Microsoft: Sales Force Is Growing, Not Competing

By Peter Galli  |  Posted 2005-05-23 Print this article Print

Despite the aggressive refocus and expansion of Microsoft's enterprise sales group, partners shouldn't feel threatened, executives insist.

As Microsoft Corp. continues to aggressively grow its enterprise sales and services force and move into new software markets, it is increasingly encroaching on the traditional turf held by many of its channel partners—and that is creating tension. In addition, many enterprise customers who have long dealt with those partners for their solution sets are now increasingly having to deal with Microsoft itself for more of that technology, a move that is not always welcome. Microsoft executives recently thrashed out the second five-year plan for the company since Steve Ballmer took over as CEO in 2000.
Under that plan, its enterprise group intends to significantly grow its sales force over that period while, at the same time, making them far more vertically specialists in nature.
That is causing increased tension with some of Microsofts channel partners, who already feel that the Redmond, Wash. software firm is stepping on their toes, partners and analysts told eWEEK. Simon Hayward, an analyst with Garner Inc. in San Jose, Calif., told eWEEK that Microsoft had no choice but to develop a more specialized, vertical-solutions sales force, as to some extent it is a matter of, "When you have pretty much saturated one area of the market, what else do you do?" But Simon Witts, corporate vice president of Microsofts enterprise and partner group, denied that there was any business conflict with its partners. Rather, he acknowledged in an interview with eWEEK, some partners have seen Microsofts services as "competitive," but that was more because Microsoft had been unpredictable rather than it because it is actually a competitor, he said. Microsoft responded to this issue by "taking the serious step" and moving the selling of services into its sales force under a program known as "One Microsoft," in which there is one account team and one opportunity pipeline, Witts said. Microsoft is also not in the services business and does not plan to become a services player, according to Witts: "We still run that as a cost center and it doesnt even break even. I bill $1.6 billion of services in the enterprise, and so it is always going to be less than 10 percent of my revenue and less than 5 percent of my server sales. Our partners make a lot of services revenue," he said. Under the new 5-year plan just ushered in, Microsofts enterprise group is also working hard at getting its business groups even more involved in all aspects of the business, whether that is helping respond competitively on deals or sponsoring accounts. "Just take the server and tools group. There are eight thousand smart people there and I measure my success by how many accounts they know and how many situations they have been involved in," Witts said. Click here to read our interview with Andy Lees, Microsofts corporate vice president for server and tools marketing, on plans to increase integration across all Microsofts server products. Some customers, like John Engates, chief technology officer for Rackspace Ltd., a managed hosting provider in San Antonio, Texas that has more than 6,000 Windows servers, welcome this greater involvement with the business and sales teams and, indirectly, the product teams. "We have to manage hundreds of customers who all have different needs. Microsofts management and monitoring tools, as well as Active Directory, have always been designed for a big IT shop rather than for service providers," he said. "The focus on vertical segments will enable us to have more input into what our specific needs as a hosting company are and see those reflected in the various products like IIS, SQL Server and the management tools like MOM and SMS [Systems Management Server]," Engates said. Engates said he was working closely with a hosting and communications group at Microsoft, who listen to his input and then provide feedback to the product groups so this will have relevance in the hosting space. He also pointed to the fact that those in the hosting business are set to become Microsofts large customers down the line, as big IT shops are increasingly becoming hosters to their largest clients. "An IT organization wants to create a hosting business and then sell it off in pieces to their internal market," he said. Next Page: Microsofts sales force is evolving.

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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