Michele Crockett: I do think it's interesting and amusing how typical our company is. We are absolutely a Frankenstein of cobbled-together businesses. Acquisition upon acquisition—I don't think that there is a single office that we have that has more than 100 people, so we're talking about dozens of different sites, and we don't have local IT people in even some of the bigger offices. So, it's kind of an academic discussion, but also a day-to-day work discussion, and I'm fascinated to see how it plays out, because we're absolutely a prototype of a business that could benefit from this, and has a lot of chaos that they need to pull together. They're doing a pretty good job of it.
Michael Risse: Yes, and that's a wonderfully typical example. The one question would be how do we get our services out to make us more productive, but at the same time we do not want the chaos where everyone is doing their own thing in different ways and losing any sense of organization, much less the legality issues of who is putting what information on which customer where. An individual might be OK with online banking, but the organization there's slightly higher standards.
Michele Crockett: Yes, it will be interesting to see how that plays out. I also had a question about data management. I saw that that was a big concern in the survey, and that seems to also be a place where these products can really help. Has there been any particular interest in the data management capabilities in EBS and SBS that you've seen?
Michael Risse: Well, there's two things I should mention. First of all, because you're a SQL head, one important difference in this version of Windows/SQL/Exchange, but in SQL Server in particular, is that it's the standard edition. It's a passive of the workgroup edition, and what matters about that is the standard edition is what all the ISVs certify on. So in the premium edition of both products—Small Business Server and EBS—you get the SQL standard edition, plus a better version of Windows Server to run a line-of-business application on, which means we're a much better base for data analytics or running a line-of-business application, or for providing a comprehensive IT environment. That being one. And then the data management piece, depending on how you define data management, I think the critical part of that is that we have a lot better support for line-of-business apps in the version of SQL that we're shipping, so we expect to have a lot more customers taking advantage of that and moving to a small business server infrastructure, which from a cost perspective is 40 percent less than buying a la carte, so that's a great way to buy and a better infrastructure when you get it. The second thing is from a customer perspective in the poll is simply that using business analytics to really understand the business and figure out where they are selling and where the costs are and how they can be running more efficiently, because part of the hunkering down also does mean that in software there are some other things that are going to be trends or have to be looked at more closely. So this gives them a better platform and toolset to look at that.
Michele Crockett: Do you think that small and medium businesses have much uptake with System Center and are using those tools as well?
Michael Risse: We used part of the System Center product line to support our remote management capabilities, but if you said tell me about management in SMBs, the first order of business would be, in the sense of automating routine tasks from an IT generalist perspective or the remote management capabilities, those would be thing one and two. We definitely leveraged some of that technology to make those things happen, but from a customer-benefit perspective those are the two things we're really focused on achieving.
Michele Crockett: Virtualization as well. I know that businesses are interested in virtualization; they know it can save them money. I think they're a little wary of how they manage these virtual machines that could be everywhere, since they have the physical and the virtual environment. What do you have that can help them navigate through that? I know there are some things in System Center that helps them not only manage the Microsoft technologies, but also reach out to some cross-platform things.
Michael Risse: The question is basically one of scale, in terms of the number of machines. We're seeing the data come back now from more and more users of our virtualization technology in Windows Server. So what we see in the small business market in particular, is single or maybe two virtual instances on a Windows server. So it's something that is manageable by hand, in the context of either Windows Server, Small Business Server, or Essential Business Server. The enterprise edition of Windows Server supports four virtual instances. If you go to data center, then that supports an unlimited number. Once you get to an unlimited number, that's when the System Center management tools become really important, particularly if you're going to be running multiple boxes, with multiple virtual instances per box. That's where, OK, it's time to bring in the artillery. For small businesses and markets where SBS/EBS is positioned, we definitely see virtualization. We see a couple virtualized instances, and on average from our research, when you move beyond that, that's where OK, we have the artillery. If that's something that you're interested in, we can certainly set up a specific conversation on the scaling of our virtualization solutions and management tools because they really go hand in hand. You can start with single instances in Windows Server, then you scale to Windows Server Enterprise Edition with four instances and the toolset, then you go up from there.
