Burgum leaves - finally!
News today that Doug Burgum, Chairman of MSFT's heretofore separate Business Solutions division, is leaving MSFT:
- Microsoft Business Software Exec Leaving
- Head of Microsoft business software unit to step down
- Microsoft business unit head to depart
According to his assessment (unbiased of course), the division is in "great shape", having managed a whopping $24M profit this year (eeked out - conveniently - in the final Q of the fiscal year before ceasing to be a separate reporting entity) versus a $170M loss the year previously. Putting aside that I can't recall a departing exec ever saying their division wasn't in "great shape", I guess Doug isn't a math major because at that rate of profit, it would take some 44 years just to payback the initial $1.1B MSFT expended to purchase Great Plains (a company he founded and was CEO of). And of course, the Bus Sol buying spree didn't end there and we've had years of significant ongoing losses.
So 3-4 years later, we're left with another of those wonderful "shareholder value creation" stories that Ballmer is so fond of mentioning. Only, as usual, no obvious value has been created, but management has managed to chew through another $3-4B of shareholder money and detract from earnings (until recently) - thereby actually hurting EPS and the share price. Worse, it doesn't appear to be on a trajectory that would alter that equation, or even just provide a payback, any time soon.
Apparently, Burgum's decision to leave came after a recent meeting with Raikes (of the "Bus Sol will be a $10B division by the end of the decade" fame) and Ballmer:
Burgum said he made the decision to leave last Friday afternoon after discussing the matter with Raikes and Ballmer over the course of last week. He said he's spent little time thinking about his plans after Microsoft.
With results like those described above, he would have made that decision after I met with him too - right after I said "You're fired". Look, Burgum may be a great guy and clearly had the requisite track record on paper. He may even have battled (unsuccessfully apparently) to keep Raikes/Ballmer et al from meddling and turning Bus Sol into an Office/Server delivery vehicle versus its purported original mandate to be the leader in small and medium business ERP/CRM. But at the end of that day, Bus Sol has been a massive failure under his leadership even accounting for any positive drag through of Office and Server products. If he was constrained from succeeding due to Raikes/Ballmer meddling, then he should have quit earlier. If he wasn't constrained and just couldn't put up the numbers, he should have been fired versus promoted to the nebulous post of "Chairman" and allowed to vest an even more ridiculous amount of shares. Instead, he made a killing while Bus Sol was allowed to flounder, taking far too long to rationalize its code base and channel strategy and being far too slow to provide updates (gee, where have we heard that before?). Worse, rather than being proactive and embracing the upcoming model of software delivered as a service, they spent numerous cycles and years trying to shoot down that concept, only to end up embracing it wholeheartedly, years late, now that Salesforce.com, Rightnow, Netsuite and others have run circles around MSFT in terms of growth and customer adoption.
And here's a surprise:
Jeff Raikes, president of Microsoft's business software division, said the company did both an internal and external search and "went through literally dozens of candidates" before selecting Nadella. The company said Nadella's experience with Web software will loom large as Microsoft develops and launches new online products, such as Office Live and Dynamics CRM Live.
So... after an exhaustive search, MSFT came up with a longtime employee to lead the effort versus say a seasoned industry veteran or CEO from a savvy upstart? Wow, we've never seen that before. Puhlease, it sounds like MSN all over again. And note how software-as-a-service - aka "web software" - is now key. Unbelievable. I sure hope Nadella actually lives up to that billing versus just being a convenient "yes sir" lap dog for Raikes.
Just once, I'd like to see an example of MSFT actually getting ahead of the curve, spending a reasonable amount of money and getting outsized returns in a timely fashion. In other words, setting the pace for both spotting the new trend and taking advantage of it. Instead, the company is constantly behind the curve, and then spends $B's and takes huge losses - in some cases for a decade - only to end up a distant #3. And for this level of business aptitude/execution, we're paying 900 executives some $1B in collective bonuses? Maybe Raikes and Ballmer should have "meetings" with a few more executives. Come to think of it, maybe the Board should be having one of those with them...
p.s. in reading this again, let me be clear that my hostility is reserved for the management team who allows/rewards this type of incompetence. I'm sure there are plenty of employees within the former Bus Sol group who are ready/willing/able to do a better job of solving customer's needs, handing Salesforce.com and others their ass, and making this a wise area of investment for MSFT. Indeed, it is unacceptable that those employees are not provided an environment in which they can do so.