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Mind the bits about dumping, MOUs and so on.
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NS-CC-Sun 0000000710040
HIGHLY CONFIDENTIAL
Winning In Government
Four Challenges and Four
Solutions You Can Use Today
realizing potential MDB 2002
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HIGHLY CONFIDENTIAL
Agenda
- - Selling Against Linux - Implementing on the Basics
- - Piecing Together the Government Puzzle
-What Make Governments Different?
- - Competitive Response Roadmap for Government
- - Action Items
- - Discussion
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HIGHLY CONFIDENTIAL
Defending the Key Beachheads
[See figure in PDF]
The core of the Windows value proposition is Business Value + Volume
Research and academic includes HPC and Grid computing
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HIGHLY CONFIDENTIAL
The Windows Business Case
- - Comparable server total cost of ownership; lower desktop TCO
- - Delivers greater business advantage
- - Easier to use & richer experience
- - Much larger partner & ISV ecosystem
- - Better accountability to customers
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HIGHLY CONFIDENTIAL
The Microsoft Innovation Case
- - Need slide that calls out why our solution set is much more compelling and
ultimately more interesting
Slide should call out need to have deep understanding of the customer
requirement and subsequent development of a vision / scope document to help
the customer solve problems or take advantage of opportunities (see the
Holland vision scope work)
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HIGHLY CONFIDENTIAL
Field Competitive Strategy
- -Focus on the business decision maker
-Avoid ’religious’ discussions at all costs
- -Identify & upgrade Windows NT 4.0 servers
- -Refuse to lose in the key beachheads
-File Servers: Samba
> $1.2B in annual revenue
> Windows NT Server 4.0 still 64% of installed base
Desktop: Linux + StarOffice
> 65% of MS revenue from Office + Windows
- -Samba & StarOffice = entry points to the high volume, high business value
segment!
- -Escalate to CompHot alias
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HIGHLY CONFIDENTIAL
Piecing Together the
Government Puzzle
Today the Four Troubling Things We
Hear or See in Government:
- -Complaints abut Licensing 6.0
- -Complaints that they are “locked in an don’t have a choice”
- -Lack of trust in our technology and its security/privacy
- -Growing interest around Linux and Free Software
Taken Together, Gov’t Wants A Company That Allows Them To:
- -Be financially responsible
- -Exert control & oversight for IT and its impact
- -Protect national security
- -Grow a local IT industry and a case of skilled workers
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HIGHLY CONFIDENTIAL
[See figure in PDF]
Reasons Government Elites
Support OSS and Linux
(IGES Qualitative Results, n=670)
Commercial
So,ware
Alternative
Build Local IT
Industry 5 5
Simple Ucense 4 4 4 ~’~, 6 5 ~;~ 5 7 6 7 5
Hi~h ~uaIi~ 4 5 4 4 ~,.f.~5 5 6 5 4
Stron~ Security 6 7 6 8 4 4 7 8 7 4 4 6
Be~er Standards 7 6 6 6 6 7 5 6 5 7 7 7
MSAIternative (vow) 8 8 8 7 8 8 8 ~ 4 ~8 4 ” 7
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HIGHLY CONFIDENTIAL
Piecing Together the
Government Puzzle
- - We have the technology products that government needs but this isn’t enough
- - Government have different needs than enterprise customers
- - Government decisions are driven by technology as well as politics
- - Winning will require a unique toolkit of programs and offerings
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HIGHLY CONFIDENTIAL
Competitive Response Roadmap
FY03H1 FY03H2
Fiscal Responsibility Global TCO Study EDGI Country REJ Study
National Security Gov’t Security program Crypto Module
Industry Growth + IT Skills Growth and Opportunity Suites Project Marshall
Government Control Community Leaders Outreach Local Advisory Boards
Govt. Engagemment Program (GEP) is more than this, it is about building world
class infrastructure ..
