As Microsoft’s new fiscal year begins, the company this morning sent out an internal memo to employees detailing a shift in its consumer and commercial businesses.
The memo, obtained by GeekWire, does not reference the thousands of layoffs widely reported as part of the sales reorganization.
But the memo — sent by Microsoft’s Executive Vice President of Worldwide Commercial Business Judson Althoff; Executive Vice President of Global Sales, Marketing & Operations Jean-Philippe Courtois; and Chief Marketing Officer and Executive Vice President of Marketing and Consumer Business Chris Capossela — does go into great detail about how Microsoft is changing its ways in an effort to be more responsive to partners and customers.
One of the biggest changes, according to the memo, is simplifying the customer model down to two segments: enterprise and small, medium and corporate (SMC) customers. Microsoft is also creating some new teams and centralizing functions under other umbrellas.
Here is a look at Microsoft’s rationale behind the changes, according to the memo:
There is an enormous $4.5 trillion market opportunity across our Commercial and Consumer businesses. We are uniquely positioned to drive our customers’ and partners’ success by leading them through their digital transformations, and becoming their partner of choice. To help us do that, starting today, we begin to implement changes to our Commercial and Consumer models. These changes will position us to best meet the evolving needs of our customers and partners, and empower them to achieve more.
To lead this digital transformation and capture this opportunity, the changes we are announcing have been shaped on the following growth drivers, which will enable us to align the right resources for the right customer at the right time.
According to the memo, those “growth drivers” include:
- Empower commercial and consumer customers and partners to digitally transform.
- Build solutions effectively with customers and partners.
- Align our selling and partnering efforts by industry for greater digital impact
- Increase our technical depth and better align sales and services to solution areas
- Increase our focus on customer success, both directly and through partners
- Scale our breadth motions to provide greater support for small, medium and corporate customers
The memo continued with hints that employees would learn more about the changes in the coming days:
Over the past year, we have made changes to how we operate internally with an eye on improving the customer, partner, and employee experience. We will build on these changes to enable faster decision making, increase our response to customers and partners, and continue to learn and grow. We have listened to our customers, partners, and employees worldwide, and have gained market insights to chart a bold path forward. We are announcing changes across the A14 (14 Areas), subject to local law, that take into account the unique attributes of our Single Sub Areas, and Multi-Sub Areas. Your leaders will share the specific details about these changes in the coming days.
Microsoft issued the following short statement about the reorganization this morning: “Microsoft is implementing changes to better serve our customers and partners.”
As part of the changes instituted by Microsoft today, enterprise teams will focus on six core industries: manufacturing, financial services, retail, health, education and government. Within those areas, sales teams will focus on modern workplace, business applications and apps and infrastructure solutions.
It also touted the importance of its “Digital Win Room,” a special group that’s designed to “touch some of the biggest opportunities around the world as nimbly as possible.” That group works alongside the new Commercial Software Engineering organization — described in the memo as “global black belts” — to power the field sales teams.
These changes point to a goal of focusing more intently on Microsoft’s growing cloud computing business. Microsoft’s commercial cloud run rate hit $15.2 billion during the March quarter, up from $14 billion in the previous quarter. Meanwhile, revenue in the company’s intelligent cloud group grew by 93 percent to $6.8 billion in the quarter.
“We will continue to support ISV partners with dedicated software engineering resources, and accelerate cloud growth through our Global Developer Evangelism programs,” the memo said.
Microsoft is also looking to make in-roads with consumers by “creating end user desire for the same creativity tools that people have at work through our modern workplace solution area powered by Surface, Windows Devices and Office 365.” Microsoft notes that gaming is growing across all its device types thanks to the rise of eSports, game broadcasting and mixed reality.
To take advantage of these trends, Microsoft recently rebranded the Beam streaming service it acquired last year as Mixer and integrated it into Xbox. Mixed reality is a big area of emphasis for the company as well with the HoloLens headset as well as a series of headsets made by Microsoft partners that are set to debut later this year.
Microsoft said in the memo it will create a “thriving partner infrastructure” built on Surface, Windows Devices, Office 365 and Xbox. The memo continues: “we will also launch new IoT vertical solutions and pursue new markets including voice, mixed reality and AI.”
“We are confident that these changes position us to take full advantage of the opportunities before us and enable Microsoft to win in the consumer market.”
Microsoft held a live webcast for employees at 8 a.m. this morning to give more details on the reorganization.
“These changes will require all employees across WCB, GSMO, and MCB to operate in new ways,” according to the memo. “Throughout the course of the week, you will continue to hear from your managers and leaders as we prepare for a successful FY18.”
Microsoft’s new fiscal year started on July 1.
Developing story, more to come.