Microsoft Now Open for Enterprise Services

On Tuesday, Microsoft beefed up its global enterprise-services organization, part of its campaign to win large corporate and government IT accounts from IBM, Oracle and Sun.

The Redmond, Wash., software giant announced the merger of its consulting services and product support divisions. The new division, Worldwide Services, will offer not just Microsoft software, but a comprehensive package of business "solutions" that will integrate its products with software from partners.

"What we are announcing today is the next stake in the ground in our commitment to the enterprise," said VP Robert McDowell, who heads the new division.

The reorganization reflects an ongoing ramp-up of resources directed at enterprise sales that is fraught with risk. Even this giant company could be biting off too much, too fast. It will have to train its consultants not only on its own software, but on that of its partners – and it could lose focus. But Microsoft needs new markets and has little choice; if it wants the enterprise market, it has to do this and it has to succeed.

With desktop-software sales flattening, Microsoft is pushing into enterprise IT departments, where a lucrative high-end market is dominated by Unix systems. In the past year, it launched Windows 2000 and then its .Net enterprise servers, including Exchange 2000 messaging server, the SQL 2000 database server and the BizTalk business-processes application server. The most powerful versions of Windows 2000, such as Datacenter Server, now offer enterprise-grade performance at much cheaper prices than Unix systems.

But cracking this market is tough and requires more than pure performance. Microsoft must convince the biggest customers that it can provide comprehensive solutions and adequate backup. Historically, it has not been known as a services company the way that IBM is. Big companies that purchased Microsoft’s software typically hired third-party partners – systems integrators such as Accenture, Compaq, and KPMG – to deploy the software, get it running and maintain it.

That approach just isn't good enough for firms asked to commit tens of millions of dollars to new systems.

Because it is the new player in the market, competing with entrenched systems, Microsoft is perceived by enterprise customers as a risk. Faced with demands to get serious about backing its systems, Microsoft recognizes the need to offer commitments that extend beyond the point of sale and iron-clad service guarantees for its enterprise products. That's now McDowell's job.

"Windows 2000 Datacenter has scaled up to where we're competing with mainframe and Unix vendors," McDowell said. "We faced demands to put skin in the game, up to and including a willingness to take on a prime contractor role.

"The bottom line for customers is insisting on clarity around our taking ultimate responsibility," he said.

One consequence, representing an important strategy shift, is that Microsoft consultants will go into a business to sell "complete solution" packages that include software from partners. For example, the sale might include enterprise software from SAP built on top of a Windows platform.

"The company's selling strategy is evolving in the enterprise toward solution-selling," McDowell said. "You'll see us coming to market with solutions to particular business problems, integrating our software with our partners software and with a services component."

"The plan is that Microsoft will do the entire hand-holding," explains Paul De Groot, an analyst with Directions on Microsoft, which tracks the Redmond giant. "If I'm a corporate customer buying a big application, they bring in consultants, they help deploy and integrate, they provide maintenance and support. I write one check."

Although the customer gets to pick and choose the components, "it will be offered as a package with one price," McDowell confirms.

McDowell joined Microsoft in 1990 from consulting firm Ernst & Young specifically to found the Consulting Services division. Microsoft currently has more than 4,000 consultants and 9,000 product support personnel, now combined in the new unit. McDowell is known on the Redmond campus as the ultimate