Redmond View

Microsoft Reorg Reflects Accelerated Cloud Push

The company must now aim for strong cloud gains that doesn't come at the cost of its legacy business.

Microsoft's customary annual reorg last month went beyond the usual reshuffling of business groups and executive promotions or reassignments. The company let go thousands of employees largely in sales and marketing roles, ranking among Microsoft's largest downsizings to date. But these headline-grabbing layoffs weren't just intended to reduce costs. Effectively, Microsoft has signaled that it's changing the way it does business.

The moves at Microsoft not only portend a new era underway with regard to how customers and partners will interact with the company, but they also mirror many of the changes the company sees taking place within many IT organizations -- or at least would like to see. Microsoft's rationale is that it needs to accelerate and execute upon its new focus on cloud computing services, analytics and digitization.

Consequently, Microsoft has determined it needs fewer salespeople with expertise in traditional software and datacenter technology and more with technical proficiency in its new cloud computing offerings, machine learning, automation and the shift toward software-defined infrastructure.

Microsoft, like IBM, Oracle and other incumbent players, is confronting the challenges presented by more nimble cloud-first companies, such as Amazon Web Services, Google and Salesforce, which don't have the legacy business models to protect.Microsoft has clearly stated that hybrid is here to stay. As Microsoft makes competing more aggressively with its cloud-only rivals a prime priority, the company must be careful not to throw the baby out with the bathwater in its attempt to accelerate those ambitions.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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