By Chris Alliegro [bio]
Posted: Oct. 18, 2004

• Chart: Key Microsoft IT Statistics
• Illustration: Microsoft IT at a Glance

The following is the full text of an article published by Directions on Microsoft, an independent research firm focused exclusively on Microsoft strategy & technology. Each month we make one or more key articles available to non-subscribers.

Organization is Service Oriented

Microsoft’s IT organization has more than 3,500 workers, half of whom are full-time Microsoft employees ("blue badges" in Microsoft lingo) and half of whom are contract or vendor employees. The organization is largely centralized in Redmond, where most blue-badge IT employees reside.

Reporting to Microsoft’s CIO are groups that are collectively responsible for:

• Supporting Microsoft’s business applications, such as Siebel, SAP, and Office
• The core IT services, such as file and print services, e-mail, and remotes access, used by Microsoft employees and the infrastructure those applications and services run on
• Planning and support for the IT organization itself.

(For an illustration of the main groups in Microsoft’s IT organization, see the "Microsoft IT at a Glance".)

Generally, each group under the CIO is composed of a number of smaller service teams, each of which supports a specific IT service (such as e-mail or telephony) or business application (such as SAP). Each service team has life-cycle responsibility (planning, engineering, and operations, for example) for the service or business application it supports. Exceptions to this rule are helpdesk and hands-on desktop support functions, and hands-on management of data center and network infrastructure. For example, the team responsible for Microsoft employee e-mail services handles design, deployment, and support for those services but relies on a common IT helpdesk for initial problem calls and a data center operations team for physical server builds and installations.

The Microsoft IT organization emphasizes end-to-end service quality—the service teams track and monitor overall service health metrics, such as the availability of remote access services, as well as lower-level metrics, such as the uptime of the physical remote access servers. Microsoft’s CIO and his staff also directly monitor service health metrics via regularly updated "IT scorecards", which aggregate data from individual service teams. Centralization has allowed the group to control costs and reduce redundancy by consolidating headcount and infrastructure near corporate headquarters.

How Microsoft IT Manages Services

For each of the end user, infrastructure, and business application support services it provides, Microsoft IT assigns a service manager who functions as the point of accountability for service quality.

Service managers prioritize and track projects related to their service, and they are also responsible for IT service level agreements (SLAs) and associated performance metrics used to gauge service quality. For services with well-defined groups of users (for example, users of a set of financial applications), a service manager works with those users (or a representative of those users) to establish SLAs and define performance metrics and meets periodically with users to review progress against the objectives spelled out in the SLA. For general employee-user services (such as file and print or remote access services), SLAs are drafted by an IT service manager, reviewed by the CIO and his staff, and tracked via IT scorecards. IT goals and objectives are presented to and reviewed by Microsoft Chief Executive Officer Steve Ballmer and his staff at annual executive review meetings.

The definitions of IT services and the service management functions follow recommendations outlined in the Microsoft Operations Framework (MOF), a set of IT best practices published by Microsoft and based on practices (called the IT Infrastructure Library) defined by a U.K. government standards agency.

Goals Mirror IT Industry

The goals of the Microsoft IT organization in many ways mirror those of IT organizations in other large companies: the group supports the technology needs of the company’s employees and runs its global technology infrastructure and business applications.

Like its peers, Microsoft IT is under steady pressure to increase the quality of its services, while reducing their cost and seeking opportunities to improve their effectiveness. The group pays particular attention to reducing the cost of standard IT services (such as e-mail and helpdesk services), referred to as "sustainer activities" by CIO Ron Markezich. Reduced spending in those areas allows the group to increase spending on new projects (such as adding features to business applications) that improve employee productivity or Microsoft’s business processes. (Microsoft’s IT budget has remained relatively flat year-over-year.)

Unlike peer IT departments, however, the group also plays a pivotal role in the company’s product development process via a quality assurance process that employees refer to as "eating our own dog food." Via this dogfood testing process, Microsoft product releases are deployed broadly on the company’s corporate network before they are shipped. Finally, Microsoft IT offers Microsoft consultants and some select customers training services that could help those consultants and customers solve real-world IT problems.

(For an overview of Microsoft IT goals and objectives, see "IT Organization Focuses on Costs, Products in this issue of Update".)

Business Application Support

Microsoft’s business applications support group is the largest of Microsoft’s IT teams. Referred to as the business unit IT (BUIT) group and overseen by General Manager Mike Adams, it consists of more than 1,500 employees (of which about half are full-time Microsoft employees) arranged in teams that support either specific business areas or specific applications used across the BUIT group. For example, one BUIT team supports SAP, which is Microsoft’s primary enterprise resource planning tool (Microsoft uses SAP for all financial transactions, managing supply chains, and storing and tracking human resources information, for example). A separate BUIT team (called Admin IT) supports a variety of applications that workers in Microsoft’s finance and human resources organization use to access data in SAP. Another team (called Commercial IT) supports sales, marketing, and product support applications.