Michele Crockett: I think that might be an interesting planning guide, we have pieces in our magazine called essential guides. On the SQL Server side there's a huge interest in virtualization, and that's where things get kind of fuzzy for that audience and they're not sure how to approach that.
Michael Risse: The two things that we talked about today, one being the virtualization, and the other being SQL Server data services in the sky. One of the things about small-to-midmarket businesses, the democratization of technology—this is my bad word for the day—where we'll see more interesting technologies being available to more companies of different sizes. It used to be you can have this because you're big—ERP, instant messaging, business analytics. We're big enough that we can have an IT specialist who does this. What we're seeing now is more service organizations providing, for example, business analytics services to small-to-midmarket businesses, so you can basically just bring your data. You don't have to pay for the server, operating system, data center, expertise, but you can take your data and have it processed for you.
Michele Crockett: I think that's huge because within SQL Server you can make a lifetime career out of understanding everything that reporting services can do. So for an IT generalist, it's like they've gotten the keys to this Ferari, but they're really a bike person.
Michael Risse: That's the part where the partner and the trusted advisor piece comes in. I know you want to see that we can take this data and do the following analysis and provide the following reporting on it. So the services model. From an ISV perspective, here's how I deliver my application on the web. From a BI perspective, here's how BI can become a service. Those are both interesting from SQL perspective, and then I agree with you on virtualization as well. So those two interesting trends, databases themselves—which you can make a career out of data reporting—and if SQL Server databases themselves weren't interesting enough, Software + Services and virtualization technologies—two of the major conversations in the industry—those have gotten businesses themselves based on the database business.
Michele Crockett: I think that will be very interesting.
Michael Risse: And then in both cases we can follow up on the Windows Server side. We've got a very elegant service that starts from you can do it by hand with a single virtual instance, but then as you grow we have both the Windows Server products and the System Center products that will stay with it.
Michele Crockett: Any closing remarks you want to make about helping SMBs through this tight economic time?
Michael Risse: I'll go back to where we started. There are a lot of small-to-midmarket organizations: 12 million organizations worldwide with at least 5 PCs, and many smaller than that, just to give you a sense of the scale. The importance of partners in the partner program and trusted advisors, that's what's going to bridge the gap. We've had conversations to think about Small Business Server and BPOS, Essential Business Server and virtualization. We have technologies that can help customers save money now, that I think customers are going to be interested in. What's going to bridge our portfolio to those customers facing these tough economic situations that want all these things shown in the survey is going to be our partner program. It's very hard for me to talk about the products and customers without recognizing the leveraging effects that our partner program, MSTP, has in getting us from here to there.
Casey (Microsoft representative): I just wanted to mention one more thing. I know you were looking at some of the survey data and how we interpret it. Even listening to this conversation, one of the topics that popped out for us a little bit was how quickly the SMBs responded that they wanted to improve their ability to connect with customers, customer management. That signaled to us in mid-October that a lot of people are looking down the hatches at strictly reducing cost, one of the very early efforts a lot of people are thinking about is how they can use software to improve the customer experience. When you look at everything from databases to cloud services, EBS/SBS, it looks like from that data one of the early areas where the SMBs will be making investments and leveraging software, will be frankly trying to improve that customer experience to compete on that level.
Michele Crockett: Right, so maybe thinking about things like dynamics and CRM?
Casey (Microsoft representative): Exactly. I know you're looking at the data, and as Michael said a lot of it is in line with what we think, but also I think a lot of it is things that people outside of software people wouldn't assume, as people are trying to pack in for a long cold winter, we know SMBs are thinking of ways that they can compete, and this is one of the top areas they looked at.
Michele Crockett: Yes, I think that's really smart, and again we're the guinea pig, at this tough time we just rolled out dynamics to our sales force last week. We're going to experiment with the Loveland office.
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