MCS, Partner Roles Clarified

A new set of partner guidelines released in mid-January signals that Microsoft does not intend to compete against its major competitors and partners by developing a large and aggressive global services organization, but instead will limit its own consulting practice to very large accounts and to highly strategic projects. Microsoft’s in-house consulting arm, Microsoft Consulting Services (MCS), will not compete with partners’ proposals based on Microsoft technology and has scaled back plans to expand MCS in the first half of 2002.

The changes, announced as part of a new “Services Partner Framework,” should reduce the threat that MCS poses to service partners, which eventually could increase Microsoft’s appeal as a vendor to those partners. Although the new framework currently applies only to the U.S. subsidiary, similar rules are likely to be introduced in other regions.

The Need for a Framework

MCS has grown rapidly in recent years, from a few hundred consultants in the early 1990s to more than 3,500 in 2001. Its role has changed as well, from a small team that helped customers integrate new Microsoft technologies to the prime contractor on some major consulting engagements. (See the Dec. 2001 Research Report, “Microsoft Aims at the Enterprise.”) These changes, combined with sharp curtailing of corporate IT spending, have increasingly brought MCS into confrontation with systems integrators and other Microsoft service partners trying to sell to a diminishing number of good prospects. Adding to partner discontent is Avanade, a joint venture with Accenture. It added yet another large, well-funded, Microsoft-focused (many of its staff came from Microsoft) consulting firm to the competition for a large slice of a shrinking pie.