CRN Interview: Microsoft's Doug Burgum

Doug Burgum, senior vice president of Microsoft Business Solutions, is leaving the company in late June. He sat down with CRN Industry Editor Barbara Darrow this week at Convergence 2007 to discuss the legacy of Microsoft's purchase of his Great Plains Software in 2001. Great Plains and Navision, subsequently bought by Microsoft, formed the basis of the MBS business applications push which is now pitting Microsoft against biz powers SAP and Oracle.

Convergence, the annual MBS customer conference, took place in San Diego.

CRN: So this is your last official Convergence show?

Burgum: As a Microsoft exec. I should be able to figure out how to become a customer.

CRN: What's next for you?

Burgum: My official statement, no official plans and kind of by design I'm still enjoying and fully engaged on the business and expect to be through the fiscal year.

There may be a possible appearance at the Randy and Andy party [at the Worldwide Partner Conference in Denver in July.]

I've tried not to commit to anything --either to operating jobs or board seats, or investing in startups.[but] I am collecting a list of opportunities and suggestions.

I have been offered a job as unpaid intern for dynamics partner in the Napa Valley with 85 wineries.They have a wine hour every Friday afternoon. Pretty good job.

CRN: In Great Plains Software, you led a private company that went public, then became part of a huge company. In simple terms, are you glad you did the deal and is there anything you would have done differently?

Burgum: In terms of whether I'm glad we did the deal, he answer there is a resounding 'yes.' At the time, my statement was I wasn't selling out, I was buying in [and] six years later I'm still here.

This category [of business software] needed to be transformed, like others needed to be transformed where you had broad easy to use capabilities that become a platform which others can innovate on.

The platformizing—if that is a word-- of biz apps is something we talked about and from [MBS corporate vice president Satya Nadella's] keynote it's apparent we'll actually get there. We're using SQL Server and SharePoint and the Office UI in ways that really add value.

The other thing that was clearly a criterion at the time-- [Great Plains was] very much a channel-focused company and we wanted to align with another channel focused company. Microsoft was always a platform company and a channel company.

To the degree that we had a broad strategy six years ago of creating great solutions for customers and great partner opportunities and value for customers, the partner opportunity today is better than it ever has been. If partners can cover SharePoint and Office competencies and CRM and ERP that's big.

If you've got that, it's the most value we've been able to offer them.

How could you not feel good when NAV partners, people friends of [Damgaard software founder] Preben Damgaard, Solomon partners, all those people who've come up in two days and told me that .'everything you said you were going to do you've done.' [Note: Damgaard sold his company to Navision which was subsequently bought by Microsoft.]

It's not a personal thing. We committed the organization and the organization has delivered on partner programs, on branding. All of that you've got to feel good about.

Now, what would I have done differently? We made some changes in field engagement three years ago when we merged the NAV/GP field orgs with the Microsoft field and there were a number of things we'd have done differently in our approach.

Most of those things we'd have done differently we've now engaged[Microsoft has added] solution sales specialists and [Partner Account Managers] We've taken the best of Microsoft and best of solutions selling sales force that supports partners.

NEXT: PROS AND CONS OF THE MICROSOFT STACK

CRN: Microsoft is always talking about the beauty of its full stack—but when you see all the interdependencies, if you run Vista you have to upgrade your database, etc. etc., I wonder how many see this as an advantage? Isn't there a downside to the stack -- especially when people see all this easy-to-use stuff from Google and others?

Burgum: Well there are two ways to look at it. The stack has so much value in it compared to ever before in capabilities. You're bringing up synchronization of versions, where you assume some short periods where you're out of sync and long periods of time where you're in sync. That's manageable. The customer has to decide whether to take advantage of all that innovation.

What we haven't seen from any hosted platforms yet, is the ability to have robust ecosystem atop that, and robust capability for personalization and customization. That is one issue with the whole software-is-dead, one-size-fits-all model.

CRN: Salesforce.com's Appexchange addresses some of that.

Burgum: Appexchange is trying to change that story and Microsoft is working to respond with Live platforms.

Any [Microsoft] strategy will have a platform for innovation, the benefits of Web-based platform but still have innovation and tools for the community .

Our stack will allow for Web Services to tie into applications as I think of what's next you have to look at ISV and channel opportunities are huge.

The opportunity right now to be a software ISV have never been better.

CRN: Really? How so?

Burgum: There are a couple of bullish thingsThe next three years will be huge in ERP because of the echo of Y2K. With all these systems five years of selling got dragged into late 98 and 99, as all those companies rushed to put in transaction systems that worked.

Do you want to do an incremental upgrade or put in a truly great new system with new search and a new interface? That would be pretty fun.

