Doug Burgum, who has had financial responsibility for the division, will remain in a new role as chairman of the unit. However, the software maker aims to recruit someone else to oversee the unit's financial performance.
In an e-mail to Microsoft staffers, CEO Steve Ballmer praised Burgum's work and the performance of MBS. The unit is a money-losing business, but has seen its sales grow in recent years.
"Our MBS business is off to a great start this year, and we are seeing the rewards of our focus on delivering software breakthroughs and continuing to build our strong partner channel," Ballmer wrote in the e-mail.
Ballmer, Burgum and Jeff Raikes, president of Microsoft's Business Division, will help find the new leader, the company said. Microsoft wants the new executive to be based at Microsoft's corporate headquarters in Redmond, Wash. Burgum was based in Fargo, N.D.
"We are doing a full search internally and externally," Burgum said in a question-and-answer session posted on Microsoft's Web site. "I will continue to drive and lead MBS until the new leader arrives."
Burgum will be responsible for the business performance of the unit for the remainder of the fiscal year, which ends in June. The software maker hopes to have a new leader in place by the spring.
Challenges for MBS
Gartner analyst Bob Anderson noted that although Microsoft has seen some sales growth in MBS, the division has not lived up to some of its lofty early projections.
"Obviously they've struggled on the revenue side, but they are doing better, as well as managing their expenses," Anderson said.
One of the challenges, he said, is that even some of Microsoft's most successful rivals aren't generating multiple billions of dollars by selling to midsized companies.
"To make the real big money in business solutions, you have to scale," he said. "It's really an SAP and Oracle game."
Among the ways that Microsoft could further grow, he said, is to consider more acquisitions, or to try and sell to larger businesses. Although he expects the company to steer clear of software to manage the headquarters of the biggest enterprises, Anderson said there is an opportunity for it to try and move somewhat further up the ladder in terms of the size of companies MBS targets.
The Microsoft Business Solutions unit consists of a number of different products that Microsoft has gotten through its acquisition of Navision, Great Plains Software, Solomon and Axapta. Microsoft recently announced plans to.
An effort to unify the product's underlying source code,, is , though the company has near-term plans to create a more common look and feel across the various products.
Microsoft also released a small business accounting program in September.
In his new role, Burgum will be responsible for helping MBS be better understood within Microsoft, help with development of business leaders in the unit and act as an ambassador for the unit to partners and customers.
Burgum came to Microsoft about five years ago, when the software maker, where he was chief executive.
In trying to fill Burgum's shoes, Anderson noted that Oracle's recent purchase of PeopleSoft and other pending deals may have freed up some talent.
"That's the gene pool that they would likely pull from," he said, referring to the acquired business software companies. However, he noted that many top prospects have already landed jobs elsewhere. He also said that Microsoft's hiring of Wal-Mart Stores' former chief information officer shows it is also willing to look beyond the traditional technology industry.
Whoever Microsoft finds, though, Anderson said it is critical that he or she is both a good business manager and a dynamic personality, Anderson said.
"A lot is going to hinge on their ability to find the right person to fill this role," he said. "They do have a lot of challenges in front of them. It doesn't leave much room for hiccups."