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Microsoft Corp. on Thursday announce a fairly significant organizational change to its business software groups. Execs said the moves were made in order to better focus the company on its small and mid-sized business applications strategy and align its namesake Business Solutions division and partner channels.

The Microsoft Business Solutions (MBS) division comprises its Great Plains, Navision, bCentral and Microsoft CRM groups.

Doug Burgum, senior vice president of MBS will report directly to Steve Ballmer, Microsoft’s CEO. Burgum will continue in his role as head of the Business Solutions group but will have more responsibility for driving the company’s applications strategy.

Orlando Ayala, senior vice president of Microsoft’s Small and Midmarket Solutions and Partner group, will take on a new duel role. In addition to heading the SMS&P group, he is the new COO of the MBS group, reporting to Burgum.

Both Burgum and Ayala formerly reported to Jeff Raikes, who heads the Information Worker, or Office, group.

At the same time, to better align its applications and partner initiatives, Ayala’s SMS&P group will take a leap across the company’s org chart, moving from the Information Worker group to Burgum’s MBS group. In his new role of COO, Ayala will oversee sales, services, marketing and operations for both groups.

Following the company’s April earnings report, Microsoft Watch’s Mary Jo Foley warned that all wasn’t rosy behind in the MBS screen. Click here to read more.

The SMS&P group includes Microsoft’s partner group and its small and mid-market customer strategy teams. Ayala took on the head role there last July with the mandate to lead a worldwide effort to help Microsoft and its partners realize significant growth in the SMB sector.

Ayala was also charged with making sure Microsoft’s 35,000 worldwide partners are working in synch, driving sales and marketing efforts in the SMB sector— a particularly necessary task given Microsoft’s increasingly fractured channel relations coupled with the fact that it sells its software specifically through alliance partners.

Read more here about Orlando Ayala and Small Business Server 2003.

Microsoft set its sites on leading in the enterprise resource planning applications market with its multi-billion dollar acquisitions of Great Plains and Navision ERP (enterprise resource planning) software companies in 2002.

Since that time, Microsoft has embarked on another multi-billion effort, Project Green, to rewrite its four ERP suites to a single code base, and has steadily increased functionality across the suites, including adding CRM (customer relationship management), online services and retail management. The line also grown into new geographies.

Microsoft is coming at the SMB sector from all points, including updates to its cadre of classic products geared toward the SMB market, such as the Windows OS, Office productivity suite and Windows Server. Other parts of the SMB push include the current consolidation of its back-office applications tailored toward its .Net integration platform; and a major push with its worldwide partner channel to reach the small and mid-sized business.

In the spring, Microsoft purchased several SMB packages from Encore Business Solutions, including non-profit accounting software, as well as its inter-company payables management and requisition modules. Click here to read more.

According to industry insiders, Microsoft is also gearing up to compete in the enterprise market—a stance that will come heavily into play in the upcoming antitrust trial between Oracle Corp. and the U.S. Department of Justice. Burgum will testify on the Justice Department’s behalf regarding Microsoft’s applications strategy.

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