Laying out right people
INvotong right people
Broader engage for infrastructure
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HIGHLY CONFIDENTIAL
Owner: Kurman
Fiscal Responsibility
Global TCO Study
- - Overview: IDC interviewed 100 customers, modeled data, and found that Windows
and Linux have roughly comparable TCO:
> Web serving: Windows is 6% higher TCO over 5 years
> File serving: Windows 13% lower TCO over 5 years
> Print serving: Print 19% lower TCO over 5 years
> Networking: 11% lower TCO over 5 years
> Security servers: 34% lower TCO over 5 years
- - What it does: Removes myth of lower TCO as an argument to purchase Linux
- - Where to learn more: http:!!linux, TCO
- - Subsidiary action: learn to use TCO metrics credibly.. Then turn conversation
to benefits of Win2K Server.
I would recommend that TCO be presented in the following manner:
1. Teach rep not to lead with TCO but to use it to counter assertions that
Linux is free, or at least cheaper than Microsoft. The best thing for a rep to
say is that we have “roughly comparable TCO.” Then to turn the conversation to
the technological advantages of Windows over Linux, plus the organizational
advantages.
2. For sales rep to be able to describe our TCO metrics effectively, here’s a
short summary.
To delve into the true story behind so called “free software,” Microsoft
commissioned market research vendor IDC to conduct a TCO analysis to quantify
the hidden costs of using Linux in the ’real-world ’ The TCO analysis focused
on major server workloads where Linux has made inroads in market share:
- - Web
- - File-print
- - Networking-WlNS/DHCP/DNS, RAS, Directory, Cache, Other (router/hub/switch)
- - Security- Proxy/Firewall/VPN, Authentication/Access/DRM/Certificates
Where did IDC get the data? IDC interviewed 100 customers over the phone who
consider themselves late adopters (i.e.
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HIGHLY CONFIDENTIAL
Owner: Driftmier
Fiscal Responsibility
Education & Government Incentive Program (EDGI)
- - Overview: Revenue adjustment program for new OEM PCs
- - What it does: Allows us to compete with naked PCs and Linux PCs on cost
- Can offset cost of Windows through services,
training and/or direct rebates
Use only with approval and for select large
education and government deals
- - Where to learn more: email: edgihq
Add best practice example of where similar approach worked
What EDGI Is. A tool that supports the MS strategy for winning against
low-cost/no-cost competitors in the government and government-driven education
space EDGI is a framework for responding to large deals revolving a designated
regional team to support the subsidiary using a consistent process This effort
will be integrated into the overall sales process and utilize the same tools
and processes EDGI is focused on the sale of OEM PC’s Geographically, EDGI is
intended for developed and developing subs through there will be a special
emphasis on developing subs.
EDGI is not a tool to help win commercial deals It is only a piece of our
competitive strategy and is not applicable for small opportunities EDGI
funding is limited
With EDGI we will increase our win percentage against the competition,
especially in developing economies. We’ll protect our product price points by
removing discounts below empowerment guidelines EDGI allows us to pursue
incentives in a predictable and controllable way to ensure maximum use of
resources We’ll track the use of resources centrally to we understand the
tradeoffs we’re making
EDGI Background
In light of recent pressures from Linux and the open source movement in
education in Malaysia, Taiwan, Brazil and many others, the Education Solutions
Group [EdSG] and windows client group have been developing a plan to give you
an additional tool to ensure that we can always match and thereby never lose
to Linux in this space. The Education and Government Incentives [EDGI] plan
will provide funding in the form of revenue adjustment so that we can Invest
in deals that involve customers purchasing OEM PC’s This will enable us to
compete with naked PC’s/Linux PC’s by meeting competition and matching prices
ff necessary. While this process is being developed and implemented, we need
to ensure that we don’t hold-up or lose deals while waiting for this to become
available You are empowered to make commitments to return a maximum of the
cost of Windows on GEM PC’s to the customer in the form of services, training,
and/or direct rebates if necessary to match a lower competing price in order
to win a large education and government deal when necessary. Until we get this
formalized, account teams should email edgihq and their GM to ensure
visibility to any deals that you intend to use this program for The team in
Redmond (Dawd Driftmier and Pat Fox) will ensure you get the support you need
to execute on this. As soon as we get the details finalized we will update you
with all the specifics.
