Microsoft Reorg: What Does It Mean for Dynamics?

Although the reorganization at Microsoft includes changes across many of the company’s business units, the impact on the Dynamics group appears minor. But there is much written between the lines.

CEO Steve Ballmer wrote:

Dynamics. Kirill Tatarinov will continue to run Dynamics as is, but his product leaders will dotted line report to Qi Lu [right], his marketing leader will dotted line report to Tami Reller and his sales leader will dotted line report to the COO group.

There are two important implications in this short paragraph.

• Strategic role of Dynamics. The dotted-line relationships with sales and marketing are a recognition of the connections that Dynamics makes outside the customer’s IT organization. In the enterprise, apart from Dynamics, Microsoft sells at a fairly low level–at best to the CIO. The Dynamics group is the one part of Microsoft that gets into conversations with other members of the C-suite and with lines of business leaders. As the consumerization of IT continues, it is essential that Microsoft break out of the IT organization. With its enterprise applications, Dynamics represents and excellent opportunity for it to do so.
   
• Dynamics representing Microsoft’s ISV partners. The dotted-line relationship with Qi Lu, the newly announced head of the Applications and Services Engineering Group, points to the opportunity to leverage other parts of Microsoft’s portfolio in its Dynamics line of business applications. These include products such as Bing, Lync, Office 365, Sharepoint, Exchange, and Yammer, among others. All of these products are enterprise-focused and should be tightly integrated with the Dynamics applications. If Microsoft expects its ISV partners to make use of these technologies, Microsoft needs to set an example by doing so within its own Dynamics apps. The tighter relationship between Dynamics and Qi Lu’s business unit indicates the strategic role that Dynamics plays as showcase for the use of the broader portfolio of Microsoft products.

Finally some have asked, do these dotted-line relationships indicate a lack of confidence in the Dynamics group? The answer is, no. If there were a lack of confidence, a corporate reorganization would be the perfect time to replace the leadership. Clearly, that didn’t happen. These changes, rather, point to an elevated role for Dynamics within Microsoft.