Microsoft and Andersen’s Billion Dollar Baby

Avanade is the result of a joint venture between Microsoft and Andersen Consulting to start a company that provides enterprise services for Windows 2000 (Win2K) to customers. At the moment, Avanade consists of a Web site, a staff of 20, and a lot of cash—$385 million from Microsoft. The Federal Trade Commission (FTC) approved the deal, and Avanade recently opened its doors. The company's headquarters is in Seattle, Washington, and it plans to establish offices in New York, Chicago, and Dallas soon and to open offices worldwide in the UK, Germany, France, Italy, and Spain within the next year.The CEO of Avanade is former Andersen partner Mitch Hill, who recently said that although the company doesn't have any customers yet, it expects to ink its first deals in the next month or two. At the moment, Avanade's problem is staffing in a difficult IT employment market. The company plans to hire 1500 employees within 12 months and grow to a service organization of 5000 within 3 years. Information about job openings appears on the Avanade Web site. The first group of employees is mostly Andersen staff with a smaller number of Microsoft people. According to the agreement, Avanade has a cap of 1200 transferees from Andersen and 100 from Microsoft. Hill said that the intent of the startup was to offer pre-IPO shares to employees and to position the company to go IPO in 18 to 24 months.Avanade will seek consulting contracts in the $500,000 and above range, and Hill describes the company as a "design, test, and build" consultancy that will specialize in enterprise integration and systems management. Avanade will specialize in contracts centered on Microsoft Windows 2000 Datacenter Edition (Win2K Datacenter). Hill said, "What Microsoft will look to Avanade for is where there's a lot of sophistication required" in constructing data center solutions that build onto the OS. Hill notes that most corporate data center applications and installations require this kind of expertise.