The BUIT group supports some 1,000 distinct applications, which vary widely in size and scope. They include the company’s large-scale, strategic business system installations, such as SAP, the Siebel customer relationship management application, and Microsoft’s corporate Web site (www.microsoft.com). Also included are a vast number of more specialized, mostly internally built systems, applications, and intranet sites that support day-to-day business activities. For example, the BUIT group maintains the e-business applications that allow Microsoft to conduct business with partners over the Web. Other applications include intranet sites that provide employees access to self-service human resources information and tools that support the special financial tracking and reporting needs of certain Microsoft business groups, such as the Home and Entertainment business unit.

Server consolidation will be a major focus of the group in Microsoft’s fiscal year 2005 (which runs from July 2004 through June 2005). Specifically, the group will consolidate many small, homegrown business applications on fewer servers, which should reduce the operating costs of supporting those applications. The BUIT teams also have major dogfood projects in the works, leading the dogfood testing of SQL Server 2005 and Visual Studio 2005.

Employee and Infrastructure Services

The following groups reporting to Microsoft’s CIO are responsible for employee-user services and the network and server infrastructure that support them. (The scale of some key services provided by Microsoft’s IT is highlighted in the chart "Key Microsoft IT Statistics".)

Client Services

Client Services, under General Manager Jim DuBois, is made up of more than 1,000 workers responsible for a range of client and regional IT functions.

The Client Services group provides "Tier I" support for all Microsoft IT services. For example, Client Services includes Microsoft’s internal helpdesk, which handles initial problem calls and troubleshooting related to IT services, and a separate desktop support team, which handles problems that require hands-on troubleshooting, such as a failed PC network card. Problems that cannot be resolved by these Tier I groups are escalated to the appropriate service team for further troubleshooting. (Messaging-related problems are escalated to the team that supports Exchange, for instance). Both the helpdesk and hands-on desktop teams are almost entirely outsourced—in fact, only 20% of Client Services team members are full-time Microsoft employees.

The Client Services team also provides IT services for Microsoft’s regional headquarters and the hundreds of local Microsoft offices scattered around the world. Services include hands-on support of remote infrastructure (for example, networking equipment in a sales office), management of regional networking and telecommunication contracts, and support for the large number of applications developed in Microsoft’s regions to meet regional or local reporting and regulatory requirements. (Many subsidiaries have built custom payroll applications to handle direct deposit of paychecks, for example.)

The Client Services team focuses largely on sustainer activities, as opposed to new technology rollout or dogfood testing, and cost control is a major goal. For example, the group will reduce the number of regional business applications and consolidate regional networking and telecommunications contracts in 2005.

Messaging Services

Managed by Senior Director Derek Ingalls, the Messaging group contains nearly 100 employees that provide planning, engineering, operations, Tier II troubleshooting, and client support for all e-mail services at Microsoft. The group also manages the recently formed Exchange Center of Excellence, a cross-organization team that also includes the Exchange product team and Microsoft Consulting Services (MCS). The Exchange Center of Excellence helps customers better manage Exchange, taking advantage of expertise gained by Microsoft IT employees running the product in-house.

(For more information on the Exchange Center of Excellence, see the sidebar, "IT-Sponsored Programs for Field and Customers".)

Over the past several years the group has focused on consolidation and reduction of servers, taking advantage of improved reliability and dropping costs of network bandwidth and features in Exchange and Outlook 2003, such as Outlook’s "cached" mode. For example, from mid-2003 to mid-2004, the group reduced the number of physical locations housing Exchange servers from more than 70 to fewer than 10, while reducing the total number of Exchange servers from more than 200 to fewer than 100. Plans for Microsoft’s fiscal year 2005 include reducing the number of locations housing Exchange servers to three.

Enterprise Services

Led by General Manager Dave Walsh, Enterprise Services supports the majority of productivity and communications applications used by Microsoft employees. The group, which consists of about 200 employees, provides the following services:

• Support for all desktop applications other than Outlook (which is supported by the Messaging Services group) and distribution of client software updates
• Microsoft’s Active Directory (AD) infrastructure and services including, for example, management of user accounts
• Collaboration technology, such as Windows SharePoint Services (WSS) and SharePoint Portal Server
• Communication services, including Microsoft’s telecommunications infrastructure and emerging technologies such as IP telephony and Microsoft’s Live Communications Server (LCS).

Recently introduced technologies, such as WSS and LCS, have become increasingly important parts of the Enterprise Services group’s workload. For example, as of mid-2004, roughly 50,000 WSS team sites were in use at Microsoft and the group has seen as many as 30,000 employees signed into the LCS service simultaneously.

