our network etc there's been a transformation of, kind of in that area what resources being allocated to what but I don't think I lost a lot of people I got more entered people more energy and trying, and now they're driving towards a clear vision I'll give you an example in the SI P case we're, now deeply. Working, on what, our telemetry needs to be for SI P and how, we get to a place where it's not deploy, sa P once every six months and worried, that you can do it in that amount of time but, how we could get the agility of speed of which we deploy sa P, instances. In and updates, to be much much faster so then now they can start focusing on the things that they actually think are value-added, I'd, say from as a consumer, of your technologies. Whether it be RMS sales or, si P systems I've seen the usability the experiences. Around it go up and be, more user friendly again. Mobile apps for things now that you, you guys could never provide before because you had different resource allocation, so, people. Now instead, of racking, a second are now providing, business, experiences, that make, my job more productive, and experience, this better which I've been excited about. Absolutely. What. Keeps a chief digital officer awake. Wow. That's a tough one everything. He. Told you he's a worrywart I am a worrywart I rewrite, an issues list all the time as leaves, in here somewhere he gets free he receives it and has to actually track down all the issues that are on it but the. Things that I worry, that we don't move fast enough still I. See, the enterprise. Agreements, that we put all of you guys through and just say it's, you know it is a weird, process today you basically, it's. It doesn't quite work this way anymore but like a account, person would crack open a pen when they started doing agreement, with and that's just that's old-school we've. Already moved for instance parts of azure onto the whole digital stack but I worry we're not moving fast enough there I am.
I Am incessantly. Worried about security, I'll, tell you when healthcare.gov, crashed. And I came in the first place I went to was the security, team because. I thought if we have a security breach and there's personally identifiable, information that, is totally, the end of healthcare.gov and I say this independently, of some, of you in the room may think healthcare.gov is the worst thing in the world if, we as a go as an organization, and government of people are gonna have such a thing it ought to be well-run but, the whole notion that, security, breaches we have massively. Increased, the security posture in the last two years I've been here we, part, of this is a DevOps thing too because now all of our code goes through a single, pipeline it. Doesn't go through the the, si pipeline, it goes through our pipeline we, do two screens, that that, search for secrets, that are embedded in code I guarantee all of you guys have, code, out there that has secrets, in it that can be discovered by by. Perpetrators. We do things like we actually fish, internally, very, proactively. And I always get this so many shoot in the email is this a fish or not is this you guys or somebody else but. I worry, a lot about security that keeps me up at night keeps, me up at night of like saying I you know now that we're. Very vision, focused, like with our cellar tools I worry. About us just being competitive with everybody else and sell our tools I have, a point of view of what Judson's, sellers need to have and I'm like God we got to get there faster. Thank. You thanks for the question that's a good night yeah. Just, wanted to touch on your. Comments around moving from like a back office services function, to product, orientation, and I would say from for, my company's perspective we've absolutely, made that that. Change from back office IT support, to everything's aligned to products whether it supports an internal customer or more importantly external, customer yeah. And your industry in particular there's a lot of transformation going on trucking, right long long-haul, trucking from. Your perspective, where. Do you think the fortune 500 are in that product alignment. Technology, versus, traditional. IT support I think it's a pretty mixed bag, and all of you could you, know couldn't, talk about it from your own perspective I think there are some companies that are very forward-leaning. We just had julie set up a we do these things with the SLT the senior leadership team where we bring customers in and, customers, sometimes. They tell us how they're using our products and what they wish they could get from us sometimes, they you say how they're using the competitors, products, and what you'd have to do to win their business but usually the same by the way it's not winnable right now because we're perfectly happy so, we, had one that came through shell, which is a very good customer Microsoft I've been the executive sponsor for the show account for a number, of years it's gone from multiple, feet it's been passed from person to person wonderful.
Customer, That's a company that they're, very, vision, focused, they actually get to the point where, they have, a world view of where. They think energy, consumption. And energy production, will be 25 years from now and that, informs, how, they think about you. Know their investment, in renewables. Versus, their in, petrol, based products, and, theirs, and the chain from the beginning you know from. Discovery. Of resources. All the way to delivery, to the customer, the. Folks that are in their IT organization. I think you had a discussion with them earlier, these very much said and and unabated. When we're talking about the, presentation, they would give as part of Scott, Guthrie's keynote said it's got to talk about us being vision led because. They believe, it I remember, the. One of their kind of tech folks, he. Came to me 10 years ago and he said let me show you my blueprint. For where we're going in our internal systems so. That's the case that's one of the cases I get another a lot of folks who say you, know I run these systems, and I don't have any money to to, improve them so, I have to live within the be means that I have though, to those folks I would say I think you will save money I think if you winnow. Down what you need to do versus not and you start disappointing, some people saying I'm, not gonna be able to deliver that now because I'm getting my house in order and I actually think I'm gonna deliver better for you and the first in the future I think you can actually make some you, can make things happen even when you're in in. An earlier state but I think this notion and you guys. Should tell me I think this notion of being vision LED and product oriented is a new thing mostly a new thing over the past five or so years so, I think we're sort, of early in our transition overall, thank. You thank you I do, see just reflect on that point the customers engage with the ones that are stuck are the ones who can't decommission, that's why I asked you that question about how you did it because you're in that bind right, you can't shift resources and, you're always you, know kind, of and hold hold in to that right then, you can move to a more you got to toss off some things and sometimes you toss off things they don't even know you're doing for him anyhow. I. Will say and the. Other thing that has, raised, an importance, for us is compliance, and, I never thought compliance. Would be a sexy, thing but. It is the coolest thing I know this is crazy to say this but compliance, is cool because, if you think about compliance. As the. The search for things that you didn't know you were non-compliant, on and looted. In tearing apart your systems end to end to find those places of vulnerability, it can actually be a super. Interest and scary place but, compliance. Is something I think we can all up our game on as well. A. Lot, of people thinking about you have a great background from product development, and sold software development, now so, I think that's really, applicable some. Of your biggest surprises. Things. That. Perfect. There's no mistakes. There's. There's. Probably, a lot of them and it has definitely not been a smooth eye I get excited about and that's why comes out of it all has worked out really, well. It's got scars I I do I think you get pushba