Microsoft's 'Tailwind' Reorg Aims For Growth

The effort, code-named Tailwind, keys off of some of Microsoft's favorite concepts: verticalization and solution selling, Microsoft CEO Steve Ballmer said in an interview with CRN last week in Redmond, Wash.

"At the highest level, it's three things. No. 1, we want to improve our verticality. Goal No. 2, we're trying to get better integration of account management resources and what I would call specialists—specialists by vertical, specialists by technology," he said. "And No. 3, there will be some accounts that have had less account management resources that will get more, and some accounts that have had more resources that will get less."

Company executives said the net impact will be more partner-led opportunities, although skeptics in the channel said Microsoft appears to be shunting off less profitable businesses and keeping the best large accounts for itself and a few key partners.

The Tailwind effort hinges on Microsoft's first major "resegmenting" of its customer base in five years, said Simon Witts, corporate vice president of the Enterprise and Partner Group.

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As a result, the company plans to push some less-active "named" accounts now handled by the enterprise sales group into its Small and Midmarket Solutions and Partners (SMS&P) unit. Twenty percent of the current 4,600 named accounts likely will move over to SMS&P, Witts said. Other, perhaps smaller, accounts now managed by SMS&P that are more active may move to named status. The overall number of named accounts likely will fall, although Witts wasn't specific about numbers.

Among its enterprise accounts, Microsoft also is erasing the current distinction between commercial and public sector accounts and collapsing 17 geographical districts into 12 that will include all those accounts, Witts said. The Desert Mountain region will comprise the old Southwest and Rocky Mountain regions; the Mid-Atlantic area is combining with greater Pennsylvania; and the Southeast and Gulf states are merging, as are the North Central and Mid-America regions.

"This change was necessary to achieve an economy of scale in organizing local account teams by industry focus," said Margo Day, group vice president for Microsoft's U.S. Partner Group.

Verticalization is a buzzword for companies trying to attack industry-specific markets. Likewise, Microsoft executives said that to sell successfully, they and their partners need to better understand the customer's business. "There will be no such thing as an account that's not aligned [by industry]," Witts said.

Microsoft already has implemented a similar strategy in Europe and is rolling it out in the United States for its fiscal 2006. The company signaled its intentions in April when Microsoft Senior Vice President Bill Veghte said it would boost its investment in enterprise account relationships by 10 percent for the upcoming fiscal year, beginning July 1.

Some partners said they are optimistic about the plan over time, but they predict the short term will bring confusion among Microsoft reps and partners. "It'll take a quarter or two before the sales guys even know how they're being quota'd. In the meantime, our business will be hurt," said one West Coast partner.

Witts said customer and partner satisfaction within all reassigned accounts will be closely monitored.

"We want to minimize the impact on the field," echoed Day, who plans to outline the changes at the company's Worldwide Partner Conference in Minneapolis next month.