No Rhythm to the Rain

Redmond has been warning and preparing for a difficult financial year. Smart partners should listen up and do likewise.

At about the same time that you're reading this, the eyes of Microsoft executives are glued to the mid-year reviews (MYRs), which report how their business has done for the first half of Microsoft's 2009 fiscal year.

I'm guessing it's not a pretty picture. Microsoft, like almost everyone else, is being hit by turbulent markets, which are hurting current sales and throwing a wrench into the company's cautious and methodical planning process.

That process is known at Microsoft as ROB: the "Rhythm of the Business." It starts on July 1, the first day of the fiscal year. Every fall, the company looks at the results of its previous fiscal year and brings its strategic leadership team together to review its strategies and priorities. The MYRs give them some real numbers to work with so that, over the next four months, product groups, corporate executives, the sales organization and subsidiaries gradually converge on their priorities and the resources required to execute them. By about the end of May, everything for the next fiscal year is nailed down. Staffs have been reorganized, money and headcount have been allocated, scorecard goals and metrics have been defined and the marketing machine is working overtime -- all so that on July 1, Microsoft hits the ground running.

The company's first major ROB event in the new fiscal year is, tellingly, the Worldwide Partner Conference, held in early to mid-July. A week later, Microsoft brings together about a third of its global sales force for the internal-only Microsoft Global Experience (MGX). As the year goes on, financial analysts, global partners, CEOs and others all get some time with Microsoft, either to hear the current pitch or to help plan the next one.

The Bump in the Road
The ROB is optimized to help everyone in a very large company catch the company's rhythm for a year at a time, and it works well in a relatively predictable business environment. The main problem: If something really serious happens partway through the year, there's no process for changing course. Furthermore, enormous turmoil and uncertainty can bring the ROB process to a standstill, because Microsoft planners need to know right now what the year will look like.

The current plans were being finalized at about the time that Bear Stearns Securities hit the dirt back in March 2008. Planning momentum was at its peak, and the troubles of one brokerage on Wall Street were considered an anomaly. The Dow Jones Industrial Average recovered to more than 13,000 in early May, and anyone planning for the year ahead had reason to be optimistic.

The financial crisis that hit after all the plans were finalized is now rewriting major business rules, and planning is one of them. The best plan might be no plan, but ad hoc-ery is not a Microsoft strength.

Microsoft partners can probably count on a few things. First, marketing funds -- an easy target for quick cost cutting -- will be savaged, so don't count on Microsoft for marketing. Second, Microsoft's most significant asset in a tight credit market is all that cash, which Microsoft financing is willing to share with customers via partners. If you aren't on this train already, run to catch it now. Finally, the best investments you can make at this point may be in yourself -- take advantage of the vast learning materials on Microsoft's partner site and broaden your expertise, so that if today's technology doesn't pay the bills, tomorrow's can.

As singer Jim Croce pointed out, there's no rhythm to the rain. Whatever song you were planning to sing, you're going to have to play it in your head.

About the Author

Paul DeGroot is principle consultant with Pica Communications, which provides consulting services for customers with complex Microsoft licensing issues.