Outsider honing Microsoft’s competitive edge
Posted on Monday, October 6, 2008
Microsoft Corp. ’s operations chief took it personally when one of the company’s biggest accounts was threatened by Google Inc.
Hundreds of workers at Procter & Gamble Co. were testing Google’s e-mail, wordprocessing and spreadsheet programs as potential replacements for Microsoft products. It would have been an unprecedented loss. So Kevin Turner flew to Cincinnati in July, spent a day wooing Procter & Gamble Chief Information Officer Filippo Passerini and left with a bigger three-year contract.
Turner, a former head of Wal-Mart’s Sam’s Club unit, had little time to celebrate once back in Microsoft’s home town, Redmond, Wash. He is fighting more skirmishes as Google and Larry Ellison’s Oracle Corp. try to eat into Microsoft’s $ 35 billion corporate-software franchise.
“To the extent the world moves to Web-based software, that’s very hard for Microsoft — it completely unlocks their grip on your desktop,” said Sarah Friar, a Goldman Sachs & Co. analyst in San Francisco. “Within Microsoft, people just pooh-pooh that idea. There’s a huge complacency within the company.” Turner, 43, one of the few outsiders among the Microsoft brass, is concerned the biggest software maker isn’t fighting hard enough.
“Losing a Procter & Gamble would be something where I don’t think I’d sleep well,” Turner said. “I want to make sure that anybody that knows anything about it would also not sleep well.” The Web has become a reliable way for corporations to run even their most important functions. That’s made Microsoft’s main business, selling software like Windows and Office for computers, vulnerable.
With a weakening economy, Microsoft’s sales growth may slow to 12 percent in 2008 from 18 percent last year, according to estimates compiled by Bloomberg News. At the same time, Google, Oracle, Apple Inc. and VMware Inc. are getting stronger, Turner told 12, 500 employees at a sales conference in Atlanta in July.
“They’re all trying to take food off of our plate,” he said at the conference.
Twenty-eight percent of technology buyers in a Goldman survey in September said they were trying Google applications or plan to in the next year, a percentage Goldman said was higher than expected. Google recently sealed deals at French auto-parts maker Valeo SA and Silicon Valley contract manufacturer Sanmina-SCI Corp.
Procter & Gamble went to Mountain View, Calif.-based Google looking for cheaper and more Internet-capable options. Turner kept the contract by giving Passerini an early look at plans for Web-based systems and promising Procter & Gamble the flexibility to shift between those and standard applications.
Procter & Gamble confirmed the deal, declining to comment on details.
Turner is using the economic slump to go on the offensive, suggesting customers switch from Symantec Corp. or Adobe Systems Inc. in areas where Microsoft programs cost less.
“I can save you half that,” Turner said he tells clients.
The approach worked at Citigroup Inc. The New Yorkbased bank more than doubled its spending with Microsoft in the past three years, said information chief Jagdish Rao, who wouldn’t provide a figure.
After Rao complained that he only heard from Microsoft when the company had something to sell, Turner started meeting with him four times a year and assigned top engineers to fix problems. The bank is now one of Microsoft’s 10 biggest customers, said Microsoft account representative Hein Hellemons.
With his Oklahoma accent and penchant for aphorisms — like “the biggest room in our house is the room for improvement” — Turner at one time was Bentonville-based Wal-Mart Stores Inc. ’s youngest corporate executive.
At Microsoft, he seemed an unlikely choice for chief operating officer. The software giant is tough on outsiders. The last COO, who came from Silicon Graphics Inc., lasted less than 15 months.
“When he came on board three years ago, my reaction was, ‘ Who is this guy ?’” Microsoft Senior Vice President Bob Muglia said. Since then, Turner has set in motion “cultural changes at the company that were pretty massive.” Chief Executive Officer Steve Ballmer knew how hard-nosed he could be.
While working in Wal-Mart’s technology department, Turner refused to pay an $ 8 million bill until Ballmer flew in to offer better terms.
When he came to Microsoft in 2005, the differences were stark. Wal-Mart had weekly sales quotas. Microsoft didn’t even have quarterly ones. Now, the staff can almost provide weekly updates, said Robert Youngjohns, who runs North American sales.
Turner introduced procedures such as a “conditions of satisfaction” document that details what Microsoft will provide each client.
A screw-up requires a “correction of errors” in which employees autopsy the mistake and lay out steps to ensure it doesn’t happen again. He also created standard scorecards with 30 categories to measure each subsidiary’s performance. Previously they were judged by as many as 1, 500 different metrics.
Being an outsider helps, said Matt Rosoff, an analyst at Directions on Microsoft in Kirkland, Wash.
“He’s a bulldog,” he said. “And he isn’t one of those executives who grew up at Microsoft when the company was living off the two cash cows of Windows and Office. He’s come in the more difficult times.”
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