Microsoft's ambition in the market for software that runs companies' finance, sales, and operations is large, but so far results in Microsoft's 5-year-old Business Solutions division have been lukewarm. The company has had to manage expensive research-and-development teams it inherited through two acquisitions, respond to customer requirements without the benefit of a direct sales force, and iron out overlap in its network of resellers. On Sept. 7, Microsoft rolled out a new plan for its business-apps group that revolves around personalized products tailored for PC users' jobs.

InformationWeek senior writer Aaron Ricadela spoke with Microsoft chairman and chief software architect Bill Gates in his office in Redmond, Wash. on Sept. 2 about the company's new approach to business software, the effect of personalization on all its products, and how it's dealing with a shortage of computer-science-trained college grads.

InformationWeek: Microsoft has traditionally been very good at developing software that could be easily installed and has lots of functionality right out of the box. For ERP though, it seems like a bit of a different story. There's a longer sales cycle, there's training, it takes longer to see a return on investment. How would you say the sales of the Microsoft Business Solutions apps are different from other Microsoft software sales? And how will this role-based approach that you're going to be taking simplify sales for your customers?

Gates: Well, certainly there are special things about applications that need to have partners who can customize the applications and [provide] the kind of support that people need, provide training, or answer questions in terms of the specific business problems that people have. In terms of products being a big design decision for people, we've always had some of that with things like choosing what mail system you're going to use or choosing what development platform you're going to use. It's the whole idea of getting the word out, being very patient, going through the value equation, organizing the sales force to really listen to the customer and be there when they're ready to make a change, which will often have more to do with the cycles in their business than when a new version of software might come out. I think we're quite good at those things.

The role-based approach is one of the very exciting directions because you define user interface based on what matters to the different kinds of employees. So if they put out proposals, they can see ranked in the order of interest. If they think about credit issues, then things are organized according to giving them a heads up on what problems they might have there. So you just go through very easily and pick out the roles for different people in the management structure, and then the user interface is just built off of that. This is a new approach; once we've come up with it I guess you could say it's pretty obvious it's the right approach, and yet it just hadn't been done before. You're actually going to see this starting with our [Microsoft Business Solutions] products, but it's something that we believe actually affects all the Microsoft software products--to really take this role point of view and use that to set up the best interface.

InformationWeek: Even for something as generally targeted as an Office application?

Gates: That's right. Even something like how you use Office. If you're a salesperson in the field, we want to show you best practices for using Office more directly than we do today. And as we look at people who work with Office, we often see people underutilizing the features. Yet we can have a nice video that says, "Here's somebody with a role like yours and how they use OneNote or InfoPath," or [which shows] how people organize their mail. Sometimes when you look over somebody's shoulder, you think, "Wow, they've got that three-pane viewer, they've sorting by conversations or they're using those--look, they're using those search folders," and you think, "Gosh, I never took the time to really learn that, but I see that that's really helping them." If you could just pick by role, then these best practices can be put forward in a little video or a tutorial, and then you can have those role-based templates that somebody brings down.

InformationWeek: You're developing these role-based applications for about 50 different job functions. In addition to potentially simplifying things for customers, can you talk about how that might be good business for Microsoft? In other words, could that expand the number of ERP seats a company uses to nontraditional employees, employees who don't traditionally touch an ERP system?

Gates: Yes, I think that's a real possibility. Now, some of those new so-called seats will have to be very low-cost seats, but we are trying to extend ourselves out to, say, the person with the handheld computer in the warehouse that in the past would have had a clipboard and paper. Now they're carrying a PDA-type device around with them to do the pick list or to report back that something is out of inventory. So we need to bring those in at very low cost with even greater simplicity than the other seats have been, but you want everybody to be connected up to the information that drives their job. The complexity and cost meant certain roles in the company end up not working in the software but rather working with paper, and that means you have a boundary there of information.

InformationWeek: At the Financial Analysts Meeting [a Microsoft conference in late July], you'd said that we're seeing worlds of what you call business-process software and of documents come together. You also mentioned that in the upcoming Office 12, Microsoft is building search capability to "navigate your accounting software." Can you expand on what that functionality is, and maybe speak more generally about those kinds of combinations of desktop and server software?

Gates: Office increasingly, starting particularly with the last version, has this SharePoint capability, which is how information workers share. We've always had some document library capabilities there. With the next version of Office, we bring in a very deep and rich workflow type capability, with the sharing of information in one common, rich way. If new business data gets published that way, people can comment on it, all the horizontal processes can be driven by the common sense that everyone has this one way of sharing. In the same way that Excel meant if you had a business plan, you knew you could mail that around to everybody to read it, now with these collaborative processes SharePoint just becomes that point of sharing. Remind me what my comment at the analyst meeting was.

InformationWeek: You said that in Office 12 Microsoft is building a search capability to navigate accounting software.

Gates: Oh yeah, right. So in SharePoint, there's a search function that gets dramatically better in the next version. One of the things it does is when you search, in the corporate world that's just [meant the software has] gone and looked for documents. But many of the questions you want to ask aren't just about documents--you also want to ask, "Who does this function? When is this product shipping?" SharePoint's search function now can go out not just to documents but to structured information like your product catalogue, your project management status, your directory of who your employees are, and your accounting software. If you type in, say, the name of an account, you don't just get the documents where that might have been mentioned, you also pull up the CRM record for that.

The idea you just go to that one search box and type something in becomes more obvious as a way of navigating into the applications and getting application data. In one place, I can type in a product, see what the schedule for that is; I can type in employee name, see who they work for, what they do; I can type in a customer name and get that information. We're taking business search and far beyond just the classic document search.

InformationWeek: How broadly does search development go at Microsoft? How many different people are working on these problems, and is there technology learning from the MSN search project that gets carried over into the things you're talking about here?