Major Reorganization Geared For Integrated Business Solutions

Microsoft’s latest reorganization is driven by the quest for integration. With the development of electronic supply chains that link businesses to both customers and suppliers over the Internet, demand is rising for customizable “solutions” rather than software packages glued together with custom programming. That poses a problem for Microsoft, a product-focused company that relies almost entirely on outside consultants and integrators to create integrated solutions, unlike competitors such as IBM and Oracle which have large internal consulting groups.

Microsoft president Steve Ballmer’s announcement of the reorganization called it “a few business changes,” but those changes ripple across every segment of the company.

The reorganization, the full impact of which will trickle down through the company over several months, is a work in progress that establishes some new—and different—directions for Microsoft. Last year, for example, the company decentralized its marketing. This year it is recentralizing it in a new marketing division that maintains complex relationships with other groups. Building cooperative relationships will be a challenge for a corporate culture that until now has encouraged internal competition.