1. ISM101 Discussion, 10.21.04 Notes from the Field Adam Seligman Platform Strategy Advisor Microsoft Corporation

2. Agenda The Business – Technology Gap The Web Services Revolution Thoughts on selling technology Thoughts on Microsoft

3. A bit about me

4. Agenda The Business – Technology Gap The Web Services Revolution Thoughts on selling technology Thoughts on Microsoft

5. Business Value & Technology or, why executives don’t care about developer productivity Adam Seligman,.NET Agitator

6. 2 Minute MBA $1 tomorrow is not the same as $1 today Difference is called “discount rate” 10% annual discount rate means: “$1.10 in a year == $1 today”

7. Discounted Cash Flow Write down your cash inputs and outputs Discount each one Sum them year1234 cash flows $ (100) $1,000 discount factor 1.00 0.85 0.72 0.61 discounted dollars $ (100) $ 850 $ 723 $ 614 NPV @ 15% $2,087

8. Advanced Management Business Case Development Guesstimate cash flows for projects Portfolio analysis and management Pick projects with positive NPV Don’t drop the ball

9. ISM101 Fall 2004 MBA Graduation!

10. How do Business Execs think about projects? Invest some cash up front Get a big inflow of cash later Positive NPV year1234 cash flows $ (100) $1,000 discount factor 1.00 0.85 0.72 0.61 discounted dollars $ (100) $ 850 $ 723 $ 614 NPV @ 15% $2,087

11. Cut Development Cost by 50% year1234 cash flows $ (50) $1,000 discount factor 1.00 0.85 0.72 0.61 discounted dollars $ (50) $ 850 $ 723 $ 614 NPV @ 15% $2,137

12. Add Some Project Delay year12345 cash flows $ (50) $ - $1,000 discount factor 1.00 0.85 0.72 0.61 0.52 discounted dollars $ (50) $ - $ 723 $ 614 $ 522 NPV @ 15% $1,809

13. Three Scenarios Old technologyNPV = $2,087 New technology 50% dev cost savings NPV= $2,137 (+$50) New technology with delay NPV = $1,809 (-$278)

14. Observations Fat tail end of projects determine returns Developer productivity is low priority Project risk = Delay of return New technology has a lot more downside than uspide

15. What do technical people think of business people?

16. What do business people think of technical people?

17. How we hear, think differently, examples of problems this causes

18. Boom-bust cycle, what it looked like

19. Market Challenges Earnings pressure Lowering costs Rising Consumerism Competition Security issues New technologies Regulatory Pressure

20. Growth is Difficult Research 130 businessesResearch 130 businesses H&R Block, Lowe’s, Johnson Controls, Medtronic, Mohawk Industries, Wal-Mart, Harley-Davidson, Dell, etc.,H&R Block, Lowe’s, Johnson Controls, Medtronic, Mohawk Industries, Wal-Mart, Harley-Davidson, Dell, etc., FindingsFindings 1997-2002 the thirty companies that make up the Dow Jones Industrial Average grew at a collective rate of 4.9% in revenue, 4% in gross profit and 0.5% in after-tax profit 1997-2002 the thirty companies that make up the Dow Jones Industrial Average grew at a collective rate of 4.9% in revenue, 4% in gross profit and 0.5% in after-tax profit If you take out the top five performers the remaining 25 companies grew revenues at 2.3% - about the rate of inflation If you take out the top five performers the remaining 25 companies grew revenues at 2.3% - about the rate of inflation Root causes – management systems, management tools and techniques have not kept pace Root causes – management systems, management tools and techniques have not kept pace Source: Michael Treacy’s Double-Digit Growth, 2003

21. Advances in Management Tools

22. “The major differentiator between companies now is their agility – their ability to create value quicker than their competitors. This may be the only differentiator in the future, as every other innovation can be copied.” - Rolf Jester Chief Analyst – IT Services Market Asia/Pacific Gartner

23. The Debate About IT

24. Fundamental Business Questions What is the “basis of competition” in the market(s) where my company competes? How will we know when the this basis of competition shifts ? How do the velocity of information and the agility of my organization impact my company’s ability to compete ? How does the Microsoft platform help me realize strategic competitive advantage ?

25. Agenda The Business – Technology Gap The Web Services Revolution Thoughts on selling technology Thoughts on Microsoft

26. What’s all this WS stuff about?

27. Business IT today

28. If You Invest …Then Tomorrow

29. 10 Years Later What Actually Happened

30. Internet Banking Wireless Aggregation Branch Banking CRM Core Banking Wealth Management Treasury / Forex Trading / Back office Payment Systems and Card Mgmt 3D Secure Business Intelligence EAI Straight through Processing ATM / POS No Application Is An Island

31. No Company Is An Island Customers Suppliers Employees Partners Suppliers Suppliers Employees Customers PartnersPartners

32. What are XML Web Services? Industry standards for applications to talk to each other Extend basic web concepts… (HTTP, HTML) To applications (SOAP, XML, WSDL, UDDI) Designed to work across platforms & languages Coexist well with firewalls and networks Standards body defining the specs: Participation by all the major players

33. What is.NET?.NET is our brand for our XML and WS stacks Microsoft is delivering XML and Web Services capability across our product line Windows OS, BizTalk, SharePoint, etc. New applications use the.NET framework, which includes WS and XML tools Use Visual Studio to develop applications on the.NET framework from a variety of languages C#, C++, J#, VB.NET, (and many others)

34. Service-Oriented Architecture An approach to take existing IT assets Think of these assets as technical capabilities: “services” Use these services, along with new services, to support business processes Reconfigure these services flexibly to support changes in business process

35. Agenda The Business – Technology Gap The Web Services Revolution Thoughts on selling technology Thoughts on Microsoft

36. What does a customer think of a vendor?

37. What does a vendor think of a customer?

38. 1. Writing a Business Case Start with your core business objectives Top line: growth, new customers, expand market Cost savings: simplify, consolidate, shutdown old systems Build a business case with champions from both IT and business 4 sections: 1 background & strategic need 2 what you want to do 3 benefits to your firm 4 economics (cost & benefit)

39. 2. Pitching Technology to Mgmt Get a clear “GO” or “NO-GO” from management Force the point Make a pitch Make a clear “ask” for funding and sponsorship Use a core team of both business and IT staff to map out the project Build a real project plan – don’t just pitch for $ Program manage project aggressively Enforce phase-gates/milestones and reviews

40. Getting “unstuck” Strategies for “NO-GO” or on the fence… Wrap an existing system as a service and deliver value to a business process where there’s a clear pain Use case studies from http://www.microsoft.com to demonstrate value of.NET Architecture in your industry http://www.microsoft.com Take a “challenge” – a hard problem that nobody else has a good solution to, and deliver past expectations

41. Still stuck? Is this a company that is using technology to its strategic advantage?

42. Agenda The Business – Technology Gap The Web Services Revolution Thoughts on selling technology Thoughts on Microsoft

43. Microsoft cheerleading R&D spend, financials What we’re good at, what we’re bad at Roles & Org A day in my life