Microsoft CIO Tony Scott on life on the vendor side

Tony Scottrecently completed his first year as CIO at Microsoft, having arrived at the firm’s Redmond, Washington HQ via IT management roles with a definitive list of iconic American corporations, including General Motors (GM) and Disney. After an illustrious career as an IT leader acquiring systems, Scott has found a new home in the software industry that allows him to release the inner product developer hidden in many CIOs. Although Microsoft is embedded into our lives as the PC’s default operating system, and through an increasingly large part of our mobile and entertainment worlds, it is easy to forget the sheer size of the corporation which for its last financial year had revenues of over $60bn (£43bn) and a headcount of over 91,000 – the company currently has a market cap of about $150bn (£107bn). As corporate vice president and CIO, Scott is responsible for 4000 IT staff around the world. “That’s what it takes to support the headquarters and field organisations,” he says. “We do business in most countries in the world,” he adds. By comparison, Disney, itself no dwarf in the business world, had an IT staff of about 800 under Scott’s command. Scott joined Microsoft in February 2008 in what many felt was a coup for the software behemoth, and 2009 has been a busy year for the broad-shouldered CIO. “The biggest achievement is that we are further along a journey,” he says. “Our cost efficiency efforts are significant improvements from where we were. All CIO roles are a journey; you inherit a bunch of things and you shape a few things. But the most exciting thing is the conversation we have had with the business on how we can shape where the business goes. If you are CIO, that is where you want to be.” Scott believes that as the software paradigm shifts, partially, away from programs delivered in shrink-wrapped boxes with great big release patterns and towards a service delivery model supported by the internet’s infrastructure, the CIO and his team become increasingly important to the software industry. Microsoft has not been shy of late in admitting that it will have to embrace software-as-a-service models and Scott and his team are instrumental in this shift in business model. “The digitisation of our business processes is a never ending journey,” he says. “Some products at Microsoft are going from analogue to digital in delivery. Our products are now often software and a service. In other industries it is something [different] and a service.” Returning to his task of driving efficiencies through his department, Scott says that by July he will have taken $100m of costs out of the IT department. “Which is not easy to do,” he says lightly, adding that he has achieved this through improvements to the reliability of key systems.

“By the time you get to your second or third leadership role in IT, you know there are a lot of common issues,” he says, when asked of the improvements he has made and whether they differ at Microsoft when compared to GM or Disney. CIOs are increasingly calling for a wider brief in the business than just technology. Scott is no exception and has secured a broad remit as vice president and CIO at Redmond. Among his extra responsibilities are head of the Quality and Business Excellence team, sponsor of the Microsoft Operational Risk Management plan, and he has a close involvement with the key research and development department. Scott sees the CIO role as being a champion of all these. Discussing the Microsoft Operational Risk Management plan, he explains that the overall objective is not to sit in a darkened room and think of worst-case scenarios involving natural disasters, war or economic turmoil – all of which seem to be taking part anyway – but to constantly monitor the little risks that can grow insidiously into a massive snowball able to take out a part of the business. “The basic objective is to give a candid assessment of the risks,” he states. “A whole series of minor things can end up being very disruptive to the business.” Scott has experienced corporations carrying out audits of risks, placing them into a matrix of high impact and preparing for them, even though these are often risks of events that are unlikely to occur. “It’s like being prepared for nuclear war, but it will not happen,” he says. Instead, Scott likes to concentrate on the risks of events that really do happen; those little things that can sideline a business or damage its reputation. “We are prepared for the big things and know how we will address them, but I believe that if you chip away at the little risks, you will be more prepared anyway,” he says.

Driving safely Scott likens risk management to car ownership and driving. You don’t want to be in the big accident, so you look after your car, you don’t drink and drive, you don’t drive when you are tired. It is all of these little things that mean that you won’t have the big accident. Scott believes that with the cross-function view of sales, marketing and other silos, the CIO today, is better placed to -assess risk than the CFO, who has traditionally been responsible for the area. “The CFO was the central nervous system of the company; they had the best view of everything that was going on in the business. [But] today the CIO may have as good a perspective of how the company really runs. If the two team together, then you have a really good perspective.” Equally, Scott champions the CIO’s suitability to be head of the Quality and Business Excellence team, and not just because he happens to hold that position for Microsoft. “Quality and business excellence, it’s the same quality principles of IT leadership – business process and IT.” Within this role is a degree of knowledge management, a term much bandied about in the last decade for selling expensive workflow and enterprise content management systems that failed to deliver on their initial promise. But knowledge management in a corporation the size of Microsoft is a major issue for Scott. People move about the business regularly and, as we all know, there is a constant stream of product releases flowing from Redmond. Scott and his team are working to ensure that when staff members move from one product group to another the team they leave behind is not missing some vital piece of information. Equally they are trying to achieve the knowledge management panacea of departments being able to benefit from other departments through a corporate information resource. “We are working with the business teams towards a standardised approach to product introductions, sales and support, and to make sure the process survives no matter the product,” Scott says. “People move into different parts of Microsoft, and teams and business conditions change.” He says that there are opportunities for divisions that are not directly related to others to share knowledge. The X-Box team could swap experiences with the Windows 7 team, for example. As you would expect, the CIO of Microsoft is a large user of Microsoft software. As CIO, Scott has introduced a close relationship between his department and the developers at Redmond. Scott’s users, the Microsoft workforce, are part of the research team, testing the products that other CIOs may be considering integrating into their organisations.

