The Innovation Engine —the Microsoft Partner Ecosystem Driving the Knowledge Economy in Central and Eastern Europe

With more than 47,000 businesses that employ nearly 700,000 people now working in conjunction with Microsoft in Central and Eastern Europe, Tomek Bochenek, vice president of sales, marketing and services group, Microsoft Central and Eastern Europe, explores how partners are fuelling growth and argues that the region is just at the beginning of its technological renaissance.

HOUSTON, Texas — 7 July 2008 — Central and Eastern European economies are booming. Independent analyst IDC estimates that to 2011 growth is set to outstrip that of other global economic success stories, including China. Information communication technologies (ICT) are proving to be a powerful engine for growth, but there are social and economic challenges that the region must address if it is continue lead the way.

Microsoft has been working in the region together with governments and partners since 1992. Central and Eastern Europe is Microsoft’s fastest growing market and will continue to enjoy this leading position for the foreseeable future. Our partner network is quickly approaching 50,000 and is projected to grow 30 per cent next year. To help support this growth, Microsoft’s presence in the region is also expanding, with a staff of nearly 2,000 in 23 subsidiary offices serving over 32 countries. Remarkably, in our Central and Eastern European headquarters, 47 nationalities are represented among the 120 staff —made up of some of the best and brightest talent in the region.

Central and Eastern Europe’s importance to Microsoft was demonstrated in May this year, with Microsoft CEO Steve Ballmer’s visits to Hungary, Ukraine, Slovakia, the Czech Republic and Russia. The visit was aimed at focusing world attention on the achievements of technology sector companies such as Microsoft in the region: engaging governments, non-governmental organisations, partners, customers and businesses. A key component was to engage with universities, governments and local partners to explore ways of working together that will deliver mutual benefits to the wider economies and societies in which we operate.

Microsoft succeeds only when our partners succeed. We are a ‘partner business’, with our sales coming through the companies we works with. And in our region, many are relative newcomers, with 7,000 unique partners added this year alone — they work in one of the most dynamic marketplaces in the world. Our partners integrate Microsoft’s applications into industry-leading business solutions and, in developing technical excellence, provide the ICT foundation on which the region’s renaissance is built. As well as increasing the depth of our partner network, we are increasing the breadth. The Microsoft partner programme encourages companies to specialise in specific areas, such as systems management, security and mobility, to name a few. Year on year, there has been a 30 per cent increase in these specialisations in our existing network, increasing the top level services our partners can offer to customers.

We are recognising and rewarding excellence in our partners, initiating an awards programme in Central and Eastern Europe. The annual Microsoft Partner Programme Awards place the spotlight on 23 of our partners from nine subsidiaries that have delivered exemplary Microsoft based solutions during the last 12 months. Technology companies within the region are advancing rapidly and reaching a high level of development; the solutions and services that our partners offer are world-class and we are proud of their achievements.

Russian partner, CDC, has been rewarded globally as well as regionally. Microsoft’s worldwide partner awards recognise their OPTIMUM Solution as a world-class mobility solution that not only leverages the full extent of the Microsoft platform, but offers its users proven levels of increased operational efficiency. We feel it is important to praise partners such as CDC, who are providing their customers with flexible solutions that maximise business potential, productivity and reliability.

The quality of Microsoft’s Central and Eastern European partner network is second to none. With 8% of the world’s total population and 13% of the global student population, the region is particularly strong. Our partners are entrepreneurs and this intellectual horsepower is helping to drive the success of the businesses we see in the technology sector. Looking at the large number of graduates in the technical sciences, we spotted this trend early. As a result, we partner with schools, academic institutions and businesses through initiatives like the 14 Microsoft Innovation Centres and more than 300 Microsoft IT Academies in the region. Ultimately this ensures that innovative and forward-thinking minds can access innovative and forward-thinking technologies.

Intellectual Property (IP) is the heart of the knowledge economy because it is a market where skills and innovation are the key differentiators. We are committed to working with governments and institutions in the public sector to help spread the message of the benefits of legal, genuine software. With estimates suggesting that 69 per cent of all Microsoft software in use in 2005 was counterfeit, Central and Eastern Europe has some of the highest rates worldwide.

Microsoft is actively supporting the development of viable national software economies and supporting emerging local companies that will provide growth and jobs. On a global scale, a study by the IDC and the Business Software Alliance (BSA) showed that if the piracy rate were to drop 10 points, it would create as many as 2.4 million new jobs, US $400 billion in economic growth, and US $67 billion in tax revenues.

In the long-run, by raising awareness of what IP brings to the region we are helping contribute to the overall GDP of the countries in Central and Eastern Europe. IDC estimates that IT employment in CEE has nearly doubled in less than eight years, up to 1.4 million people. Growth in this sector is expected to continue at rates faster than those in both Western Europe and the Asia Pacific region. This growth will represent over 8,900 new companies —2,700 new businesses in Russia, 700 in Czech Republic and 600 in Hungary, for example. In financial terms this would generate an estimated €17 billion in new tax revenues and €44 billion of new revenues contributing to GDP.

Sustaining the region’s progress in ICT is a virtuous circle: in focusing on providing students with the latest ICT skills, countries will develop an educated and motivated workforce eager to move into the industry; which, together with business friendly policies and robust IP protection, will foster and feed an existing home grown ICT market; that will encourage talented individuals to remain in the region; who will start up and build successful local ICT companies; which will fuel growth and encourage more students to acquire valuable skills and move into the ICT industry.

IDC estimates that the ICT industry will create 331,000 new jobs in the region, with around 40 per cent linked to the Microsoft partner ecosystem. We see our role as helping to protect the circle’s integrity — creating a positive business environment and rich talent pool that meets the needs of the people, governments, academic institutions and businesses in the region.