Saturday 24 March 2018

Managing Microsoft: the accounts clerk who became the boss leading a change of culture

Microsoft MD Cathriona Hallahan spoke to Donal Lynch about innovation, the environment and the implications of the Safe Harbour ruling for Ireland

Microsoft MD Cathriona Hallahan
Microsoft MD Cathriona Hallahan
Donal Lynch

Donal Lynch

My biggest interest outside of work is... "Dance. My daughter is a world champion Latin and ballroom dancer. So I set up the national dance sport federation to promote dance sport in Ireland. It differs from regular dance in the level of speed and athleticism. Creating an opportunity for some of our young talents, that's a passion for me. My husband breeds racehorses so that's another interest."

The biggest professional challenge I've had was… "When the head of operations role for Ireland first came up I didn't get it and when I asked my boss he said I hadn't shown the aspiration, he literally didn't know I wanted it. That was a big lesson to me. I did not let that happen again! I talk to young people about being transparent about their ambition."

The most broke I've ever been was… "Growing up. We didn't have money. We lived in a very practical way day to day. That informs my attitude to money even today. I'd give my last dime to family and friends before spending on myself."

The best advice I've ever been given… "To be true to yourself and to do what you love. If you're going to bed on a Sunday night and you're dreading the next five days, that's the wrong life. You should be bouncing out of bed in the morning and I've loved every minute of the career I've had at Microsoft."

Far from Dublin's Silicon Docks, in the windswept reaches of the Sandyford industrial estate, is Microsoft's sprawling Irish HQ. Like the company itself, it's huge and not particularly cool, (at least not by the standards of the Grand Canal tech upstarts), even if it is a temporary arrangement. The company recently announced plans to build a new €134m, 35,000 square-metre campus of their own in Leopardstown, south county Dublin and the new facility will bring all 1,200 of the tech behemoth's Irish employees under one roof for the first time in recent history.

Cathriona Hallahan, the company's MD in Ireland, called it "an important commitment to Ireland in the year of Microsoft's 30th anniversary here".

Even on a grey December day, the view from her current boardroom is still pretty slick, taking in the Stillorgan reservoir and much of south county Dublin. And there are probably good memories from this facility; during Hallahan's period here she has guided Microsoft's Irish operation from core manufacturing, which the company used to primarily be known for, to the development of a more diversified range of activities.

"We now have an operations centre, a development centre, a data centre and a sales and marketing centre for the island of Ireland so we've diversified significantly from the core services that we used to do," she says.

Ireland is one of four operation centres for Microsoft outside of the US, although Hallahan declines to get specific in terms of where exactly it fits in terms of importance for the global operation. "The data centre here is the biggest outside of the US and it is supporting customers from all over the Middle East, Europe and Africa. I would say Ireland is a very strategic part of the company. You see that in the capital investment in Ireland across our current buildings and our data centre. The recent announcement is evidence of the company's commitment to the next 30 years in that."

The story of the business here has mirrored that of Microsoft's global operation - a gradual move from technology and hardware manufacturing toward service with an emphasis on the cloud. "Really, now, we are moving towards what the customer demands for our business," Hallahan says.

"Fifty per cent of the scorecard I get measured on is customer value, not just revenue generated. So it's been a shift in the culture of the company, to say it's not enough to sell a product to the consumer, we want to see them get value out of those products.

"There are very few companies that have the productivity suite we have - if you look at platform it's Amazon, if you look at search it's Google. But we don't really have direct competitors in terms of the total offering. We're the only ones who offer a suite to consumers and enterprise."

The applause for the announcement of the company's new campus was led by Enda Kenny. On the day I met Hallahan, the Taoiseach publicly blamed a "lost decade" of recession and "unrealistic" targets set by the EU for Ireland's difficulties in tackling greenhouse gas emissions. Given that tech companies like Microsoft have been at the forefront of green concerns - in May 2012 the company made a commitment to make their operations carbon neutral - I wonder how Hallahan feels about his comments.

"Climate change is a priority for the company," she begins. "In the early days when I started with the company we were very focused on green packaging, for instance. Today our data centre is one of the most environmentally friendly in the world - it was one of the first to use the natural ambient air in Ireland to cool the data centre and reduce energy costs."