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HIGHLY CONFIDENTIAL
Owner: Charania
Fiscal Responsibility
Proactive REJ Studies
- - Overview: Localized Rapid Economic Justification studies for 40 subsidiaries
in FY03
- - What it does: Allows us to go into a govt agency before there is a Linux TCO
study
- MS shapes cost/value definition
- Proactively identifies where we are not competitive
- Regional teams of experts conduct the studies
- - Status: In progress - approval pending
- - Subsidiary action: GM input requested
Add best practice example of where this worked
Best practice: Belgian Ministry of Finance - see attachment mailed to David for
details.
What it does. Allows us to go into a govt agency before there is a Linux TCO
study
MS shapes cost/value definition
Proactively identifies where we are not competitive
Regional teams of experts conduct the studies
MS-CC-Sun 000000071053
HIGHLY CONFIDENTIAL
Owner: Neault/Coburn
National Security
Government Security Program
- - Overview: New government offering includes:
- Windows source access via secure website for sponsoring agency and
contractors
- Redmond residency program to audit build process
- MCS/PSS efforts to support projects
- - What it does: Increases trust and transparency, removes significant OSS
differentiator
- - Where to learn more: email Davidco
- - Action: ID technical & business owners for your sub
The government security team in June visited government customers in Korea,
PRC, Singapore, Russia, France, and Brazil Met with deputy-minister level
people from Defense, Intelligence, and E-Government agencies as well as their
key Academic advisors and contractors
Add best practice example of where th~s worked (Saudl)?
OVERVIEW:
Government Security Program consisting of the following elements
Source Code access, sponsoring other government agencies and contractors
Access through MSDN Code Center Premium
Sponsoring agency manages a smart card bullet system
for maximum 25
Specific projects with 3rd party contractors or
consultants mutually agreed and authored by Microsoft
Redmond visit to audit build process and discuss their critical projects
10 day visit includes interaction with product group,
visit to build lab, build own CD project,
pursuit and support of specific objectives outlined
in their proposal and product group and
senior management de-brief to share ideas
and capture customer feedback
Separate build lab infrastructure and support provided (building 25?)
Government submits proposal outlining specific goals and
objectives m coming to Redmond prior to arrival
MCS/PSS support where required to support their projects
Create forcing function In agreement that leads governments and subs to
allocate
necessary resources In order to be successful with related projects
Feedback on security-related issues and development kits
Provide clear process for Iogging and following up on security bugs
reported as a result of source code review
Create process to capture feedback to be used to identify development
kit improvements Additional security-related documentation as below
Improve PAG, planning and operations guides, document
security-related deltas from version to version releases
Communicate technical reasons for the things we do
Answer why we do the things we do from a bigger picture
policy and architectural perspective
Develop a business policy for how we engage
foreign governments in security related technical
discussions and collaboration Agencies visited want to
engage technically; if we do so we can get
mindshare & funding that is or will be applied to Linux
Staff 2 hub-spokes systems (Redmond - subsidiary/region) for government-centric
security efforts (i) business approach & engagement/market development, (ii)
technology/product design & collaboration Est ~15 heads worldwide (including
MCS) some staff already in subsidiaries Must do efforts include
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HIGHLY CONFIDENTIAL
Owner: Matt Tomlinson
National Security
Government Security Program Training
- - What:
-Policy, strategy, tactics, technology, tools
- -When:
-Sept 9-10, Bldg 33/Baker, Redmond
- -Who:
-Govt BizDev exec (or LCA) from subsidiary
-MCS/TS/TAM with infrastructure security
knowledge/responsibility from sub or region
How:
-mailto:rebstern (Becky Sternberg) to register
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HIGHLY CONFIDENTIAL
Owner: Matt Tomlinson
National Security
Pluggable Cryptographic Modules
- - Overview: Technology solution that
allows substitution of MS standard
crypto module with module built by
government or other third party entity.
- - What it does: Increases trust and
transparency. Removes significant OSS
differentiator.
- - Status: in progress - approval pending
- - Subsidiary action: ?
