How Microsoft top brass hammered out Dropbox, Salesforce moves

Phil Wainewright Profile picture for user pwainewright November 5, 2014
Top executives at Microsoft meet twice a week to figure out moves such as this week's Dropbox alliance, while Bill Gates brainstorms long-term strategy - Dynamics included

Microsoft Mike Ehrenberg
Mike Ehrenberg

Yesterday's surprise announcement of a partnership between Microsoft Office and Dropbox is characteristic of the fresh approach to partnering ushered in by CEO Satya Nadella. I got an insight into the behind-the-scenes discussions that precede such decisions from Mike Ehrenberg, a 12-year Microsoft veteran who is CTO for the Dynamics product line, during an interview today at the business unit's annual Convergence EMEA event in Barcelona.

It all gets thrashed out at twice-weekly meetings between leaders of the main product divisions, said Ehrenberg:

The framing of conversations that would have been impossible before, they deal with those issues.

There's still hard problems but you can see the changes in the way we operate every day.

The Office integration with Salesforce, they talked about what was important for each side and they made choices. It was done as a group thinking about what was right for Microsoft.

The meetings include Scott Guthrie, EVP of cloud and enterprise, whose responsibilities include Azure and servers; Qi Lu, EVP of applications and services, which includes the Office portfolio; Terry Myerson, EVP of operating systems; and Kirill Tatarinov, EVP of Microsoft Business Solutions, which runs the Dynamics product line.

The regular meetings were added to the executives' schedules earlier this year and are symptomatic of a new joined-up approach to product strategy within Microsoft. Previously, meetings between these leaders or their predecessors were intermittent and often focused on other matters. As another indication of how things have changed, Ehrenberg pointed out that sessions at this week's event, which is the main EMEA event for Tatarinov's Business Solutions division, included an entire track on Office as well as a keynote by Takeshi Numoto, corporate VP of cloud and enterprise: "He's never been at Convergence before."

Brainstorming with Bill Gates

Bill Gates

Ehrenberg also said he's seeing much more of company co-founder Bill Gates, who regularly meets with product engineers in his new role this year as the company's technical advisor. Nadella also sometimes joins these meetings, he added.

I'm spending a fair amount of time with Bill. He's very interested in the things that will create the lasting value of the next generation of Microsoft.

I see him every few weeks now. It's a deeper product engagement, for us [the Dynamics team] at least, than for a long time with him.

Those meetings are often brainstorming sessions, said Ehrenberg, and I asked him if that's an intimidating experience with Gates participating.

You will be humble in that situation but it's not scary. In a brainstorming environment he's great, he's very creative.

It's when you're presenting to him and you say something dumb, that's when you should be scared.

Open to partnering

Ehrenberg, who joined Microsoft in 2003, said the openness to partnering with other market players is very different than previously.

Things are very different, in a great way, from they've been for a long time ... We have conversations today that we couldn't have before.

You can't just say everyone's got to be on a Windows device, you just can't do it any more.

This idea that's it OK to have OneDrive and partner with Dropbox, it's OK to have Dynamics and partner with Salesforce, [it's because] our customers are telling us what they want.

There's a bunch of people using Dropbox with Office, you don't want them moving off Office because of that. The bad scenario is, it becomes easier to use Google Apps with Dropbox.

And guess what, OneDrive, you've got to compete.

Especially for the Dynamics products, where people have to work with their customers and with partners, you can't draw walls around our products and chose what you want people to use.

How does OneDrive compete?

So how does OneDrive compete against Dropbox now that those walls have come tumbling down? One customer today who has been using OneDrive as a way to tempt users away from Dropbox wondered how that would work now that Dropbox will connect with Office: "At first blush, it's a head-scratcher."

But Sanjay Manchanda, director of product marketing for Office, believes enterprise compliance remains an area of differentiation for OneDrive:

One of the things that's important is the ability for business to have more governance and management of their corporate assets. Corporations are looking at ways to intelligently empower their users with the ability to work anywhere, on any device, while having some governance in place.

OneDrive for business has been designed as an enterprise-grade offering. A lot of focus has been on security and supporting enterprise-grade standards around security and compliance, especially around DLP and encryption. That probably is one of the biggest areas of differentiation.

In the end, customers will decide based on their use case and we want to enable customers to have that choice.

Integrating Dynamics and Office 365

Ehrenberg added that more integration between Dynamics and the Office 365 product set was on the cards.

In the spring release of Dynamics CRM we're going to push the integration of Office to a new level.

For example this could include using Yammer to follow deals, sales organizations, or other elements in CRM, or adding notes into OneNote within the Dynamics application. There would also be "more seamless" integration with Powerpoint, Word and to leverage Skype functionality. The Delve search functionality, which leverages Office Graph, will also be connected into CRM. The latest partnerships add impetus to those initiatives, he added:

Having Salesforce come along and say we're going to integrate to Office, that's even more inspiration for us to get that right.

He also endorsed the notion that compliance is a complex issue where Microsoft can differentiate, explaining that supporting Office Graph and the Cortana voice assistant are raising challenges around protecting individual and corporate data:

We're looking at a model where, first our customers get to decide which bits of corporate information get looked at, and then the individual user also makes a choice ...

That is one of the things we're spending an enormous amount of time on. Microsoft wants to take the high road on allowing people to decide what data they can expose — and, just to make things extra complicated for ourselves, to allow you to change your mind, too.

Other vendors respond

Meanwhile, other vendors in the online file sharing and collaboration market were evaluating how to respond to the Dropbox moves. Stuart Cochran, CTO of Huddle saw the partnership as further validation of the market while emphasizing his own company's differentiation:

Although the partnership sees Dropbox start to shift into the enterprise collaboration space, simply combining editing plus sync capabilities does not equal a collaboration service. Teams need to have access to all the information they need in one secure, central repository rather than have data fragmented all over the place. This information needs to be stored, shared and worked on in context with all comments, audit trails and version controls accessible to everyone who needs it within and across the firewall.

Box was eerily quiet, settling for an anodyne company statement:

Under Satya Nadella's leadership, Microsoft has shown a commitment to openness that will make it easier for an ecosystem of partners to drive innovation in the enterprise. We have a strong relationship with Microsoft and have worked with them across several initiatives, including our recently announced Box for Office 365 integrations, compatibility with Azure Active Directory, and our Box for Windows 8 app. We'll continue to find ways to collaborate with Microsoft and bring new experiences to our joint customers around the world.

My take

One of the questions I had going into Convergence this week was whether the Business Solutions unit was fully on board with the cloud-first strategy being driven by other parts of Microsoft, in particular the Office 365 team. The Powerpoint decks in the keynotes portrayed a platform message in which Dynamics was an equal partner with Office and Azure, but did the reality match up to the 'marketecture'?

The insights into the high-level co-ordination that CEO Satya Nadella is orchestrating — along with Bill Gates' involvement and interest in technology roadmaps — suggest that Business Solutions is indeed fully on board with the strategy. There may still be some wrinkles that need to be ironed out — the ERP customer base in particular is notoriously conservative and advancing the product refresh cadence will be a challenge. But it's clear that the entire company sees this division playing a crucial role in cementing its position in the business applications market, even as that market moves to a cloud-first, mobile-first world.

Disclosure: is a diginomica premier partner. Microsoft paid my travel expenses to attend its Convergence EMEA event in Barcelona.

Image credit: Megaphones © eelnosiva -; headshots via Microsoft.

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