Major Microsoft Reorg Comes into Focus

The long-rumored, cloud-oriented sales and marketing reorganization at Microsoft is taking shape this week with a companywide e-mail and all-hands meeting on Monday, along with region-specific detail meetings going on for the rest of this week.

Microsoft has said nothing publicly about the reorganization, other than to confirm it with a terse e-mailed statement. "Microsoft is implementing changes to better serve our customers and partners," a Microsoft spokesperson said in an e-mail sent to Redmond Channel Partner and other outlets in response to specific questions.

Several news outlets reported details of the reorganization after obtaining copies of internal memos that went out Monday from three senior executives: Judson Althoff, EVP of Worldwide Commercial Business; Jean-Philippe Courtois, EVP of Global Sales Marketing & Operations; and Chris Capossela, Chief Marketing Officer and EVP of Marketing and Consumer Business.

The memos do not reference any layoffs, contrary to widely reported rumors that thousands of job cuts could be coming. However, sources with first-hand knowledge of the all-hands meeting Monday indicated that the reorganization may be "net neutral" in terms of overall Microsoft headcount but will lead to thousands of job roles being eliminated while as many more are created. That would generate tremendous churn and uncertainty among Microsoft employees in a scramble for new positions just days into Microsoft's fiscal year.

Update, 7/6: Microsoft reportedly began the process of laying off about 3,000 people on Thursday. Read our story here.

One of the biggest changes disclosed in the memos is a reorganization of Microsoft's sales organization into two main teams -- one focused on enterprise and another on everyone else, called small, medium and corporate (SMC) customers. According to sources, that means functionally that the formerly corporate account managed (CAM) accounts will go up into the enterprise operating unit, while corporate territory managed, SMB and the partner organization go into SMC.

The partner organization was already reorganized in February into One Commercial Partner, which included both the Enterprise Partner Group and the Worldwide Partner Group, along with an ISV group. It was unclear what, if any, further changes One Commercial Partner may undergo under the new restructuring. It was also unclear how Microsoft Consulting Services (MCS) fits into the new picture.

Some of the changes outlined in the memos and discussed by participants in the call seem to indicate that Microsoft will be shifting its focus to driving wide-ranging digital transformations and multi-product solutions, rather than specific products. For example, the memos say the enterprise team will be organized around six vertical industries: manufacturing, financial services, retail, health, education and government. Sources said that structurally the SMC will consist of a Global Demand Center, inside sales, field sales, marketing and operations, and One Commercial Partner.

The memos also referenced a "Digital Win Room" intended to concentrate on big opportunities around the world. That team will work closely with a new Commercial Software Engineering organization, designed as an aide to field sales teams. The memos describe the CSE as "global black belts."

Meanwhile, ISV partners remain top of mind for Microsoft. "We will continue to support ISV partners with dedicated software engineering resources, and accelerate cloud growth through our Global Developer Evangelism programs," GeekWire reported a memo as saying.

Look for a renewed push on the consumer side, as well, according to the memos, which discuss ambitions to construct a "thriving partner infrastructure" on Surface, Windows devices, Office 365 and Xbox.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.


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