Although working for a company that is decidedly high-profile, David Hemler likes to describe his style as low-key.
And true to form, he plans no major changes while in charge of Microsoft Canada, where he was appointed president in January
following a leave of absence by Frank Clegg.
That’s not to say some fine-tuning is not in order. Microsoft Canada plans to get closer to both its enterprise and SMB customers, but of more immediate concern is the channel, of which Hemler is viewed as a strong proponent.
Hemler has been with Microsoft Corp. since 1995, most of it in the channel and partner community, and most recently in the position of regional vice-president of Microsoft’s Mid-Market Solutions and Partners.
Resellers take note: a huge priority at Microsoft Canada will be to clear the channel of any unauthorized use of software. At the same time, Microsoft wants to foster better relationships with solution-providers and system builders.
Hemler recently met with a team of editors at the IT Business Group’s office in Toronto.
ITBusiness.ca: What are some of the primary ways you want to change the Canadian organization?
David Hemler: With Microsoft Canada having a long, strong history within the company, and a strong reputation in the marketplace, I wouldn’t say I came up here with an awful lot of stuff to change. The priority is continuing strong growth, we are currently the fastest growing large subsidiary in Microsoft and we want to stay that way. I will look at how we integrate, making Microsoft products work together and new scenarios for our customers, how do we make that real. That’s a big piece for me. A third thing is continuing advocacy work with the government and being a good citizen here, that child tracking system we launched last month, and our work with the Canadian Institute of the Blind.
ITB: What do you see as threats to the continued growth in the Canadian marketplace?
DH: One piece is education. Do customers really understand what the new solutions do for them? And, do business partners understand how they can successfully make that happen? If you look at the amount we spend both through our channel, it’s big for us. Secondly, there is risk to us posed by the strength of the Canadian dollar causing budget pressures on our customers so they cut back on IT investment. If you look historically, Canada has lagged other countries such as the U.S. in terms of relative IT spend on a per capita basis and we think that contributes to the productivity gap. I have a hypothesis: the soft Canadian dollar of years past has led organizations to avoid capital expenditures especially in the manufacturing sector as an example. So why update your equipment if you don’t have to and you can still be a low-cost producer? The strengthening dollar certainly makes that a less viable position. We think that there are some great things that software can do to help the efficiency side of that, but companies are going to have to make some investment to get there.
ITB: How do you do that, by going vertical or by building depth of expertise in your organization?
DH: We are largely going to continue to be a broad-market, high-volume, fairly low-priced software provider. Certainly, we have business solution applications that play well into vertical markets but we really look to our partner base to provide deep vertical expertise. For example, take the federal government: we are oriented in terms of vertical sales teams but we don’t sell vertical products there. Same with the communications and financial services sector. We are vertically oriented from a sales view but we sell horizontal products.
ITB: Presumably you spend a lot of time with CIOs of large companies. What are they telling you the priorities are?
DH: I spend time with CIOs and CEOs, and it’s interesting, those priorities don’t exactly jive. From a CIO perspective, I’m hearing cost reduction, pressure from an export perspective and how can we help them take cost out of their organization? And that’s everything from better procurement to operational efficiency. Secondly, I’m seeing a lot of concern around collaboration in the sense, “Hey, we’ve got all these people and assets, how do we work better together so we share information?” The third thing is time-to-market, building a solution is going to take 18 months to get there — is there anything we can do online. The last piece is, “Too much of my budget is going to maintain the old stuff, 70 cents out of every dollar, and not enough for new offerings or value-added software. The CIOs I talk to would like to get to much closer to a 50/50 balance.
ITB: So what are CEOs telling you?
DH: Growth, growth and growth. Growth is No. 1 on their agendas by far, especially in context of some of the challenging economic conditions. It’s how do I get a solution in place fast and do it in a profitable way.
ITB: There’s some feeling out there that vendors have saturated the market with software and organizations have pretty much finished building their IT infrastructures. Where are the opportunities?
DH: I don’t think our infrastructures are done. Their ideal remains to be seen and a lot of tweaking needs to be done. Also, a lot of infrastructures are high-cost and we can do some things to take costs out of those infrastructures. We are seeing continued interest in Windows upgrades and taking costs out of the back office in our server and tools business. That’s double-digit growth. The good news is we see growth in every part of business.
