By Rob Helm [bio]
Posted: Dec. 8, 2003

• Illustration: Dec. 2003 Sales Reorganization

The following is the full text of an article published by Directions on Microsoft, an independent research firm focused exclusively on Microsoft strategy & technology. Each month we make one or more key articles available to non-subscribers.

Enterprise partners and customers will see new leaders for Microsoft's sales and consulting, thanks to recent reorganizations. The reorganizations bring in new management to lead the company's race against important 2004 deadlines and suggest that consulting will remain subordinate to software sales as the company seeks growth in the enterprise.

This article summarizes changes to the Microsoft organization at the vice-presidential level and above since July 2003. Most of these changes are reflected in the Dec. 2003 Directions on Microsoft OrgChart (see sample of a past OrgChart).

New Leaders Seek Enterprise Growth

A new hire has taken over sales to Microsoft's largest corporate customers, while the company's chief information officer (CIO) has taken over its technology consulting and product support units. Both changes come at a time when the company's consumer businesses have been expanding, while growth has proven harder to sustain in corporate sales of Windows and Office.

(See the illustration "Dec. 2003 Sales Reorganization".)

Former Sun Exec for Enterprises

Barbara Gordon has replaced Jonathan Murray as vice president, Global Accounts, responsible for relations with the company's largest customers. Gordon was formerly vice president of worldwide sales at Sun Microsystems and has served as the chief of staff to Sun CEO Scott McNealy. She will report to Simon Witts, as did Murray. Murray has been named chief technology officer for Europe, the Middle East and Africa (EMEA), where he will report to Pete Hayes and work with governments and other decision makers regarding technology policy.

Gordon's top challenge will be driving renewals and new sales of Enterprise Agreements, which were lower than expected in the quarter ended Sept. 30, 2003, as security problems associated with the Blaster worm slowed the company's sales force.

Murray's top challenge could be maintaining good relations with European governments and fending off inroads by open-source products as the European Commission continues to closely scrutinize Microsoft in that region.

Other changes in enterprise sales include the following:

Pierre Liautaud has been hired as vice president, EMEA Enterprise and Partner Group, reporting to Neil Holloway. Liautaud will oversee all sales and marketing for EMEA. He was formerly CEO of ActiVia Networks; before that, he served 17 years at IBM in positions such as executive assistant to then-CEO Lou Gerstner and vice president of Internet business.

Linda Zecher has been named vice president, Public Sector. She will be responsible for sales and marketing to government and education customers in the United States and reports to Gerri Elliot.

A CIO for Consulting and Support

Microsoft CIO Rick Devenuti will now also head Worldwide Services, responsible for all the company's technology consulting and product support. Devenuti replaces Mike Sinneck, who has left the company. Putting Devenuti at the helm of Worldwide Services could calm some partner fears, and further strengthen the support the unit provides for enterprise software sales.

Sinneck's hiring from IBM Global Services in 2002 had raised concerns that Microsoft would begin to compete more aggressively against systems integrator partners in consulting. In fact, under Sinneck, Worldwide Services put rules of engagement in place that focused its consulting work on early wins for strategic products, and on compiling "prescriptive guidance" for those products.

Under Devenuti, who among other things is responsible for internal "dogfood testing" of products at Microsoft, the focus on early wins and prescriptive guidance is likely to be even stronger. Devenuti will retain his role as CIO while leading Worldwide Services.

Two notable changes among Devenuti's reports:

Brian Boruff has replaced John Wilkerson as vice president, U.S. Services. Boruff was formerly vice president, Enterprise Sector, Eastern Region. Wilkerson has left the company.

Bill Norman, who was formerly vice president, Commercial Operations and Technology, has left the company. A replacement has yet to be named.

Other Changes in Sales

There have been other changes of note in the sales organization:

Darren Huston has been hired as vice president, U.S. Small and Midmarket Solutions and Partners (SMS&P). Huston will be responsible for small and midmarket business customers and partners in the United States and will report to Andrew Lees. Reporting to Huston will be Margo Day (vice president, U.S. Partner Group), Robert Deshaies (vice president, SMS&P East Region), David Hemler (vice president, SMS&P Central Region), and Matt Pease (vice president, SMS&P Western Region). Huston was formerly senior vice president of Starbucks New Ventures.

