To compete in the enterprise with the likes of IBM, Oracle, SAP and Salesforce.com, Microsoft has to take a more direct approach.
There's lots of speculation floating around about why Bob Muglia, head of Microsoft's Server and Tools Business, is leaving this summer. I agree with my colleague Mary Jo Foley that it wasn't because Muglia wasn't all-in on software and services (S&S). He seemed to actually get it.
I do think there may be a reason that is nonetheless tied more to S&S than it may appear; Microsoft is going to reorg around its own "stack" business, and in doing so take a major new tack in the battle for the enterprise.
The new tack will be Microsoft's own version of the stack wars, in which Azure, fueled by the Dynamics ERP products and partners' enterprise software and services, becomes the leading edge of an increasing focus on direct sales to the enterprise. This won't obliterate the thousands of partners from the mix. But it will create a major shift in how Microsoft goes to market, particularly with respect to the large enterprise: much more direct and more in line with what IBM, SAP, and Oracle are able to do with their stack offerings.
As I have said before, the synergies between Dynamics and the products that Muglia oversaw was growing significantly, and that overlap will continue as Azure moves forward to claim a significant piece of the cloud market.
Indeed, the growing realization that the cloud is taking over mindshare (though not walletshare -- yet) in the enterprise has been sharpening the focus of executives across the industry. And while Muglia was great at building a strong Server and Tools Business (STB) and a strong partner channel for the products, would he necessarily be the right guy to help shift gears and help position Microsoft for a C-level dialogue about the new enterprise a la Microsoft? I don't think so.
This shift is one that has to be under consideration in Redmond, for no other reason than the fact that the competitive landscape is demanding it. Oracle is pushing the envelope hardest right now, though it's following IBM's footsteps into the CEO's office with a me-too stack sale. This is putting a ton of pressure on SAP to man-up and woman-up its own efforts to sell a deeply strategic vision of software and services. That vision is starting to look like it will include a decent amount of Azure+Dynamics-like functionality, and be highly competitive to the Microsoft offering.