Microsoft Services Chief: No More Competition With Partners

Microsoft Corporate Vice President of Worldwide Services Mike Sinneck, who spent 32 years at IBM Global Services before joining Microsoft in January, said he is not confused about the company's customer and partner satisfaction focus going forward.

"We're not here to build an IGS (IBM Global Services)," said Sinneck during his keynote on Sunday at Fusion 2002, his first major public appearance since being appointed worldwide services chief. "At Microsoft, services is a means to an end. We're not confused. We had MCS focused on profits .. and then we got the wrong behaviors. I think we have the breaks on that. Microsoft's commitment to you is we're not going to compete."

Sinneck acknowledged that skirmishes between solution providers and partners with Microsoft's field sales force during the last calendar year "hit a fever pitch" but the conflicts will be avoided as executives are given financial incentives to bring partners in on as many contracts as possible and serve as prime contractor only when necessary. "Sure, we'll have to prime from time to time, but our preference is not to prime," said Sinneck. "We want you to prime."

Sinneck's comments were met with a round of applause from solution providers at Fusion 2002, who were told at the annual conference that executive compensation --including those of vice president and general managers -- will be tied to customer and partner satisfaction going forward. "Services is not an island. It is integrated in the mainstream school of thought [at Microsoft," said Sinneck. "Partners satisfaction is important. People are going to get paid [at Microsofton this stuff, folks."

At Fusion 2002, Sinneck also unveiled the new partner engagement framework and a number of partner enablement services planned for its 2003 fiscal year including a new 15 percent discount for partner who subcontract services through MCS and additional business investment funds for Go To Market plays. MCS will also move firmly back to a cost recovery status and will see its head count decrease by 400 over the next year, Sinneck said. "That game is over," said Sinneck. "My objective is not to make profit. We're not in this game to make money."

Microsoft will slash head count at services but will increase its sales force by 500 over the next fiscal year.

In a recent memo, Sinneck outlined a new regional model for Microsoft Services and four key Microsoft services initiatives for fiscal year 2003 including partner enablement, end-to-end value for customers, product and services integration and an effort to professionalize services. Of Microsoft's 12,000 world wide services arm, 4500 are currently employed in MCS, 2500 are in premier services and the remaining 5000 work for product support services, which fields 54 million calls per year.

Sinneck said Microsoft will also enhance product quality and support services to help the company and its channel maximize profits during FY03. For example, Microsoft will attempt to improve the number of days to solution for customers down from weeks to seven days or less, cut the number of support calls by 15 percent and drive down the number of incidents per product unit by 15 percent.

Microsoft will also double the number of MVPs to offer community-vased support and will slash the price of support for partners for web incidents from $245 per-incident to $99. "It's a bold step," he said.

Microsoft also plans to offer more customized, specialized offerings to partners including the hiring of new partner strategy consultants and access to Microsoft's Intellectual property as well as additional premier support services for partner and systems integrators, he said. The software giant currently offers premier support services for ISVs and OEMs only.

Microsoft also created an India Global Delivery Practice model and is building that up.

Solution providers who attended Fusion 2002 said they are pleased with Microsoft's recommitment to the channel but wait and see the results over the next year.

Sapient, a key systems integrator, has one major conflict with MCS on an enterprise engagement last year and is hoping that is the exception and not the rule going forward. "The one problem wasn't so bad," said Tom Fornoff, vice president of Sapient in Houston, Texas. "I'm relieved to hear what Microsoft is saying but the proof will be in the pudding."

Ironically, even as partners applauded Microsoft's pledge to have less skin in the game, at least one solution provider implored Microsoft to take more risk on co-engagements.

A key executive from G.A. Sullivan, for example, noted that his firm is engaged in major negotiations with the Department of Energy and other major firms but he can't get hold of Microsoft services executive to fly out and hammer out the deal with him. "We can't take all of the cost risks," said Musheer Robinson, chief executive officer of Insurance Claims and Salvage Solutions Internal of St. Louis, Missouri, a G.A. Sullivan company.

"I acknowledge this is a problem," said Sinneck, directing partner to use Microsoft's expanded Industry Verticals Practice. "We're hiring a different caliber of talent and making available business investment funds ...You shouldn't bear all the financial risk."

Sinneck said he is determined to make sure that Microsoft follows through on its promises to work more closely with solution providers. "The things I say to you today will come true," Sinneck said before thousands at the Los Angeles Convention Center. "I'm relentless. I'm like a dog on a bone."