The head of Microsoft Business Solutions is out to fashion acquisitions and partnerships into the leading force in management software.
Even with somewhere north of $1 billion in annual sales, Microsoft Business Solutions is dwarfed by the enormous Office business that it shares space with in the company’s quarterly reports.
But Kirill Tatarinov, the group’s leader since July 2007, said MBS brings more to the broader Microsoft than revenue from its Dynamics-branded systems, which manage a company’s customer relationships, suppliers, inventory and other business basics.
It provides a “proof point to business decision makers” using the whole set of Microsoft server technologies, Tatarinov said. The Dynamics products “take advantage of all the innovation that’s happening” on Windows Server, Visual Studio, Office and other major products Microsoft sells to businesses.
The software-industry veteran, a Russian immigrant who pursues ski racing in his spare time, is unequivocal about his goal for MBS, which competes in a fragmented market selling business applications to small and midsize organizations.
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“We wouldn’t be in this business if we didn’t have aspirations to be No. 1,” he said in an interview ahead of a major sales conference in New Orleans this week.
Success would make good on two of the biggest acquisitions in Microsoft’s history and challenge major competitors in the business-software space, including Oracle and SAP, as well as the more focused enterprise resource planning (ERP) players Lawson, Infor and Sage Group.
The broad ERP category includes software that coordinates suppliers, tracks inventory, handles billing and other basic financial management. Microsoft is also in the customer relationship management, or CRM, software business, which is sometimes categorized as a segment of ERP.
Microsoft Business Solutions is atypical within the software giant in that it is spread geographically among three locations, a result of its formation through acquisition. There’s Great Plains in Fargo, N.D., acquired for $1.1 billion in 2001, and Navision, a Danish company purchased in 2002 for $1.3 billion. The third location is Microsoft’s new Advanta Office Commons, three leased buildings in Bellevue’s Eastgate area.
Better integrating the products and the teams with each other and within the broader company was a substantial challenge facing Tatarinov when he took the job.
He also had to step out of the shadow cast by Doug Burgum, founder of Great Plains, leader of the Navision acquisition and a major presence in the evolution of Microsoft Business Solutions until he left the company in June 2007.
After Burgum’s departure, Satya Nadella got the top job at MBS in fall 2006, but was abruptly moved to lead Microsoft’s Internet search business seven months later.
The leadership turnover was unsettling for many of the partner companies that act as middlemen between Microsoft and the companies that use the Dynamics software, providing sales and service.
“It left kind of a big hole in the Dynamics world as far as uncertainty,” said Andy Vabulas, chief executive of Interactive Business Information Systems, a top Microsoft partner in Norcross, Ga. “Suddenly, Kirill Tatarinov gets in there and nobody knows him.”
Tatarinov, 44, grew up in Moscow, the son of a software architect working on major air-defense projects for the former Soviet Union. He remembers being fascinated by the diagrams his father would draw and asking him lots of questions.
He received a master’s in systems engineering from Moscow University of Transport Engineering, but later left the Soviet Union in 1990 as it was on the verge of collapse.
“I had two little children and really needed to make sure that I put them in a safe environment where they can grow and flourish,” Tatarinov said.
After a stay in Israel, Tatarinov moved to Australia, where he co-founded Patrol Software, which made systems-monitoring software. He sold that company to enterprise software maker BMC and moved to the United States in 1994. Eight years later, after rising to chief technology officer at Houston-based BMC Software, Tatarinov joined Microsoft. He moved from the systems-management business — which makes software to help IT departments operate and monitor their technology — to head Microsoft Business Solutions in summer 2007.
Vabulas, who met Tatarinov early into the executive’s tenure at MBS, appreciated his candor and willingness to listen.
“I’ve never had a relationship that candid at that level in Microsoft, and he’s done that with lots of partners,” Vabulas said. “He’s not a political guy at all.”
Yet some of his accomplishments, particularly uniting the various Dynamics teams and partner companies, required diplomacy if not outright politicking.
Portfolio of systems
Microsoft sells four ERP systems, each the descendant of one of the companies that through acquisitions eventually came together to form the Dynamics business. (Navision and Great Plains had each made an acquisition before being scooped up by Microsoft.) The systems have similar user interfaces and have come a long way toward looking like a unified product line since the acquisitions early this decade.
And each one is designed for a broad market — professional services, say, or manufacturing — but there is still some overlap, and, until recently, the groups responsible for each one weren’t always on the same page.
“When he took over the team, they were very divided,” said Nigel Montgomery, an analyst for AMR Research.
Tatarinov said he addressed this by clearly articulating a strategy of winning small and midsize business customers, putting a stable leadership team in place and making sure that the people developing the various ERP products could articulate why one is different from another and where each one fits in the broader portfolio.
“For some people it was easy; for some people it was more or less of a culture change,” Tatarinov said.
On the partner front, the challenge was — and remains — coordinating the efforts of companies worried as much about competition from other Microsoft partners as from SAP, according to a recent AMR survey. The global recession, which contributed to a 7 percent decline in MBS customer billings in the past quarter, is making the situation more delicate.
“Right now, obviously, [partners] are very nervous about their own environments and don’t want to see encroachment from other people,” Montgomery said.
Tatarinov said Microsoft is doing more work to coordinate partners now than ever before.
The best partners are those that support the full Dynamics lineup and offer the best systems of their own end customers, he said.
Vabulas, the partner from Norcross, Ga., lauds Tatarinov for going forward with a zero-percent financing plan proposed by partners last year to help them win business during the downturn.
“It’s a good icebreaker, it’s a good way to move deals along,” he said. “It has worked.”
Benjamin J. Romano: 206-464-2149 or email@example.com