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Bill's Bookshelf by Bill Rosenblatt

The world according to Gates

One author you cannot ignore

May  1999
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Bill Gates's Business @ the Speed of Thought is his contribution to the spate of books on how networked digital technology is revolutionizing the business world. His messages and customer success stories are worth reading, even if his ideas are, by this point, not very original. But caveat emptor: buried not far beneath the surface of this book is a Microsoft sales pitch. (3,000 words)

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If you've been paying attention to this column or visiting your local bookstore with any regularity, you know that the last year or so has seen a spate of books from various people about how networked digital technology is revolutionizing the way we interact and get work done. Authors have included Lotus's Jeff Papows, analyst Patricia Seybold, and many others. Each such book has a different viewpoint, a reflection of the author's biases and experiences. But the messages have been largely the same -- so much the same, in fact, that I haven't been reviewing these books ... until now. There's one author whose opinions on the impact of networked digital technology on business are impossible to ignore and have reverberations that go far beyond his books' readership. He is, of course, Bill Gates.

For those of us who understand Bill Gates's power in the business world, it is impossible to imagine that his new book, Business @ the Speed of Thought: Using a Digital Nervous System, is intended to represent anything other than Microsoft's agenda. Gates is no more likely to be objective about and disinterested in technology than is a US senator about politics. So in reviewing this book, it's much more important to assess how it defines and contributes to the Microsoft philosophy than it is to say how "good" the book is or is not.

But first, some brief words about the book's content are in order. Business @ the Speed of Thought is a straightforward explanation of how networked digital technology applies to various aspects of medium-to-large businesses. Gates used the term digital nervous system when trying to describe to a group of large-company CEOs how a well-developed information infrastructure can help a business, and he liked the expression well enough to use it for this book. The idea is that a digital nervous system, like a human body's nervous system, monitors events and conditions in every part of an organization. When something happens, or when it detects some extreme condition, it relays the news instantaneously throughout the whole organization, enabling the right people to do something about it.

The book's sections cover topics like Internet commerce, corporate knowledge management, and using information throughout an enterprise to make smarter, faster business decisions. To people who have spent the last few years in business information technology, there will be no revelations. By far the best chapter is "Treat IT as a Strategic Resource." In it, Gates admonishes CEOs to learn more about technology, involve CIOs more in business strategy, and treat IT as more than just a cost center. He cites the CEOs of Alcoa, Johnson & Johnson, and Boeing as inspirational examples.

The book also overflows with great case studies, many of which are about Microsoft. These aren't just examples of how the company uses technology; some are about how Microsoft runs as a business, and one is about how Microsoft moved to embrace the Internet.

The majority of the success stories are from a diverse group of Microsoft customers, including Merrill Lynch, McDonald's, Coca-Cola, Dell, and Marriott. Gates goes through complete explanations of what induced these companies to make investments in technology, how they went about it, and what the business benefits were. They are good stories in plain, readable language, not dry B-school case studies. They are also virtually devoid of technical details. You read them, and then you feel envious of these other businesses because they are able to be cutting-edge.


Selling from the top down
That's exactly the point. Business @ the Speed of Thought is aimed squarely at nontechnical CEOs of medium and large companies. Moreover, it's part of Bill Gates's strategy for making Microsoft into a serious enterprise technology vendor by focusing on top-down, rather than bottom-up, influence within a company.

Remember that Microsoft got to its leadership position in the business world by being the first technology vendor to market to the average office worker rather than the corporate MIS department. Back in the mid-'80s, the company sold desktop productivity software directly to people who wanted to use information and didn't want to deal with the long turnaround times and green-bar-paper output of MIS departments and their glass-house mainframe environments. By the early '90s, most office workers had PCs on their desktops, and small workgroups had networked them together, often without any help from corporate MIS. As PCs reached critical mass, and enterprise networks were required to support e-mail and other network applications, MIS was forced to support them. In some cases, MIS was dragged kicking and screaming into supporting PCs and PC networks.

Microsoft got to its leadership position
by being the first technology vendor to
market to the average office worker rather
than the corporate MIS department

Now, of course, PCs and PC networks are standard in almost all organizations. As Microsoft began to saturate the market, it knew the next important phase of growth would be through MIS departments themselves. In the mid-'90s, Microsoft started trying to put out the kinds of scalable, reliable products that would appeal to corporate data centers. It designated MS BackOffice as its system software suite and applications for medium-to-large-scale enterprises; BackOffice includes Windows NT, the SQL Server database, MS Exchange messaging server, and other components.

By now, it has become clear that BackOffice isn't making as much headway into the high-end of the market as Microsoft would like. Windows NT 5.0, now called Windows 2000, has suffered many setbacks. MS SQL Server is only making minor inroads into Oracle's hegemonic domination of the database market. Overall, Microsoft hasn't made it to the short-list of enterprise players that includes IBM, Sun, HP, Oracle, SAP, and a few others. So it's clear that Microsoft is looking for better ways of selling top-down to executives that make large-scale technology buying decisions.

