MSFTextrememakeover

Tuesday, September 12, 2006

Burgum leaves - finally!

News today that Doug Burgum, Chairman of MSFT's heretofore separate Business Solutions division, is leaving MSFT:

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.

10 Comments:

  • So... after an exhaustive search, MSFT came up with a longtime employee to lead the effort versus say a seasoned industry veteran...

    To a man with a hammer, every problem looks like a nail. To a CEO with 900 "Partners" pulling down high-six or seven figure comp packages already in the company...

    By Anonymous Anonymous, at 4:48 PM  

  • Burghum is an embarassment. And his comments today in the MBD all hands about "now having to interview for his next job" were lame. He should have been put out pasture years ago with so many others that just hang out collecting bloated paychecks in our executive ranks. Satya wasn't "found" for this role. He's been doing it for the last year, MSFT was just too lazy to really tell him as well to take a hike. They need to either bring someone from outside (and pay the price in dollars and culture) or better yet, do just what you say...bring someone up. Those good ideas, those innovators can't break that good ol' boy glass ceiling. I would put Anoop Gupta in the Burghum category as well. Maybe it's just time to get rid of Raikes. He's just protecting his base.

    By Anonymous Anonymous, at 10:25 PM  

  • This is good:

    Nadella Named Burgum's Successor At Microsoft Business Solutions

    "Burgum said despite healthier-than-average year over year ERP growth compared to competitors, MBS still has "low share" that it must convert to "high share."

    Which competitors was he talking about? Certainly not any of the main ones. At least he got the low share right.

    By Anonymous Anonymous, at 2:27 PM  

  • I agree with the postings that say that Doug's leaving is long overdue. I worked in that division before leaving the company and it was clear from Day 1 that he wasn't up to the task of running the business within MSFT. That's why Orlando was made COO. It pisses me off that he was allowed to stay and collect a check and vest his options while doing little to nothing to grow the business.

    I like Satya and am happy for him. At the same time the company did take the safe route by putting him in the role. Still, I don't see how the company really jumps to the next level of growth without shaking things up a little in the VP ranks. Then again, considering the track record of VPs from outside the company this will probably play out to be the best move - not sure the business will really take off, but there will be stable management for a while.

    By Anonymous Anonymous, at 9:50 AM  

  • Finally. Albeit after earning a killing by doing nothing. This fellow should have been fired a long time ago. The sad part is as long as MS has the billions, we will keep attracting worthless talent to hire in our leadership echelons.

    By Anonymous Anonymous, at 7:27 PM  

  • From an MBS VAR - at last Burgum has gone. I wish MSFT would start hiring people for Dynamics who understand how the enterprise software business works - why not someone from SAP. Problem is, MSFT have enough money to keep coming back from mistakes, but us VARs dont have that luxury.

    By Anonymous Simon G, at 9:05 AM  

  • Great Plains... no wait, I mean Microsoft Business Solutions... no that's not right, MBS, nope that's not it eaither - Microsoft Dynamics - yes, that's it... Microsoft Dynamics. Huh?? No wonder we can't grow this business, we can't figure out what the heck it is. Talk about brand confusion, could we make it any MORE difficult for partners and customers to figure out our roadmap and market strategy. Oh yes, that's right we actually could by HAVING ONE in the first place.

    Roadmap convergence for ERP products - novel idea and a complete pipe dream. Let's think about other large mergers with roadmap convergence and how did those go. Let's see... there's Compaq buying Tandem and then Digial - gee that went well with Tandem then DEC slowly dying a painful death. Then HP buys Compaq and it was "all hail the wonders of HPUX and Alpha combined" and of course that was such a splendid success that the CEO was fired.

    There are a whole lot of people in the Dynamics space who quite frankly would have been fired a long time ago at many other companies. But I guess I shouldn't be surprised, there's a lot of people on the platform side of Microsoft that fall into that bucket as well.

    Hopefully Mr. Burgum's departure will be the beginning of a departure wave of several over paid, under performing people at the company. Oh yes, that's myMicrosoft V5.0 on the roadmap - to be released in the year 2999 but the date's likely to slip.

    By Anonymous Anonymous, at 8:58 PM  

  • shame on you "arm chair quarterbacks". Bitch, Bitch, Bitch. Snipe, Snipe, Snipe. Not one constructive thought or suggestion, except "hire from the ranks". Wow, gigantic thinking.

    Burgum built something special in the 90s. Did he screw it up or did the company? Can you even imagine what the new accounting software guy must have felt like trying to work and make change inside a massive, high unit volume, low unit cost, technical, tools (not solutions) giant??

    lasting as long as he did is tribute indeed.

    By Anonymous Anonymous, at 8:41 PM  

  • FYI - Despite being frequenetly reported as such, Burgum was not the founder of GPS. He purchased it.

    By Anonymous Anonymous, at 10:00 AM  

  • Well now, you educated and financially well off folks seem to forget that Burgum created and maintained a successful company and later sold it to a world leading software company. But somehow you want to charge Burgum of ineptness of nearly running aground a business division of Microsoft. I would be able to understand your rational, maybe, if Doug where to have been the CEO of Microsoft. As I recall he had many detractors who seemed to think they could run the division better than him. Did you ever ponder why Microsoft would buy a company and employee its key personnel if the organization and its people (who you claim) were perceived as failures? Lets not forget that Microsoft must think of its shareholders interest first when making acquistions. Furthermore, I find it hard to believe that many of you would begrudge a person from making money. I also find it interesting that all of you who have the time to make poignant comments about Burgum are not at all concerned about what you are costing your company for your time to write prose that provides very little insight or value of where the real issues may lie. When a large company buys many companies outside of the scope of their norm, do really think that one man could be the sole cause of all that turmoil that comes along? Organization Dynamics 101 my dear friends, its a great college course.

    By Anonymous Anonymous, at 10:14 AM  

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