To have the ability to create IP atop this platform is exciting.

We [Microsoft] won't get to everything, there's a lot of white space on functionality and process and going deep One partner is doing a nurse's station healthcare thing we heard about. It's a tiny thing but doing great business. Then the winery verticals. There are so many ways to make money in this business.

There are a couple of partners Junction Solutions and FullScope that are just going great.

One was not really on our radar, then came to convergence 2003 and now has 100 people. The other has 120 or 140 doing sophisticated things, winning business. That sounds like fun. They won't stop at 100, they'll build beyond and will do it largely organically.

Terry Petrzelka [CEO of Tectura] is up to 1,800 people! He came in six or seven years ago with an idea there was a void for someone who could do the high end of the mid market and lower part of the high end market. There was a need for someone with global reach that could deal with the full Microsoft stack. He built a global [system integrator] below the Accentures of the world and above the VARs.

He had a single idea and executed against it. I think they have 350 customers just at this event. They had a packed ballroom here that was bigger than our first four convergences.

Some partners say 'Woe is me, Microsoft will kill ERP margins,' and under our nose, people are building large organizations based on reselling software, some IP and CRM and the Microsoft stack.

If we've got Live solutions, my guess is they'll have them as a part of their kit, still adding domain expertise.

NEXT: WHO AT MICROSOFT WILL HAVE THE PARTNERS' BACK?

CRN: With you leaving, there's quite a bit of sentiment among partners. They're wondering who MBS' face to the partners will be. Who will it be?

Burgum: There's a broad set of people depending on where you are. There's Cesar Cernuda in EMEA [Europe, Middle East and Africa] who is now international, meaning he's everything but North America.

There's Klaus Holse Andersen, who joined six or seven years ago. He's Danish but worked in California for Oracle at a high level and came to Microsoft. An enterprise apps guy from Oracle at Microsoft.

He was the Danish GM when we acquired Navision and that was the one place in the world where the MBS business was actually bigger than the Windows client business. He was head of Nordic, then East Europe, now Europe. He's promoted now to a role not unlike Orlando's for global sales and field. He's a corporate vice president now, that's huge, there're only 120 of them. And he's based in Copenhagen, which is a big deal. [Navision and Axapta originated in Denmark.]

[Other key partner players include] Craig McCollum who has tons of experience, and Jeff Young who has close to 20 years at Great Plains. Also Michael Parks who came over from SAP. Tami Reller also has 20 plus years at Great Plains. And there are lots of people inside [Allison Watson's] org—Don Nelson who's now with worldwide partner programs. We have a pretty good infiltration at Microsoft.

I'm thinking close to 80 to 100 people have moved from Fargo to Redmond and not because we moved any jobs but because they took promotions.

And on the EMEA side, a lot of Navision folks are populating Cesar's org.

CRN: How much interaction have you had with Ray Ozzie and his Live efforts?

Burgum: When he arrived, and the Live effort was being born, I reported directly to [Microsoft CEO Steve Ballmer] and we had many, many offsites. And once the launch happened there was a lot more clarity and a framework and Satya is now the R&D lead and spends the most time, now delegating to the team to make sure they're aboard.

CRN: Do you need to offer hosted ERP as well as CRM?

Burgum: Do we need to? We need to offer solutions that customers demand. I ran into a partner here who said he's going live in two weeks with a Dynamics GP hosted offering. That's a signal that there's customer demand. Our SPLA partners can opt to do that today—hostable ERP. Having partners host is a nice model. They can offer the confidence and support customers want. It won't be completely blind in the sky service, it's not a brand on the Web site, they get to meet the partner people and the partner can add IP atop that. It's not a click to buy without a partner thing. The only place that will exist is in the Office accounting level.

We have real traction going with our Office Accounting downloads and we will keep tweaking that. It's disruptive at the low end but that learning can be applied. A piece of the market will want very simple stuff, not modified, and that's not where GP, SL, NAV or AX sells anyway.

To the degree we decide to have that capability in addition to partner capability [Microsoft will do hosted applications] but there will to be have a partner element there in configuration and implementation. Our stuff is not self-configuring. It's just not.

The long-term vision for partners—the role of the partner becomes more important the more capability we deliver, the more things they can do. I say they have to move to the customer edge vs. the platform edge. I'd love to eliminate from partners having to spend their time and customers' money making our products work together.

As you could see in Satya's keynote, if you have the same interfaces, the dynamic movement of data from one piece of the stack to the other, that's the stuff partners used to get paid to do. We want them out of the plumbing business and at the customer edge where their domain knowledge has huge value.

When I talk to partners, the future's huge, but not if you want to write a piece of middleware, that'll be our job. Partners need deep domain know how. High customer service means high margins.