Although the group marshaled significant new technology into Microsoft’s corporate network in 2003 and 2004, its efforts in Microsoft’s fiscal year 2005 will center on cost reduction. For example, the group will continue to increase use of Voice-over-IP on Microsoft’s IP network, which could reduce telephony costs by several million dollars per year.

Global Technology Services

The Global Technology Services (GTS) group, overseen by General Manager Bob Davis, is composed of about 400 employees (half of whom are blue-badge employees) that manage Microsoft’s data centers. Other service teams (e.g. Enterprise Services) and BUIT teams rely on GTS for physical server build and configuration, server and network monitoring and troubleshooting, data backup and recovery, and server patch management. These functions also provide a dogfood testing environment for products such as the Microsoft Operations Manager and Systems Management Server. GTS also provides several fundamental IT services to Microsoft employees, including domain authentication, remote access, file and print services, and terminal services, which employees in remote offices use to access centrally located business applications such as SAP.

GTS is primarily involved in sustainer activities, with only 15% of its budget targeted for new technology. Cost reduction is a major goal: GTS has been the main player in Microsoft’s data center and server infrastructure consolidation efforts, which have been facilitated by the decreasing costs of network bandwidth, advances in computer hardware and improvements in Microsoft products. For example, better print services in Windows 2003 allowed GTS to reduce the number of print servers supporting Microsoft’s corporate headquarters from 26 to four.

The group will continue to centralize operations in fewer data centers and deploy new technologies to support other IT groups’ consolidation plans. For example, GTS will deploy Microsoft Virtual Server to allow the BUIT groups to consolidate multiple applications, particularly those running on different versions of Windows, on common hardware.

Corporate Security

Managed by Director Pete Boden, the Corporate Security group is responsible for the security of Microsoft’s digital assets and intellectual property. This group numbers almost 100 employees, two-thirds of whom are blue-badges.

Responsibilities include assessing and flagging potential risks (such as computer viruses), setting security policies, and auditing and testing Microsoft’s vulnerability to known risks; the group employs a number of workers whose sole responsibility is hacking the corporate network. The Corporate Security group also leads the charge on Microsoft’s internal response to known vulnerabilities, threats, and network intrusions and manages Microsoft’s Smartcard infrastructure.

Microsoft IT has steadily increased its spending and emphasis on corporate security to keep pace with the growing frequency and sophistication of electronic threats. This focus has paid off: according to Markezich, Microsoft has not had a major security incident since the SQL Slammer worm, which wreaked havoc on corporate and public networks nearly two years ago. Future work will focus on mitigating network and data security risks that have increased with Microsoft’s growing reliance on partners and external vendors (such as the vendors to whom the BUIT groups outsource application support).

Although this group was previously responsible for physical security of Microsoft’s IT infrastructure, that responsibility was recently shifted to the company’s real estate and facilities organization.

IT Planning and Communication

Two groups support the IT group itself, by providing high-level planning of Microsoft’s IT infrastructure and ensuring that the group communicates effectively with its customers.

Technology planning. Technology Infrastructure Planning (TIP), a small team reporting to Senior Director Lynn Kepl, is responsible for the initial planning and coordination of new Microsoft technology deployments on the company’s corporate network and overseeing the dogfood process. TIP works with product teams to establish the success criteria (such as availability targets and the number of production servers on which a product will be deployed) for dogfood projects and tracks progress against those goals during the dogfood testing process. As part of the process, the group collects product feedback and feature requests from within the IT group and delivers these to Microsoft product groups and executives. TIP also maintains the Microsoft IT Showcase, an external Web site that details Microsoft IT practices.

Communications and marketing. Reporting to Group Program Manager Gina Dyer, this team documents and communicates information about the Microsoft IT group. For example, the team runs Microsoft IT’s internal Web site, which offers detailed information about IT groups and services, real-time summaries of service health and availability, and the status of open helpdesk calls and data center trouble tickets.

Resources

The Microsoft IT showcase site, which details Microsoft IT’s practices, is at www.microsoft.com/itshowcase.

More information on business application development and management in Microsoft IT is at www.microsoft.com/technet/itsolutions/msit/default.mspx.

Microsoft’s Exchange consolidation efforts are described at www.microsoft.com/technet/itsolutions/msit/consolidation/ex2003siteconwp.mspx.

More information about Microsoft’s data-center consolidation is at www.microsoft.com/technet/itsolutions/msit/consolidation/svrdatactrconsoltsb.mspx.

The Microsoft Operations Framework is detailed at www.microsoft.com/technet/itsolutions/techguide/mof/default.mspx

For more information on how Microsoft responds to security threats and vulnerabilities, see "Client Patching at Microsoft" on page 20 of the Jan. 2004 Update.