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HIGHLY CONFIDENTIAL
Owner: Kaefer
Industry Growth + IT Skills
Growth & Opportunity Suite
- -Overview: Suite of information including:
-IDC study looking at IT economies in 29 countries
-Overview of Microsoft partner model
-Government best practices for building local industry
- -What it does: Basis for beginning discussion with
government about building strong local IT industry
- -Where to learn more: email davidkae or go to
http://Icaweb/WSG/CLO/Tools/Opportunities
- -Subsidiary action: Identify sub champion for this
subject and engage with government leaders
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HIGHLY CONFIDENTIAL
Owner: Kaefer
Industry Growth + IT Skills
Project Marshall
- - Overview: Negotiate and implement MOU with government,academia and local
industry outlining MS local commitment
-IT Economy Blueprint (McKenzie Study + Working Group)
-IT Sector Opportunities (hardware, software & service commitments,
co-marketing, source access, tech co-development, VC funding)
-IT Skills (teacher training, free certification, curriculum development)
-Academic & Research Cooperation (source access, IVlSR partnerships,
research outsourcing)
- -What it does: Convinces government academic and industry elite that Microsoft
is investing locally and committed to country’s success
- -Status: in progress - approval pending
- - Subsidiary action: Provide feedback to initiative working group on
feasibility, benefit, resource needs
Introduce by using China as best practice example
MOU Is something each subsidiary should work towards creating. The MOU Is a
structured process thatallows us to develop a meaningful local partnership
with industry, government and academia The process of negotiating and
leveraging the MOU is as important as the substance.
MOU can contain
- - Budding and implementing an IT economy blueprint
-McKenzle style economic study
-Formation of MS industry and government working group
- -Education and training
-Target both developer and knowledge worker environment
-Money and resources for curnculum development
-Money and resources for teacher training
-Subsidized certification on MS products
- -Academic and research cooperation
-Source code access and community
- -Product Iocalizahon
- -Commitment to expand opportunities for local firms
-Hardware manufacturing outsourcing
-Software outsourclng
-Service partnerships
-Financial commitment for VC opportunities
-Co-marketing financial commitment
-Source access for local industry
-Technology co-development
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HIGHLY CONFIDENTIAL
Owner: Kaefer
Government Control
Community Leaders Outreach
- -Overview: Government targeted image building initiative
-Key theme is realizing potential. Corp delivers tools around digital
decade, responsible leader and trustworthy computing
-Infrastructure encourages GM involvement
-Coalition focus on Initiative for Software Choice
(www.softwarechoice.org)
- -What it does: Allows Microsoft to engage proactively in public policy
discussions about IT and its impact on local society and industry.
- -Where to learn more: http://Icaweb/w_sg/clo
- -Subsidiary action: Form CLO team and follow RVP budgeting guidelines. Send CLO
team to regional workshops in late fall. Support Initiative for Software
Choice.
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HIGHLY CONFIDENTIAL
Owner: Kaefer
Government Control
Local Advisory Boards
- -Overview: Group of current or former government officials that provide advice
and guidance that is used as feedback loop for product design and business
decisions
-Boards include senior Microsoft executives at regional level and from
Redmond
-Five largest subsidiaries have country advisory boards
-Three+ regional advisory boards
- -What it does: Demonstrates Microsoft’s commitment to listen to government
input and use that input to shape product and business decisions.
- -Status: in progress - approval pending
- -Subsidiary action: GM feedback requested on the likelyvalue of the idea and
guidance on possible roadblocks
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HIGHLY CONFIDENTIAL
Crisis Management
Escalation Programs
- -Overview: There are three main escalation paths in Redmond
-Product: comphot alias
-Legislative & Regulatory: Davidkae
- -Crisis tools:
-Peter -anything to point to on http://linux?
-Q&A With GM’s faced with legislative challenges
- -Subsidiary Action: Ensure one person on teamis member of ’gosdft’ and ‘___’
aliases
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HIGHLY CONFIDENTIAL
Summary of Recommended Actions
- - X
- - X
- - X
- - X
- - X
- - X
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HIGHLY CONFIDENTIAL
Discussion Time
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HIGHLY CONFIDENTIAL
Microsoft
realizing potential MDB 2002
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HIGHLY CONFIDENTIAL
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