After having worked at one of the acknowledged enterprise players for a few years, I've seen what it takes to sell in this manner. First, you don't sell products or technology, but rather business solutions that offer measurable and significant impact. You talk to customers in their language -- the language of business, not technology: you talk about sales, manufacturing, and customer service, not networks, databases, and file servers. Better yet, you talk credibly about their particular industry, showing that you know what problems they're facing and how to solve them. You make your customers' mouths water by telling them stories of other customers, preferably their competitors, who have already adopted such solutions. Above all, you engage your customers in an ongoing dialog, during the course of which you get them to think your way. If you do this right, customers will naturally buy your products, over a long period of time, without your having to "hard sell" them every time.

Business @ the Speed of Thought follows precisely this pattern. It is nothing less than Bill Gates's enterprise pitch. There are two important messages here. The first is: Look at how many businesses are inducing radical improvements by adopting PC and Internet technologies, and by integrating simple tools together into business solutions. Second: This is the approach that I, Bill Gates -- highly respected CEO, hardheaded "numbers guy," up on the latest trends in business management -- have chosen to take at my hugely successful company which has one of the largest market caps in the world.

Do not underestimate the power of the second of those two messages. While I was at Sun, I found that many nontechnical senior executives want to talk to their counterparts at Sun because it's a successful business and they want to find out how the company is run. During those conversations, Sun executives naturally do a bit of understated sales work by espousing the company's basic philosophical tenets -- in Sun's case, big servers, thin clients, the Web, Java, etc. (This is precisely why all computer companies find it very important to "eat their own dog food" -- to use their own products, and not those of their competitors.) The hope is that this leads the nontechnical senior executives to start talking to their technical managers in those terms, and the result is a group of top management people who "believe." Once the customer believes, it's that much easier for the sales rep to do his or her work and move the product. This book is Bill Gates's mass-market approach to getting the same kind of message out.

Spreadsheets and e-mail
Although Business @ the Speed of Thought is nontechnical (except for an Appendix), you will see how it positions Microsoft's technology if you read between the lines. Gates is using this book to position Microsoft against various types of competitors that he needs to beat in order to be taken seriously as an enterprise player. Most of the success stories Gates tells are, as mentioned, based on PCs with Windows and/or Web user interfaces. On a few occasions, he mentions mainframes as legacy systems with which PCs can integrate. He does this because mainframes are still running at many major corporations, and if he talked about moving mission-critical systems from mainframes to PC servers, he would undermine his credibility; virtually no one believes you can do that successfully. He only mentions Unix once: in the Appendix as a "legacy" system at McDonald's, which they replaced with PCs. He also mentions Java exactly once, as one of several programming languages that Merrill Lynch is using to implement the user interface of a very large application for its army of financial planning consultants. The message is standard Microsoft positioning: Unix is not important; Java is just a programming language; the Web is important, but especially when integrated with Windows PCs.

The message is standard Microsoft positioning:
Unix is not important; Java is just a programming
language; the Web is important, but especially
when integrated with Windows PCs.

It's also interesting to look at how Gates positions enterprise resource planning (or "businessware") applications like SAP. In addition to the main enterprise players in the computer industry, the other important influencers of Fortune 500 executive technology buyers are the major consulting outfits, like Andersen Consulting, PricewaterhouseCoopers (PWC), EDS, and Cap Gemini. These firms have been growing rapidly, thanks in part to the explosive growth of businessware applications, which require large consulting engagements to implement. If you're a senior Fortune 500 executive, then a partner from one of those consulting firms will tell you -- over a suitably expensive lunch -- that a businessware app combined with his or her firm's expertise is the ultimate solution for installing the equivalent of an enterprisewide digital nervous system.

As he does with mainframes, Gates dispenses with businessware applications and large consultancies by pushing them off into a corner. He implies that such things have their uses, but only in limited situations. Microsoft does have SAP installed internally, but he calls SAP and its competitors "financial applications" -- a term at which SAP and large consultancies would certainly bristle (much as Sun does when Gates calls Java a "programming language"). Microsoft also did hire Andersen, but only for one fairly modest job in Human Resources.

When Gates goes into detail about certain case studies, particularly those at Microsoft, he emphasizes simple tools -- things that Microsoft is good at. One particularly telling example of this comes early in the book. Gates talks about a sales and marketing tool devised by a Microsoft operations manager in a regional sales group. By combining information from Microsoft's existing sales database with demographic data and other sources, the manager was able to target particular cities where there was high potential for Microsoft product sales but little penetration -- meaning that marketing activities in those cities would be likely to have big bang for the buck. The theory was tested out in a few cities in the manager's territory, and the results were very positive, so Microsoft decided to take his tool and roll it out worldwide. The way Gates describes it, this tool provides a level of precision in measuring marketing effectiveness that ought to be the envy of every company this side of Procter & Gamble.

