Microsoft changes sales strategy

Users like plan to present 'solutions'


Microsoft Corp.'s sales force is adopting a significantly different approach to working with its large corporate customers.

Rather than simply promoting individual products, the software giant plans to put together customized "integrated solutions" of software packages and services to address specific problems, said Charles Stevens, vice president of Microsoft's enterprise and partner group. For example, some packages could help companies link with business partners or connect with customers, Stevens told more than 3,200 attendees at last week's Fusion 2001 conference here.

An account manager and a technical specialist will be dedicated to each account. And the sales force will make calls on business decision-makers in addition to IT.

Microsoft introduced the approach July 1, after running a pilot. But Stevens said he doesn't expect the company's worldwide sales and service organization to be completely aligned behind the initiative for 12 months.

However long it takes, several corporate users and industry analysts agree it's the right approach if Microsoft wants a better chance in the enterprise.


Roundtables Set Change in Motion

Microsoft's new corporate sales strategy started taking shape after a series of roundtables conducted last fall with key IT executives.

Charles Stevens, vice president of Microsoft's enterprise and partner group, said that in the past, Microsoft took a "silo-based" approach, with account managers, business solutions experts and services sales forces often selling independently into the same enterprise.

Stevens said customers told him, "It's just too hard to work with Microsoft. I have to deal with these account managers and these purchasing contracts, which is too complicated, and none of these people are selling me solutions. Then you have all these partner people over here."

IT managers also told Stevens that budgets are being cut and companies are focusing on returns on investment, shorter projects and creating business value. "If you really want to help me to be successful, show me how to cut costs in the infrastructure," Stevens said he was told.

Thus, Microsoft made the move to "integrated solutions" sold by a dedicated account manager and a technical specialist, who can call on executives or experts in specific product areas as needed.

"We'll measure your satisfaction every year. And any problem you have, you work with these two people," Stevens said.

Another driver was a desire for growth in enterprise sales. Stevens said Microsoft had a great business selling desktops into the enterprise, but he could foresee that the 10% growth rate would be flat if the company didn't change its sales and product development model.

The alternative? "Get more aggressive, go up to the data center, build much deeper solutions with partners and just go head-to-head with IBM and Oracle. Not on every case or winning every case, but have a really well-defined solution that can be deployed - whether it's supply chain for business integration or employee self-service or portals or CRM applications," he said.

In a further change, Microsoft's enterprise sales force will no longer be compensated by salary and bonuses. Instead, they will be compensated based on quotas that can't be met by "just selling a lot of Office and Windows [products]," Stevens said.

"You've got to sell [those products] because that's where a lot of the revenue comes from," he said. "But if you don't get some of these big server projects, you're not going to . . . hit the full quota."


"People come in here and they talk to us about products, but we're more interested in solutions - how can the software provide more meaningful functionality and solve a specific problem?" said Jerry Miller, CIO at Sears, Roebuck and Co. in Hoffman Estates, Ill. "We're constantly pushing back on our vendors to understand our business so that they can bring solutions to us."

For instance, Miller said that Microsoft has talked to Sears about products that fit into his company's point-of-sale applications. "OK, but what are they going to solve for us?" he said.

Whether or not the new corporate sales strategy will make Miller more receptive to Microsoft enterprise products remains to be seen. "Typically, I think many times, we do not think of Microsoft when we probably should because we just don't think they have products that can scale to the size of Sears," he said.

David Annis, group senior vice president and CIO at The Hartford Financial Services Group Inc. in Hartford, Conn., noted that "Microsoft has been developing more products targeted at corporate customers, and for that matter, they're more interested in getting into corporate data centers with larger solutions. And our expectation would be integrated sales, service and support."

Rob Enderle, an analyst at Cambridge, Mass.-based Giga Information Group Inc. who advised Microsoft on the issue, said the new "solutions" approach addresses one of the biggest problems the company has faced when trying to sell into the back office.

"I think they should have done it years ago," Enderle said. "This is something that some of the more traditional firms like IBM know and have built into their process for decades."

'The Whole Kit'

Tom Bittman, an analyst at Gartner Inc. in Stamford, Conn., said he agreed that Microsoft's focus on building a relationship and selling the "whole kit bag" of products and services makes sense. "Let's see how they execute," Bittman said, noting that he's been impressed by the "real changes" he has seen Microsoft make during the past year where the enterprise is concerned.

Stevens said Microsoft initially will focus its new model of integrated solutions selling and services on its top 2,000 corporate accounts. Under the system, an account manager equipped with more dedicated resources than in the past will serve as the single point of contact for an enterprise customer, planning business projects and making sure the right specialists are brought in to work on technical road maps, architecture and software deployment, he said.

Another key change is that Microsoft will make more sales calls to business decision-makers, such as CEOs, chief financial officers or chief operating officers, in addition to the IT community, Stevens said. "But the majority is still with IT, and much of it is working with both together," he added.

For clothing retailer Gap Inc. in San Francisco, that approach has already worked well. High-level personnel from each organization have been in contact, "and this helps educate Gap management and enables Gap to get visibility at senior levels at Microsoft," said CIO Ken Harris.

But some corporate users stressed that IT must remain part of the picture.

"We think they should talk to both when there's a meaningful reason to do so. [But] if this means going around the information technology providers to get to the business leaders, I think it's a bad idea," said Annis.

"For us, technology strategy is part of business strategy, and where we make technology investments, and how we implement things is very much a collaborative decision," he said.

Miller said Microsoft is "not going to get very far" if it tries selling to business decision-makers at Sears. "Software decisions are made by the IT organization," he said. "Now we make those decisions in concert with the business, but we also have to look at how the software's going to interface with all the other applications we have here. That's why the final say for any software selection is IT's responsibility."

Copyright © 2001 IDG Communications, Inc.

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