Contract Dispute, a Tragic Death: What Happened to Microsoft Israel This Summer?

General manager and five others left the U.S. software company's local sales unit or moved to a different position in the space of six months

This July 3, 2014, file photo, shows the Microsoft Corp. logo outside the Microsoft Visitor Center in Redmond, Wash.
AP Photo / Ted S. Warren

In the final days of last May, Microsoft Israel sent out a news release announcing that its general manager, Shelly Landsmann, was leaving the company. The release said she would be stepping down at the start of July.

After 22 years at Microsoft, four of them as one of the most valued country managers for the global corporation, her sudden and swift departure raised eyebrows in the Israeli tech industry – in particular because Microsoft didn’t announce a successor.

Instead, the company sent Celine Bremaud, its vice president of sales, marketing and operations for the Middle East and Africa, to assume Landsmann’s role until a permanent replacement was found. Finally in October, Ronit Atad was named to the position.

In contrast to the previous switch of general managers, when Landsmann had replaced Danny Yamin in 2015, there was no running-in period when the previous executive helped his successor learn the ropes. Yamin had stayed on several months to help Landsmann, as is usually the case with global tech companies.

What added to the mystery around Landsmann’s exit was that she wasn’t the only one to leave Microsoft at the time. Tal Shtainman, Microsoft Israel’s vice president for sales, and Orly Friedman Marton, its legal adviser, both departed last July – both of them after more than 12 years at the company.

In addition, Shira Fayans Birenbaum, who had been vice president for marketing, left the same time after six years at Microsoft. More recently, Avi Binya, vice president for commercial partnerships, is reported to be on his way after more than 14 years. Chief Financial Officer Dana Alexandrovich Suprasky also stepped down.

All told, in the space of six months six out of nine senior executives at Microsoft Israel have left their jobs.

That is in a unit that employs 300 people engaged in marketing and sales of software and cloud computing services to businesses and government. It is a separate operation from the company’s research and development operations, which employ 1,500 people in office in the Tel Aviv suburb of Herzilya,

Sources trace the problems to the start of negotiations with the Israeli government to renew software agreements. In August 2018, the Finance Ministry announced that it didn’t plan to renew the agreements with Microsoft due to expire at the end of that year.

The contract to license the Windows operating system, Microsoft Office and software used in servers by the Israeli government is worth about 100 million shekels ($28.8 million) annually.

Microsoft had sought to change the contract model from one where the government bought the rights to use the software to one where it leased it via subscription, a model known as Software as a service, or SaaS. The minute the contract expires, the user has no more right to the software.

The treasury said an SaaS contract would cost it significantly more and demanded a big discount on the new contract to compensate for the software it had previous bought and would now be worthless.

The dispute won the attention of the Israeli and world media and eventually to the attention of Microsoft headquarters in Redmond, Washington. The issue threatened to harm Microsoft’s relations with other government customers. Microsoft Israel came under heavy pressure to reach contract terms quickly.

Eventually, Landsmann took over the negotiations herself, which was a serious financial blow to the local sales team who earns bonuses for winning contracts. The Finance Ministry eventually signed a contract but the bad blood inside Microsoft Israel remained.

Shortly after the new contract was signed in November 2018, a senior Microsoft Israel employee who belonged to the government sales team died under tragic circumstances, an event that traumatized local staff.

Former employees said that Bremaud visited the Microsoft Israel offices last March to examine operations and talk with staff, Three months later she returned to Israel, this time to fill in for the now departed Landsmann.

Landsmann said in response to the report: “These are false claims based on cheap gossip without evidence proof by people who won’t identify themselves by name.” Microsoft Israel and its parent company in the U.S. declined to respond.