But does she believe that environmental concerns should take a back seat to economic growth, as the Taoiseach seemed to be suggesting? "I don't believe that, no. As a business leader I think that our company does a very good job on that. We take it very seriously."

In October of this year, the European Court of Justice ruled that the 'Safe Harbour' agreement, which allowed the transfer of European citizens' data to the US, was no longer valid. EU privacy law forbids the movement of its citizens' data outside of the EU, unless it is transferred to a location which is deemed to have "adequate" privacy protections in line with those of the EU. The Safe Harbour agreement that was made between the EC and the US government essentially promised to protect EU citizens' data if transferred by American companies to the US. It allowed companies such as Facebook to self-certify that they would protect EU citizens' data when transferred and stored within US data centres.

In a two-year-old case accelerated to the EU's highest court by Austrian privacy campaigner Max Schrems, the ECJ ruled that the European Commission's transatlantic data protection agreement that went into force in 2000 was invalid because it does not adequately protect consumers in the wake of the Edward Snowden revelations.

In the aftermath of the case companies such as Microsoft can no longer rely on self-certification and must seek to strike "model contract clauses" in each case. These agreements authorise the transfer of data outside of Europe. The case has huge implications for our own Data Protection Commissioner.

As the Schrems legal team memorably put it, "the comfortable times are over" for the Portarlington-based authority, but what impact will the ruling have on Microsoft in Ireland? "I think Safe Harbour will have no impact or a limited amount of impact because we've always had a clear strategy around trustworthy cloud", Hallahan tells me. "We've put a huge amount of investment into data protection and into privacy rules, which can be seen in the work we did for the warrant case in the US. We worked with the Irish government to ensure that the sovereignty of Ireland and the data protection laws of Ireland were upheld, and in fact we went into contempt of court and refused to give data to the US government because we wanted to make sure that the data protection laws of Ireland were adhered to. From our perspective, we have always followed the legislative requirements."

The case she is referring to was heard in Manhattan in July of last year and the judge held the software giant in contempt of court for failing to comply with an order to give US authorities access to customer emails housed in a Dublin data centre.

To many observers it was an important PR move for the company, letting customers know it would vigorously defend their privacy in a shifting legal landscape. "It's critical for the consumer who puts his data into a cloud that they can trust that the data is going to be protected", Hallahan adds. "I know I, as a consumer, want that for myself. We want to make sure that our cloud is the most secure one there is. People need clarity on this."

To call Hallahan a Microsoft stalwart might be an understatement - she's as close as they get to a lifer, having been with the company almost all of her professional life. The wonderful view from her boardroom affords her a view of nearby Stillorgan, where she grew up. She came from a working-class background; her father was a mechanic and her mother a cleaner. "My mum had three children under 13 after my dad died. She had to go back to work. So my aim after leaving school wasn't to go off to college for a number of years, but instead to bring some income back into the family home. Life throws difficult things at you along the way.

"My mum left school at 13 and had no qualifications. Her own mother had passed away and she had 15 brothers and sisters. So she had become the housekeeper at home, and so when dad passed away she started cleaning houses for other people. Both my father and her had their own business and the values I have are very much founded in my own attitude to life; an honest wage for an honest day's work and to value every single person, because they all have a job to do."

After school Hallahan, who is married with a 16-year-old daughter, worked for a small company for three years before joining Microsoft's fledgling operation in Ireland, which then had only 100 employees. "I was employee number 24", she recalls. "I came in to join the finance department as an accounts clerk. When I joined Microsoft, I didn't even know who they were. I spent 10 years in finance and 17 years in operations and global roles.

"My last four years have been spent running global operations for Europe, the Middle East and Africa, with teams based in Singapore, Reno, Fargo and Japan." She's now coming into her fourth year as MD for Ireland.

Hallahan says that the biggest challenge that the company has faced in the last few years has been "the culture change we're going through". This has involved "transforming the company into being more service-led. We're trying to be more collaborative and take risks, to fail faster, and develop that start-up mentality. I suppose as one of the largest technology company in the globe you do operate a bit under the expectations of the analysts in the market and there is a tendency not to want to take risks."

The company's CEO - since early last year, Satya Nadella - has been instrumental in this, she adds, and "has really brought in a growth mindset and moved us away from being focused solely on the Windows platform. We've accepted that we're not the solution in town for our customers, so how do we accept that we have to help other technologies to grow so that all boats will float high together?"

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