Kathleen Hogan has been hired as vice president, Customer Partner Experience and Worldwide Field Operations. She will oversee programs designed to improve customer and partner satisfaction, business planning, communications, and incentive compensation for the worldwide sales force. She will report to Kevin Johnson, group vice president, Worldwide Sales and Marketing.

Office Marketing, Exchange Development in New Hands

Two key products—Office and Exchange—have new leadership owing to a series of moves inside the product groups. Microsoft's mobile device business is also changing just as its strategy begins to see success in the United States.

Project Boss Takes on Office Marketing

Chris Capossela has replaced Joseph Eschbach as vice president, Information Worker Product Management Group. Capossela will take over marketing for all of the Office System products, including the Office suite, Project, Visio, and SharePoint Portal Server. Eschbach has left the company after roughly a year in the position. However, the change does not necessarily signal a major shift in strategy: Capossela was formerly general manager of the Project Business Unit, whose strategy of adding servers to the traditional client-based business is similar to the strategy now being pursued by the Information Worker business unit.

The Information Worker unit also said goodbye to Visio cofounder Ted Johnson, who has left the company. Johnson had been vice president of the Business Tools Division responsible for Visio and Project, which was disbanded in Aug. 2003. Visio is now the responsibility of the Office Graphics Services unit led by General Manager Richard Wolf, who in turn reports to Steven Sinofsky, senior vice president, Office.

Windows Server Architect for Exchange

Dave Thompson has replaced Mohsen al-Ghosein as vice president, Exchange Server, where he will be responsible for all development of the product.

Thompson is a longtime software architect who formerly led development of the Windows Server OS. His OS experience could serve him in good stead as the Exchange group moves to take advantage of the forthcoming WinFS file system and other capabilities of "Longhorn," the major redesign of Windows currently planned for late 2005.

Thompson's former duties have been absorbed by Bill Veghte, vice president of Windows Server.

Marketing Strategist Leaves Mobile

Juha Christensen has left his post as vice president, Mobile Devices Division. Christensen was a former executive of Microsoft competitor Symbian who drove marketing for Windows-powered mobile device platforms, including the Pocket PC and Smartphone.

He leaves at a time when that strategy has begun to gel: number-two handset manufacturer Motorola has adopted the company's Smartphone platform, and major carriers AT&T Wireless and Verizon have rolled out the first Smartphone devices in the United States. For the moment, Christensen's duties fall to Pieter Knook, head of the Mobile and Embedded Devices and Communications Sector, who was recently promoted to senior vice president.

Intellectual Property, Merger, and Acquisition Changes

There have been two other changes of note in the company's operating groups:

Marshall Phelps has been hired as vice president and deputy general counsel, Intellectual Property and Licensing. Phelps will manage Microsoft's portfolio of patents, copyrights, and trademarks. Phelps is the former CEO of Spencer Track Intellectual Capital and was formerly IBM vice president for intellectual property and licensing. Phelps is currently driving a major expansion of Microsoft's programs for licensing its intellectual property to other organizations. Under Phelps's leadership, Microsoft in Dec. 2003 announced two new programs for licensing intellectual property related to the Windows file allocation table (FAT) system (which is used in Flash memory devices that work with Windows) and ClearType, a technology that makes reading text on a computer screen easier.

Richard Emerson, formerly senior vice president, Corporate Development, has left the company. Emerson was responsible for leading merger, acquisition, and investment activities, responsibilities that now have devolved to the company's seven business units and their chief financial officers.

Resources

For a current picture of the Microsoft organization, see the Dec. 2003 Directions on Microsoft OrgChart.

For information on Blaster's effects on enterprise sales, see "Unearned Revenue Drops in Q1'04" on page 27 of the Dec. 2003 Update.

An update on European antitrust issues appeared in "Antitrust Fears Remain Despite Settlements" on page 29 of the Dec. 2003 Update.

For an overview of the Information Worker business strategy and major new products, see the Nov. 2003 Research Report, "Office System Anchors Information Worker Strategy."

A summary of new capabilities planned for Windows Longhorn appeared in "Longhorn Preview Focuses on Developers" on page 3 of the Dec. 2003 Update.

For information on Microsoft's seven business units and the new responsibilities of their leaders, see "Seven Businesses Plan for FY'04" on page 24 of the Sept. 2003 Update.