“We are driving these tools and deploying them within. It’s an internal programme I call ice-creaming, we eat our own ice-cream,” Scott says, using a term he created because it sounds more palatable than the traditional Americanism of eating your own dog food. Scott doesn’t just take the latest beta-test release from the various product divisions of Microsoft and implement it. Since joining, he has been involved in product development from the drawing board, before a line of code has even been written. “I sit down with the product development teams and agree a set of goals on customer proof-points, compatibility and reliability. We give them a set of ideas before they write the code.” Scott says the product teams are keen to work with him and garner as much information as they can from him as they look to discover knowledge gleaned outside the Microsoft campus. Many of his CIO peers also provide wish lists that he can pass onto the development teams. “Our list often reflects the customer wish list and the differences are often related to a vertical market,” he notes. When a beta product is available, Scott releases it to a limited audience and then continues to extend the roll-out as the product nears commercial release. “We had all our financial applications on the latest version of SQL Server a year before it was released,” he says by way of example. Beta programmes come with their own sets of risks and Scott’s first priority is the smooth running of the Microsoft business, with its product development a lower priority, but he remains relaxed and you can tell intuitively that there are no opportunities for systems to go offline and bring Redmond to a halt. “I have a set of processes to mitigate failure; all beta systems include backup and failover and there are ways of checking the data. Often we are very confident of the product by the time we are deploying it to my customers.” Scott admits that the close involvement in technology development is one of the great pleasures of his role at Microsoft. “There is a creative part in all of us [CIOs]. I’m one of those frustrated product development guys; maybe I’ve gone home now,” he says.

Harnessing creativity Dealing with creative energy has been a trait of Scott’s recent career. “At Disney everyone was a frustrated writer, actor or director,” he says. “At Microsoft we have a lot of software developers. They all want to be the next Bill Gates. You have to live with that and embrace it. With Disney it was how do you tell the story; at Microsoft it is ‘how do we shape the future?'” That last statement about Microsoft staff and their ideology is pretty profound: that a corporation and its staff believe they have the technological future in their hands, and that they are responsible for moulding it. But Scott says it is the main emotional response he receives from the Microsoft community.

“I feel that energy every single day, when you think of the uncharted markets for technology, it still fells a like a big opportunity. With clearly stated direction, people at Microsoft line up and tackle the hard problems; the creative energy is very focused and it is very powerful.”

Believing in intellectual property

If there is one thing that pharmaceutical makers, car manufacturers, entertainment corporations and Microsoft agree on, it is that they own and control a mass of intellectual property (IP), and that it is of great value to them. It just so happens that Tony Scott, vice president and CIO of Microsoft, is an expert in IP and a strong advocate for its protection, having been an IT leader for a pharmaceutical giant, once powerful car maker General Motors, Disney and now Microsoft. “I lived near Santa Clara University and they had a joint MBA/doctorate and I found I liked the law side of the doctorate more than the MBA,” Scott says of how he came to hold a Juris doctorate in IP and international law. “I wanted an advanced degree; I knew I was interested in IP. I was also doing a lot of contracts with global deals.” Intellectual property is set to be one of the biggest challenges organisations face over the next decade and Scott hopes to be closely involved in the debate that is set to ensue. “Most of the [IP] laws were created for an analogue world where we moved atoms around the world. The digital world is different; digital doesn’t know borders, nor copyright. IP is one of the most interesting challenges that we have to think about for the future. There will be some tension in the world.” Scott is adamant that IP laws need to change radically to keep pace with the internet, but he is a keen advocate of the value of IP to society. “Without some scheme for rewarding invention, it is a pretty dull world.” As you would expect from a CIO, and especially from a CIO at a software company, Scott expects invention of the future to come from the software industry. The challenge for legislators, Scott believes, is to separate the notion of tax from IP, because it is going to become unworkable. “Ideas know no boundaries.” Advocates of wiki and open source technologies argue that IP is an outdated mode of operation and all knowledge and code should be freely available for everyone to use as they want. Scott is sanguine about the two ideologies, but although he doesn’t say it outright, you get the feeling he doesn’t believe they will deliver true inventiveness. “Open source and wiki is another form of what we has been done before,” he says, questioning their true value to major organisations and CIOs. “You ought to know what you are getting and be clear about its source and the support for it. In a business environment, these things are very important.”

Tony Scott: CV

1996-1999: VP of IS, Bristol-Myers Squibb

1999-2005: CTO, Information Systems and Services, General Motors

2005-2008: Senior VP and CIO, The Walt Disney Co.

2008-present: CIO, Microsoft