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Redmond's restructuring draws praise

News that Microsoft CEO Steve Ballmer will appoint executives to independently oversee the finances of the company's business units was well received by customers and analysts.

Experts said IT executives will certainly benefit from a Microsoft plan to put a financial management team within each of the company's business units because they said it will speed up each unit's ability to react to market forces.

Microsoft's CEO Steve Ballmer said in a published report this week that the company will install a CFO-type executive within each of the company's seven autonomous business units. The company plans to discuss the changes at a meeting today with financial analysts. The move is the latest step in an ongoing 20-month reorganization at Microsoft.

Originally, the heads of the business units were little more than figureheads, but now they're getting their own finance people and having influence over their own sales forces, said Rob Helm, research director at Directions on Microsoft, an analysis firm based in Kirkland, Wash.

"It's a trend to get Steve Ballmer out of direct management and put it in the hands of these business leaders," Helm said. "It gives him more time to think about strategic issues, like Linux and customer satisfaction."

One customer said that, by having CFO positions in each of the business units, each business unit will be better positioned to achieve its business goals.

"By creating CFO positions, you are empowering the business unit to a level where they may be more flexible on pricing, whereas a CFO at a high level won't care about a deal here or there," said Peter Osbourne, group manager for advanced technology at Dollar Rent A Car Systems Inc., in Tulsa, Okla.

It will be a challenge for Microsoft divisions that make products for an IT audience to maintain a unified platform, Helm said. Microsoft's biggest strength is the breadth of what it can offer in terms of desktop and server software. But to pay off, there has to be synergy between the business units.

"If the business units are autonomous, I'm not sure who will be paying attention to that," he said. "[Co-founder Bill] Gates and Ballmer are important in this, but as the company goes forward, can they keep it up?"

For IT managers, there are other advantages. The independent organizations are more likely to bring out products that are financially justified, said Rob Enderle, a research fellow at Forrester Research, Cambridge, Mass. "Long term, once a product is out in the market, it will have full corporate support," he said.

Enderle said that the manner in which the reorganization is taking shape reflects the fact that Microsoft faces more competition today. For years, Microsoft has been unchallenged, and the company has gotten sloppy, he said.

"But like the fighter that got paunchy," Enderle said. "Microsoft has to get into shape to fight again."


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