The world has changed, and the clock has rolled back to IBM of the 1970s. Everyone wants to own their own stack, from software to hardware to services. It's a trend that’s driving a wave of consolidation through the enterprise world. HP has absorbed EDS, while Oracle is using its Sun acquisition to build a vertically integrated model that aims to be a one-stop-shop for enterprise hardware and software. Even Dell's Perot Systems acquisition is changing the way it sells into the enterprise.
It's all something that has to be worrying Microsoft, especially the folks in the enterprise Server and Tools division. While Windows Server remains one of the most popular ways to deploy Oracle databases, how long will it be before alternative platform support lags behind Oracle's own hardware? I suspect the lights are burning late in Redmond while management teams try to navigate through a rapidly changing environment.
Could it be this changed world that's one reason for Bob Muglia's departure from the division that's become one of Microsoft's multi-billion dollar businesses? Microsoft needs to work out how to compete with vertically-integrated businesses like the new Oracle – and that's going to be very difficult for a software-only business. That doesn't mean that Microsoft needs to make its own servers (though the Azure appliances that it's working on with Dell and HP are a small step on that road).
Microsoft's actually already well on the way to owning its own stack, in the shape of Azure – a platform-as-a-service play that gives the Redmond giant a way to sidestep the hardware world. It's got the OS chops to deliver, and is, in the shape of its Online Services group, moving much of its enterprise productivity tooling to the cloud and to Azure. Office 365 and Dynamics Online are the first part of this migration, with online versions of Project and Team Foundation Server to follow in 2011. It's a big change for Microsoft, and one that's flourished under Muglia's management.
So where do I think a change was needed? With Azure Microsoft has the hardware and OS needed for a next generation stack, with Online Services providing the software. What's missing is the consulting clout – and that's where Microsoft needs to bring in outside expertise.
Microsoft's had its Consulting Services for a long time now, but it’s not the scale necessary to compete with the one-time EDSes of the new enterprise world. If Microsoft's to compete it's going to need to acquire a consulting business, and integrate it into its own business. That's tricky, and it's probably not a job for a management team that's focused on software development. With Server and Tools the logical group for a consulting business to fit into, perhaps Muglia just wasn't the right man for that task…
It'll be interesting to watch just who replaces Muglia – and, more specifically – just what their background is. While I'm not a betting man there's part of me that might just put a couple of quid on it being someone from outside Redmond, who’s got a significant consulting background. I'd also be tempted to suggest that they might be someone like Avanade's Adam Warby or Tyson Hartman (with a Redmond old-hand as a deputy), as they've been building a consulting business just like the one Microsoft needs, as part of a Microsoft and Accenture joint-venture. And if that happened, well, it wouldn't surprise me if some of that debt Microsoft is selling at the moment was used to dissolve the joint venture, buy out Accenture, and bring Avenade fully into Microsoft.
After all, stranger things have happened.