ITB: SMBs really seem to be struggling with IT management issues, what are you doing for them?
DH: Our strategy is borne out by Small Business Server, a pre-integrated solution with messaging, collaboration, file and printer services, directory, fax services and database all integrated into one solution, easy to implement and a few clicks for customization. It’s much simpler than it would have been in the past at a more attractive price point. Having a targeted product for that customer set is powerful, and you’ll see us do more of that at in the mid-market space. Our approach is to solve that problem with software, not through services, which is a differentiator we have in the marketplace.
ITB: A lot of companies in Canada seem to be hanging on to the old stuff and not refreshing their desktops. As president of Microsoft Canada, do you think it’s incumbent on you to speed that along?
DH: The cycle varies dramatically depending on the type of business, and yes, I’d like it to go faster. I see (some) organizations using much older versions of hardware and software than what their employees could be getting. It’s a challenge for us. How is a refresh going to drive business results. A lot of organizations are still at Windows XP and Office 2003, and there is a lot of interest in Longhorn, but I don’t have a crystal ball.
ITB: How are you working to prep for Longhorn?
DH: The thing we don’t want to do is get too far ahead of ourselves. We are still in the testing phase. We just had our Windows Hardware Engineering Conference in Seattle last week, which, among other things, is about how we get the device-driver people to think about what is in Longhorn, how we get the OEMs on that from the hardware side, and flowing to the service-providers and the ISVs. Given that we are a good year-and-a-half away, we are advising customer to deploy Windows XP Service Pack 2 today.
ITB: What’s your plan for opening up your partnership program to more solution-providers?
DH: A couple of aspects to that, we already do a lot of partnering such as the overlap with HP’s partner program, and we do some work in targeting those partners we both work with. Cisco is a logical extension to this. But the last we want to do is spam our partners, introduce things they are not interested in, and secondly, make sure the information is relevant to them. As we look at what customers are asking, certainly the ability to bring a solution is a big thing.
ITB: The system builder community has begged Microsoft for a fairer pricing policy. Are you looking to overhaul that?
DH: There is a couple aspects to that. The first thing I hear from system builders is “Get rid of pirated software because it’s really hard to sell against something that is illegal?” If you noticed the work we have done in the last few months, we have filed a significant number of lawsuits against people who are doing hard- disk loading and selling counterfeit software. The first thing is to level the playing field between those who are and those who are not playing by the rules. The second thing we look at is what makes the most sense from a pricing perspective given certain volumes. It makes sense that somebody who sells dramatically more software gets a lower price, that’s general volume discounting. We try to balance that as best we can. The one thing we haven’t done is jointly market with those system builders who can showcase their value add so they can potentially command a higher price point, whether it be a media centre edition or a customer software solution.
ITB: How would you describe your management style?
DH: My style has always been one of making sure my team does well. If my team does well, I do well. I tend to be fairly low-key, and not really trumpet me, but what my team does. My teams have their businesses, I help them co-ordinate and marshal resources but it’s really about empowering those vice-presidents and managers and then getting out of the way.
ITB: What would you say to those who would rather have a Canadian in charge of Microsoft Canada?
DH: Microsoft is, at the end of the day, a global company. More than half of our revenues come from outside the U.S. and we have a pretty strong flow of people across borders. We have Canadians running key businesses in Redmond, Wash., and we have people moving across the world. The guy I used to work for, who is a Canadian in the U.S., is now going to run a business in Japan, We move people around all the time. Having also worked in the Canadian marketplace in a previous life, I know the marketplace up here.
ITB: How technical are you?
DH: My background is Unix and mainframe development. My few years at Microsoft Services (division) were spent doing custom infrastructure work and hands-on implementation.
I use a tablet PC and mobile device. If you send me a briefing, e-mail it or send a link. I try not to have paper in my life. I spend a lot of time on planes, and the only problem is, I have to turn my machine off in take-off and landing.
I’m a firm believer in the benefits technology can have, and
I figure, if I’m not living the (digital) lifestyle, how can I convince others to live the lifestyle as well?