Microsoft Partners: The Search For Ballmer's Successor Is A Channel Turning Point

Microsoft partners said Friday that they see the search for a successor for Microsoft CEO Steve Ballmer as a turning point for the future of the channel.

Microsoft Friday said Ballmer will retire as CEO sometime over the next 12 months upon the "completion of a search for his successor." The Microsoft board of directors has appointed a special committee to direct the process. Executive recruiting firm Heidrick & Struggles International, which recruited Lou Gerstner to take the reins of troubled IBM in 1993, is considering both external and internal candidates for the top Microsoft job, according to Microsoft.

Ballmer's replacement will be only the third CEO in Microsoft's 38-year history.

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"It's critical to the relationship between Microsoft and the partner channel that the successor to Steve Ballmer employ a partner-centric mind-set to regain any lost ground, faith and trust in that relationship," said Douglas Grosfield, president and CEO of Xylotek Solutions, a Cambridge, Ontario, partner whose Microsoft sales are up about 20 percent in the past year. "Failure to do so will undermine their efforts to grow their business through the channel, and partners will bear the brunt of that failure in their own businesses."

The Microsoft relationship for Xylotek, which was founded in 2005, has been a "mixed bag" under Ballmer, said Grosfield. "We've seen some real positive effects, and we have seen our Microsoft business increase," he said. "We've seen, at times, a stronger commitment to the channel and to partners, but it's so sporadic. There are times when they seem to take the opposite approach, and Surface is an example of that. It was a meaningful addition to the mobile market and they seemingly cut the partner out of the equation altogether."

As for Ballmer's retirement plans, Grosfield said he thinks it's time for new leadership at Microsoft. "I think there was a time when they needed Ballmer's energy and drive and vision," he said, "and maybe that time is coming to end."

David Powell, vice president of TekLinks, a $100 million solution provider based in Birmingham, Ala., whose Microsoft business is up considerably in the past year, said the threat of "disintermediation" with a Ballmer successor is real. "It's critical that Microsoft hire a CEO that is channel-friendly and not someone like [Microsoft COO] Kevin Turner, who is not a fan of the channel," said Powell. "The question is which side wins: the partner-centric model or the hard-nosed vendor approach of Kevin Turner, who grew up at Walmart?"

Powell said the new CEO needs to be someone who values Microsoft's broad and deep partner relationships. "There is a disconnect between what they say about how they value partners and what they do," said Powell. "There is no partner strategy around Surface other than LARs. You could see someone come in and say we are going to take our Azure service and Office 365 and go direct to the customer. My message to the board of directors looking for a replacement is to talk to the partners. We are the ones closest the customers. Find out what we are seeing in the market and listen to us."

Powell said the new CEO's biggest challenge will be pulling together a cohesive strategic vision for Microsoft in what the company itself is calling the devices and services era.

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"Microsoft lacks cohesion," said TekLinks' Powell. "Are they a gaming company? A search engine company? A cloud company? It's hard to be good at all those things. The first thing Microsoft needs is a cohesive, unified strategy and then they need a partner community to execute and deliver that message."

Christopher Hertz, founder and CEO of New Signature, a $15 million Washington, D.C., solution provider that focuses exclusively on Microsoft, said he is sorry to see Ballmer step aside for a successor. "I was shocked," he said. "I figured he would be the CEO forever. To me, he is Microsoft."

Hertz credited Ballmer with bringing back the software giant's "swagger" with the product and services refresh over the past two years. "We rise and fall with Microsoft," he said. "That is all we do, and we have been growing at an insane clip. The last two years have been the best ever from a systems integrator perspective. We are a pure-play Microsoft partner and our business was up 47 percent last year and will be up 57 percent this year without any additional head count."

Alan Weinberger, chairman and CEO of The ASCII Group, an association for thousands of SMB solution providers, said all in all Ballmer has been a great partner advocate and often doesn't get recognition for the good things Microsoft has done over the past decade, from Windows XP and Windows 7, the Xbox, and moving Microsoft software to the cloud.

"He's a better leader than I think a lot of people give him credit for," said Weinberger. "I think he's done a lot of good things that he doesn't get credit for. I give him a decent grade for his tenure. He was committed to his employees and his partners. He wasn't arrogant or too high-minded. He's humble, energetic and he's a smart guy. And I think he related to partners well. Microsoft's Surface channel strategy aside, I think he's been loyal to the channel and been a strong advocate for partners and their businesses.

"It's going to be a big shift for Microsoft," Weinberger said. "Ballmer's been there since 1980, and that's a long time for anyone to be anywhere, let alone in the fast-changing technology industry."

Rick Jordan, director of sales and strategic alliances at Tenet Computer Group, a Toronto-based Microsoft partner, said his company is putting more resources than ever before into the Microsoft partnership.

"What's ironic is that we have always been a Microsoft partner and it's only as of the probably the last two months that we have invested more of our resources into a partnership with Microsoft. We just signed an agreement to be a Windows Azure partner."

Jordan said that despite the positives Ballmer brought to the company, Microsoft could use some new blood to take the company forward.

"From people I talk to from large companies to small companies, from SMB to the enterprise side, either you like the guy or you hate the guy," added Jordan. "He's been with the company 30-plus years, since Bill Gates, so maybe it's time to get somebody different at the helm and think about things a little differently."

ROB WRIGHT contributed to this story.

PUBLISHED AUG. 23, 2013