Microsoft's reorganization may have long-term impact on IT, systems

TechTarget Staff

Microsoft's reorganization to break up the company and restructure it by function could have some long-term positive impacts for enterprise IT as the engineering teams become streamlined.

However, some question whether the sweeping reorganization will have the positive impact on quality that Microsoft Corp. purports that it will.

The big question is: are they trying to become an Apple?

Bob O'Donnell, IDC analyst

Microsoft will be divided by key functions that include: engineering, marketing, business development and evangelism, advanced strategy and research, finance, human resources, legal and a group that includes commercial operations, support and IT.

What is particularly important about the restructuring is how Microsoft's new engineering groups will consolidate into four key areas consisting of the operating system (OS), apps, cloud and devices. A fifth group consisting of Dynamics will be kept separate.

"We will consolidate our technologies coherently into these groups pulling together some things that have been spread out in our current [business group] structure like cloud infrastructure, operating systems, mail, and identity, to name a few," wrote Steve Ballmer, CEO of Microsoft in an email that was sent to employees about the massive changes. 

"Some of these changes will involve putting things together and others will involve repartitioning the work, but in all instances we will be more coherent for our users and developers," he said.

Who's who now?

Microsoft's new head of the operating system engineering group will be Terry Myerson, overseeing all OS development across devices including consoles, mobile devices, PCs, back-end systems and core cloud services as it relates to the OS.

Julie Larson-Green will lead the devices and studios engineering group while Qi Lu will oversee applications and services.

Satya Nadella was named as head of the cloud and enterprise engineering team, which includes responsibility for the back-end development of data center technologies.  He will also oversee the construction and operation of the data centers.

Dynamics will continue to be headed up by Kirill Tatarinov. 

Meanwhile, Tony Bates will lead business development and evangelism to reach OEMs and developers. Bates formerly headed up Microsoft's Skype business. Rick Rashid, who ran Microsoft Research will now return to the operating systems group to work on core OS innovation.

Tami Reller will lead Microsoft's marketing efforts while Microsoft veterans Kurt DelBene, formerly head of Office, will retire and Craig Mundie will step down to devote his time to a special project for CEO Steve Ballmer until the end of 2013. Mundie will then become a Microsoft consultant at the start of the 2014 calendar year.

IT professionals welcomed the news, although for the short-term, Microsoft's reorganization will not impact them directly.

"Looking at the day-to-day life of the IT pro, the reorg probably won't matter much to people," Scott Ladewig, manager of networking and operations at Washington University in St. Louis. "Anything that streamlines and improves Microsoft's ability to deliver what we need to get our jobs done is welcome news."

Other IT pros took a decidedly dimmer view about any positive impact the reorganization would have on improving the quality of its products and services. Some are also disappointed that Microsoft did not bring in any new blood to the organization, particularly talent that could drive innovation into some of its products, especially for Windows desktop OS and Surface devices.

"Microsoft needs new, innovative people, not job reassignments for veteran employees," said Mike Drips, a Houston-based veteran IT professional specializing in Microsoft platforms. "Windows 8.0 and 8.1 is an albatross around their neck. They thought they could beat Apple at their own game by putting an OS that works on everything but no one has bought into that so far."

Despite the reorganization being designed to better integrate technology groups in-house, Microsoft will have to overcome a tradition of internal groups competing with each other.

"Microsoft is still made up of compartmentalized silos that compete against each other. The Excel guys don't go out to lunch with the Word guys and swap high fives. They have a very long history of major technical snafus because they don't test across the product lines," Drips said. "The number one issue is breaking down barriers among groups, which I am not confident will happen."

Where Microsoft's new reorganization could impact its enterprise IT customers will be in its own day-to-day operations. The new engineering technology leaders will need to collaborate and deliver products and services in a more unified manner.

"This really emphasizes that there are no boundaries between old [organizations] anymore," said Jonathan Hassell, president of North Carolina-based 82 Ventures and a SearchWindowsServer.com contributor. "Execs must drive cooperation, which means we can see more unified products and services to come."

Whether the collaboration among engineering teams will work is still too early to tell. For example, the company's strong push to deliver more cloud services and mobile devices that have a familiar interface across all form factors could impact the way enterprise IT implements Microsoft technology in their own organization.

"It will come down to how much autonomy these guys actually have and where they steer their respective organizations," said Dan Antion, VP of information services at American Nuclear Insurance, an insurance company based in Hartford, Conn. "The impact to us will be if they change Lync to Skype and if they deprecate Office on-premises and force us into the cloud."

Industry analysts see Microsoft's reorganization as a positive step because technology will now be aligned in such a way that product development will not be spread out across groups. 

 "It looks like the top leaders will get more time to focus on technology, which will help them cope with the much higher rate of change that Microsoft is pushing for," said Rob Helm, managing vice president of Directions on Microsoft, an analysis firm based in Kirkland, Wash.

"I'm [also] hoping the technical leaders [will be] free to focus on what they deliver to customers versus what they deliver to investors, and that will pay off for Microsoft's enterprise IT customers," he added.

However, Microsoft repositioning itself as a devices and services company could pose problems long-term if the reorganization does not go well.

 "The big question is: are they trying to become an Apple?" said Bob O'Donnell, IDC program vice president for client and display research. "The biggest opportunity is to figure out the services entry point," he said.

This story was written by TechTarget writers Ed Scannell, Diana Hwang, James Furbush, and Jeremy Stanley.

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