Microsoft Crushes Antiquated Business Model: Bravo!

Busting a move that every enterprise-tech company should follow, Microsoft has pounded a stake into the antiquated and harmful notion that businesses today still have “front offices” and “back offices” that operate in disconnected silos.

On my weekly Cloud Wars Top 10 rankings, Microsoft is the longtime #1, followed by #2 Amazon and #3 Google Cloud.

While it is certainly the case that many businesses over the past century did indeed develop separate front- and back-office operations, I’m constantly baffled that the world’s top cloud vendors—the innovators responsible for delivering new ideas and new capabilities to customers—continue to position their apps and services around that backward notion.

Hey—tech industry—I’ve got a message for you: your job is to help your customers bury that mindset, not perpetuate it!

So kudos to Microsoft corporate VP Alysa Taylor, who in the past 18 months has been given increasing levels of responsibilities, including Microsoft’s fast-growing Dynamics 365 applications, Power Platform, industry solutions, data and mixed reality. For more on that, please see Microsoft Reorganization Merges Data and AI with Apps and Industries.

Speaking last week at an investors conference, Taylor was asked about “the relative priority of front-office versus back-office application investments.”

To her great credit, Taylor rejected—politely—the premise of the question and described the new world order here in the digital age.

“The lines between front office and back office have blurred, and that blurring is happening because the historical traditional CRM and ERP systems really never talk to one another,” Taylor said during her Q&A with analyst Brad Zelnick at the Deutsche Bank investors conference.

“Think about how quickly every industry is evolving. Take retail—if you zoom into retail and look at curbside pickup as a service, every retailer has to offer it in this world today but you can’t do that with just front-office systems and back-office systems because you have to be able to understand real-time inventory visibility.

“You have to be able to do alerts to employees on the front lines servicing the customers, and the world of digital and physical has completely merged. So you have to know your customer in a virtual environment and be able to bring that into the physical environment.”

My only quibble with Taylor’s comment is a small one: she says the lines between old-fashioned front-office and back-office distinctions “have blurred” but I would say they’re being demolished. Because that mindset prevents a business from not only become fully modernized with end-to-end digital capabilities, it also significantly damages that business because its customers will get the impression it can no longer meet their needs and expectations. So they will take their business—and their revenue—elsewhere.

“Customer expectations are that it doesn’t matter if I interact with you online, or I interact with you in a store—I expect you to know me in either case. So you can’t have two discrete and disparate systems and two levels of service,” Taylor said.

“That’s why we’ve moved very much into a functional model, and the key and the secret to Dynamics 365 is we have individual services by function: sales, service, marketing, finance, supply chain, operations and commerce. 

“And there’s a common data service that threads throughout, which is what we call Dataverse. That common data service allows you to have your supply chain visibility seamlessly flow in through your commerce systems into your sales and into your service applications. 

“So there are no more silos between those functions. And that’s our core value proposition: breaking down those traditional silos and enabling a data-first, AI-first set of applications that serve every business need.”

Later this afternoon, when Oracle releases its fiscal Q1 results, I hope CEO Safra Catz will stop referring to Oracle’s fast-growing “strategic back-office applications” because that terminology no longer accurately describes the business realities of today.

Disclosure: at the time of this writing, Oracle was a client of Cloud Wars Media and/or Evans Strategic Communications LLC.

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