Microsoft bumps business apps group up hierarchy

Microsoft Corp. is tweaking the organizational structure around its Microsoft Business Solutions group, announcing Thursday that group leader Doug Burgum will now report directly to Microsoft Chief Executive Officer Steve Ballmer. The change gives the business applications unit a more prominent position in Microsoft's hierarchy.

Microsoft also expanded the responsibilities of Orlando Ayala, who last year vacated his position as the company's top sales and marketing executive to take charge of Microsoft's small and medium-sized business sales, marketing and partnering efforts. Ayala will continue as senior vice president of Microsoft's Small and Midmarket Solutions group, but will also serve as chief operating officer of the Microsoft Business Solutions group, the company said.

Both Burgum and Ayala previously reported to Jeff Raikes, Microsoft's group vice president of productivity and business services. With the new shuffle, Ayala's group will be part of Microsoft Business Solutions, and Ayala will report to Burgum.

The change is directly unlikely to affect customers and partners, but it signifies the importance Microsoft places on its growing enterprise applications business.

Microsoft's desktop applications are ubiquitous in the business world, but the company did not traditionally compete in the market for the expensive, complex ERP (enterprise resource planning) and CRM (customer relationship management) systems used for back-office functions.

Attracted by the growth opportunities of the market, particularly among smaller businesses, Microsoft cannonballed into the space several years ago, spending US$1.1 billion to buy ERP maker Great Plains Software and another $1.3 billion on Danish software company Navision. Microsoft combined the two companies to form the foundation of its Microsoft Business Solutions group, which operates out of Great Plains' old headquarters in Fargo, North Dakota.

Microsoft inherited a large customer base from Navision and Great Plains, but the Business Solutions group's sales haven't been up to expectations in recent quarters. Executives blame execution problems on the group's work with its channel partners, and say a turnaround is expected soon. The company still has high hopes for the business applications market: Ballmer forecast that the Microsoft Business Solutions group will be doing $10 billion in annual sales within a decade.