Devenuti Retirement Casts a Shadow over Microsoft Services

In September, we featured Microsoft senior vice president Rick Devenuti in a cover story about the company's "theater of operations" strategy and Devenuti's effort to clarify the balance between Microsoft services and partner services.

Since that article ran, Devenuti has announced plans to retire at the end of this year, after helping the company find and train his replacement. Devenuti, a 19-year Microsoft veteran, joins other top executives making their way to the exits, such as Jim Allchin and Doug Burgum. Even Bill Gates is in that class, having decided to ratchet down his direct involvement in the company over the next couple of years.

Devenuti's departure raises questions about the services strategy that he championed. That issue was so obviously of concern that, in an e-mail announcing Devenuti's departure, Microsoft specifically stated that the company remains committed to the three-year initiative that Devenuti created and set in motion after taking over the Enterprise Services & IT group in 2003. Microsoft is currently in the second year of that plan.

Devenuti spent much of his time over the past year ramping up Microsoft Consulting Services (MCS) and other parts of his organization for the upcoming worldwide rollout of Windows Vista and Office 2007.

He laid out the company's plans in private meetings with partners and analysts over the summer and in a keynote at the Microsoft Worldwide Partner Conference in Boston in July. While Devenuti's plans call for increasing MCS revenues by about 20 percent in the next year, his main goal is for Microsoft's services organization to act primarily to seed business for partner companies delivering services.

7 Correction

Our November feature on Microsoft Financing contained an error. Microsoft Financing is the program designed to spur partner sales by providing financing for 100 percent of a customer's purchase of anything from hardware to software to services. The correct value for the portfolio of Microsoft's outstanding loans is nearly $500 million. Thanks to Brian D. Madison, general manager of Microsoft Financing, who alerted us to the mistake. -- S.B

Darren Bibby, a senior analyst with the Framingham, Mass.-based research firm IDC, says Devenuti worked hard to smooth partners' ruffled feathers during his tenure. Previously, many viewed MCS as both a potential partner and a potential competitor. "I think Rick Devenuti did build up some trust," Bibby says.

"This is not a step back, but a pause, and the momentum will have to be built again," Bibby says of Devenuti's retirement. "Ask partners how they feel after the next partner conference."

Devenuti will also be remembered for his efforts to create packaged services (or SKUs) and to provide some managed solutions directly to customers. At the same time that Devenuti stepped down, one of his key lieutenants, Ron Markezich, moved from his job as co-CIO to a new job in Bob Muglia's Microsoft Server and Tools Business. Markezich is taking the Managed Solution initiative with him.

Paul DeGroot of Directions on Microsoft, an independent research firm based in Kirkland, Wash., sees the move of Markezich and managed solutions out of Microsoft's services organization and into Muglia's product group as "quite significant."

"They have had this embryonic incubation effort with Energizer and XL Capital to provide managed services to customers," DeGroot says. "What they've really done is take this thing out of incubation. They feel that this is mature enough to start bringing it to market in a more general sense."

Psst ... we know the real reason Devenuti's stepping down. After you've gotten your picture on the cover of Redmond Channel Partner magazine, what more is there, really, to achieve in your career?

About the Author

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


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