If Andersen or PWC were to tell this story, they would focus on high-level issues like data warehousing, information architecture, and systems integration. If it were Oracle or Sun, the discussion would focus on database server performance and network scalability. Gates's discussion of this success story doesn't focus on any of those things, not even on the main Microsoft sales database. It focuses on spreadsheets and e-mail. The message: Spreadsheets, e-mail, and smart people who know how to use them are the main things you need to build a digital nervous system.

The message: Spreadsheets, e-mail, and smart
people who know how to use them are the main
things you need to build a digital nervous system.

Public sector wish list
The book concludes with a section that is de rigueur in every book of this type: chapters on how technology can improve healthcare, education, and government. Again, Gates breaks little new ground, except to cite various isolated success stories in each of these areas. Most of the section on government is about how countries outside the US, such as Australia and Ireland, are ahead in using technology to streamline operations and make life easier for citizens.

The difference in this final section is the chapter on the use of technology in the military. Gates talks about how the military is using commodity technology to get information about geography and battle plans to soldiers in the field at a tiny fraction of the cost of the previous generation of custom-developed systems. The most interesting thing about this chapter is that whereas Gates's book may not make him any friends among the big consulting companies, it's likely to make active enemies of the defense-contracting establishment.

Companies like Raytheon and Lockheed-Martin thrive on multi-hundred-million-dollar custom development programs for the military, and they've spent the last decade or two fending off the military's desire to migrate from costly custom development to less expensive so-called COTS (commercial off-the-shelf) integration. Now here's Bill Gates telling the world that a mission planning system, which used to cost $250 million and run (presumably) on Unix workstations, now costs $2.5 million and runs on virtually disposable Windows CE-based handheld devices. That's $247.5 million out of the pockets of defense contractors. Yet dig a level deeper and you'll find out whom Gates is really talking to: generals, admirals, and other military equivalents of corporate CEOs. He's telling them that they can spend less money for better results, and he's warming them up by quoting Sun-Tzu, Ulysses Grant, and Napoleon, and throwing in slightly disturbing phrases admonishing "...the unwillingness of the American public to accept high casualty rates."

Windows. Do not argue.
The Appendix of Business @ the Speed of Thought is the "how to get started" part of Gates's pitch. By going into somewhat more technical detail than the body of the book (though not much), Gates is forced to go into more explicit sales mode.

One of the Appendix's two main ideas is that the computer industry has shifted from a vertical model, in which vendors like IBM, Digital, and HP produced everything from CPUs to business solution software, to a horizontal model, in which different vendors contribute interlocking components. This isn't exactly a news flash. But look at the chart that illustrates this point and you'll see an example of the great British slang term Oh what a giveaway. In the new horizontal paradigm, Gates identifies the following layers: chips, systems software, databases, financial systems, networking infrastructure, network integrators, and system integrators. In each one of these categories, he lists a few examples. Where are the computer makers, like Compaq, HP, IBM, Dell, and Sun? Not there. (Sun, HP, and IBM are listed under systems software.) Obviously, Gates didn't want to play favorites among PC makers, nor to list vendors that don't do PCs, like Sun.

The other main idea in the Appendix is something called Windows DNA, which stands for Windows Distributed InterNet Architecture. This is Microsoft's latest-generation high-level computing architecture, the technical instantiation of the overall Microsoft philosophy. It's designed to ensure that customers lock themselves into Microsoft by building applications that use Microsoft technologies in addition to (or instead of) open standards: Active X instead of Java for Web pages, COM instead of CORBA for object modeling, multiple data sources instead of SQL databases, and load balancing among clients and servers instead of among servers alone. (Some wag will surely call this architecture Windows. Do Not Argue. Oops, I just did.)

In all, Business @ the Speed of Thought is a book that technology managers should hope their CEOs read. It tells them how technology can transform their businesses and that they need to get more involved, and it does so in the voice of a highly respected peer. The writing is clear and free of both technical and business jargon. There is no "simple diagram that explains everything" of the type used by management consultants. The case studies alone are worth the price of admission. It's simply important that anyone who reads this not take it at face value. No matter how cleverly disguised this book is, it is at heart a Microsoft sales pitch.

Scott McNealy recently said that he will not write a book "on the shareholders' time." By that, I suppose he meant a book more like the usual ones that look back at how the authors built their successful businesses. Business @ the Speed of Thought is not such a book; on the contrary, I'm sure Bill Gates fully expects it to contribute to Microsoft's bottom line, and hence its stock price. I'm equally sure that Microsoft's new crowd of sales reps who call on Fortune 500 companies will give copies of this book to their CIO-level customers. I hope that if these CIOs pass it on to their CEOs, they'll include a cardboard cylinder of Morton's finest Iodized.

[ Books] Title: Business @ the Speed of Thought: Using a Digital Nervous System
Author: Bill Gates
Publisher: Warner Books
ISBN: 0446525685
List price: $30.00

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About the author
[Bill Rosenblatt's photo] Bill Rosenblatt is vice president of technology and new media for Publication Services at The McGraw-Hill Companies.

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