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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

June 25, 2014 at 5:54 PM

Q&A: Avanade chief on outsourcing, English accents and Microsoft’s rep

At the start of the PC era, Adam Warby was working for IBM in his native England, where he kept hearing about Windows 3.1.

IBM was selling its own PC operating system at the time — OS/2 — but customers kept asking, “What is it about Windows, how does this all work?” Warby recalled last week during a visit to Redmond.

Warby took the plunge and joined Microsoft in 1991.

Avanade photo

Avanade photo

“Put it down to 50 percent luck and 50 percent judgment,” he said.

Eventually, Warby became general manager of Microsoft’s enterprise services group and head of Midwest sales before helping to launch Avanade, a Seattle-based tech services firm that Microsoft and Accenture formed in 2000. In 2008 he became chief executive of Avanade, which now has 21,000 employees in 21 countries and annual sales of $1 billion.

Avanade helps big companies develop and run technology projects on Microsoft platforms, such as the Windows Phones that Delta Air Lines flight attendants now use to sell food and provide in-flight services.

Better flight services are important to Warby. He spends two-thirds of his time traveling away from his home in England. That includes a monthly visit to Avanade headquarters in downtown Seattle, where Avanade has about 500 employees.

During an annual product development expo held on the Microsoft campus in Redmond, Warby talked about the evolution of outsourcing, how Avanade has dealt with hits to Microsoft’s reputation and the benefits of his English accent. Here are edited excerpts of our conversation:

Q: Is there a threat to Avanade and other big integration companies from startups and cloud vendors bringing a “self service” movement to enterprise IT? There are new tools that make it easier for companies to develop and test things in the cloud, rather than hiring firm like yours for $10 million.

A: Our business absolutely is changing and evolving. I think “as a service” is one example. It depends on the size of the business but most companies are focused on one of two things — one is trying to drive cost out and efficiency in, and the other is their own customers and their own market and how do they figure out how to innovate.

So we find ourselves in of those two conversations and we’re trying to make sure we’re lined up with what’s relevant to those. It is changing the way we work, but we’ve been around the changing IT world for long enough that as long as you focus on the customer and the application and where it’s going, generally there’s a lot of work still to be done.

Q: Outsourcing firms are also under pressure because they no longer have such a cost advantage. Wages in India aren’t where they were 10 years ago when it really started rolling.

A: Yes, it has to be beyond cost. It’s not about labor arbitrage anymore; it’s about capability, skills — we have centers of excellence, remote-managed capabilities. … It is absolutely about capability and solutions and being able to bring those in a timely manner.

Q: Cost is still critical. Will you move to Africa or new places in South Asia to find lower costs?

A: We’re in Manila. I think our view at the moment is we’ll always continue to look at sources of good, scale, educated capability. You get into questions of political stability and commercial questions. I think at the moment our footprint is pretty good.

Q: Will you continue to grow in Seattle and be based here?

A: Yeah. My physical location is probably the least important thing. Microsoft is here, we’ve got a very significant engineering team that works closely with Microsoft, and we’re headquartered here in Washington state and that’s where we’ll continue to be.

Q: Microsoft has new leadership and board members looking at its operations and how to move forward. Is there a chance it could cut ties with Avanade?

A: I ought not to really talk on behalf of our board, but I think if you asked our board they’re very happy with the growth we’ve got and what we’re focused on, and we have no plans to change that.

Q: Some have said Microsoft needs to spin off Xbox or spin off Bing, but here they’ve got a stake in a company that might be worth billions if it was standalone.

A Lotus F1 simulator at last week's Avanade product expo on Microsoft's campus. Lotus F1 is one of Avanade's marquee clients.

A Lotus F1 simulator at last week’s Avanade product expo on Microsoft’s campus. Lotus F1 is one of Avanade’s marquee clients.

A: People will continue to speculate on all sorts of things. All I can tell you is on Avanade’s front we’re happy where we’re focused and my direction is to keep that going.

Q: How has Avanade’s business been affected by dips in Microsoft’s reputation over the past few years, such as the early reception to Windows 8, and some mainstream perceptions that the company is behind the times? IT people may have a more nuanced view but it must still affect you.

A:  Brand reputations ebb and flow. I’ve been in and around Microsoft for over 20 years and, of course, when we started we were the new pretender and then you go through the Internet phase.

I personally don’t spend too much time worrying about it and I encourage my team not to spend too much time worrying about it because we’ve chosen our focus. It’s more about, “Well that’s your decision Mr. or Mrs. Customer to decide whether you think Microsoft’s technology direction is relevant.”

We have a point of view which we’re willing to share. As long as we focus on that, the customer has to make up their mind about their view of Microsoft’s reputation or not, because it will change over time, as you said.

Q: Three years ago, were you losing jobs because a customer might have thought Microsoft missed the boat on phones and tablets?

A: We’ve managed to sustain the business growth around 15 percent, compound, over the last three years. So I’m sure we’ve lost jobs here and there, but it’s still a healthy growing marketplace.

Microsoft’s got a very good enterprise reputation. Not everybody’s going to be in love with Microsoft, but we want to work with the people that believe in their future and help them get the most out of it.

Q: Microsoft is more open to working with different platforms now. Does that change your approach since you were set up to bring people into the canyon of Microsoft?

A: It’s part of this evolution that I was talking about and it’s part of the real world.

“First on best on Microsoft” is the way we would like to think of it. At the same time you’ve got to serve your customers and what they’re working in today.

I think it is going to be more relevant in the future than it has in the part as we integrate this new set of digital and cloud platforms together. Integration is the key.

Q: How has Microsoft’s new regime affected Avanade?

A: The announcements and direction that Microsoft is going around cloud-first and mobile-first are very exciting. The big question for us: Is Microsoft relevant to our enterprise customer set? I’d say right now the relevance and excitement around what Microsoft’s doing is higher than it’s been for a while. It’s got to be good for our business.

Q: How valuable is it having an English accent? Microsoft loves to have an Englishman on stage for some reason; maybe it conveys authority. What’s your take on that?

A: It’s a difficult one, being English. I put a big store on communications as a skill and if people like the accent and that helps even more, then that’s a good thing.

But at the end of the day it’s about communicating clearly. If the accent helps that sound good to some people then so be it. As I go as a Brit into Europe they may not feel the same way.

Q: Does it work the other way? If you’re having an event in the U.K. do you bring Americans on stage?

A: No — content first, accent second, I think. That’s what I say.

Comments | Topics: avanade, Enterprise, Microsoft

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