Nadella Named Burgum's Successor At Microsoft Business Solutions

Satya Nadella

Nadella succeeds MBS Senior Vice President Doug Burgum, who will leave the company at the end of its fiscal year in June.

An MBS veteran, Nadella for the past five years has been responsible for the group's research and development worldwide. He will report to Jeff Raikes, president of the Microsoft Business Division.

Burgum in November had announced plans to step down as operational MBS chief once a replacement was found. At the time, a replacement was expected to be in place by June 2006, and Burgum said he would move into a new MBS chairman role. That idea has now been nixed, although Burgum will stay on as MBS senior vice president for several months to ease the transition.

"I've decided to help with the transition but leave at the end of the fiscal year. We made the decision that it's not necessary to invest meaning in a new role," Burgum told reporters in a conference call Tuesday.

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One long-time Microsoft partner, who requested anonymity, said Nadella's appointment as head of MBS was "a surprise but a good move." Microsoft last year had stressed that the search for a successor would focus on external and internal candidates, and among insiders Nadella was a popular choice.

"Outside hires don't do well there," the Microsoft partner said.

Raikes said he, Burgum and Nadella "went through dozens of candidates interested in the role and, at the end of the day, we concluded Satya was the best choice."

MBS just came off its first-ever profitable year earning $24 million on sales of $919 million compared to a loss of $171 million on sales of $784 million for the previous fiscal year.

Burgum said despite healthier-than-average year over year ERP growth compared to competitors, MBS still has "low share" that it must convert to "high share."

"We need to provide more value, make the software eaiser to use, easier to buy, easier to integrate," he noted.

He also said MBS wares, compared to the widely deployed Office franchise, are "not as globally dispersed ....[there are] a lot of global markets where we need to enter with localized products for ERP--we see a lot of upside there."

Nadella will also have to manage Microsoft's multi-faceted SaaS strategy when it comes to ERP and CRM.

Microsoft will continue to offer on-premise CRM and ERP products; partners will continue to host software-as-a-service offerings based on those products; and Microsoft will also directly offer some of its MBS products starting with CRM Liveas services to small businesses starting next year.

With the upcoming wave of ERP offerings, the company is also transitioning to a per-user cost model. MBS had used per-module pricing in the past.

The whole issue of SaaS and managed service options should be front and center for MBS, partners said.

"For solution providers with MSP operations, managing Microsoft applications whether installed on customer premises or connected via Live is a critical objective," said Peter Sandiford, CEO of Ottawa-based LPI Level Platforms, a Microsoft ISV. "Coming from the development side of Microsoft, Satya should bring a focus on accelerating the integration of the Dynamics applications and improving their manageability by solution providers."

PAULA ROONEY contributed to this report which was updated Tuesday afternoon with additional partner quotes and MBS financial information.