Microsoft Investing Billions to ‘Verticalize the Cloud’ for Industries

Looking to exert its will in the booming industry-cloud market as it has done in the overall cloud business, Microsoft is vowing to “continue to invest deeply in the individual capabilities of these industry clouds,” according to corporate VP Alysa Taylor.

While Microsoft has been #1 on my Cloud Wars Top 10 rankings for more than 2 years, I’ve got them at #6 on my Industry Cloud Top 10 because I feel at this point their potential still far outweighs their actual performance. But I expect that to change quickly.

More important, so does Taylor, who holds the powerful position of being in charge of not only Microsoft’s Business Applications unit but also Global Industry.

So Taylor is in an ideal position to ensure that Microsoft doesn’t allow its traditional business to go one way while the industry clouds go another. 

Industry clouds played a starring role during Microsoft’s April 27 earnings call, as several analysts asked CEO Satya Nadella for more insights and details about his intentions in this dynamic sector. You can read all about that in Microsoft Reveals Plan to Leapfrog Oracle, Google, Salesforce in Industry Clouds.

In my recent conversation with Taylor, she emphasized that Microsoft is completely committed to fully integrating industry-specific capabilities across and with the company’s high-demand solutions, including Dynamics 365, Teams, Power Platform, and Azure. (You can check out my entire conversation with Taylor in this episode of my Cloud Wars Live podcast.)

Here are some of Taylor’s most-compelling comments from our discussion, which clearly indicate that Microsoft regards the red-hot industry-cloud market as essential for its ongoing success. 

1. Customers want solutions “tailored to their very specific vertical.”

“This is a multi-year strategy, because we’ve heard from our customers that, to be a digital transformation partner and to help them continue to rapidly evolve and be future-proofed, they need solutions that are tailored to their very specific vertical. So this is something that has been in development for a number of years, as a direct response to what we’re hearing from customers. And that is helping them be more agile and more outcome-focused and doing that in a very vertically specific way.”

2. Industry clouds will help “unify the Microsoft Cloud” for customers.

“Starting with what we announced for the Microsoft Cloud for Healthcare, you can think about the industry cloud offering as a way to unify the Microsoft Cloud in a vertical capacity by data models, connectors, APIs, and specific applications that will light up the underlying Microsoft Cloud for our relevant verticals.”

3. Don’t put the integration burden on customers.

“We didn’t want to have a vertical-specific offering for just Teams on the collaboration side, and then something different with Dynamics on the business-application side, and yet another thing on the data and Azure side. So that’s why we’ve worked across: we brought together our engineering teams to create these vertical offerings that light up all of these aspects, so you can collaborate in Teams in a modern UI environment, have your business process come directly into Teams and then into Dynamics and Power Platform and have your data aggregated against a vertical-specific data model that brings all that data in against the core scenario.

“We believe this is extremely unique in the industry because it’s not just about verticalizing one aspect of a cloud service, it’s bringing verticalization across all of the cloud services in a unified and seamless way.”

4. Meeting the needs of the customers’ customer.

“Cleveland Clinic is one of our first adopting customers in the Microsoft Cloud for Healthcare. And they actually use the capabilities because they had issues with triaging patients after their first visit. A patient comes in, they get a diagnosis and then that follow-up care falls off. But now they use the Microsoft Cloud for Healthcare to do direct outreach, to stay in connection with the patient, to make sure that they are doing their follow-up procedures in a timely fashion.”

5. Bulldozing the front-office and back-office silos. 

“If you think about organizations that need to be able to rapidly respond, they need to continue to drive down costs and they have to have world-class customer experiences. You can’t do that when your back-office operations are not deeply connected to the front-end experience. We’re seeing that organizations have zero tolerance for these siloed applications and in particular business applications. The data that they ingest with silo, that data, it would be very expensive for organizations to have to extract, do ETL, custom machine learning on it and try and bridge these systems.

“And so what you’re seeing is this industry movement to break down those data silos, have the data be accessible and then have the applications actually surface up real-time insights. Being able to drive that connection between the front office and the back office automatically. And that’s really the direction that we’re going, both in a vertical capacity and in a horizontal.”

6. Walgreens Boots Alliance: transforming from retail to healthcare.

“We’ve been working in partnership with Walgreens Boots Alliance to help them launch a world-class digital experience and what they call a customer insights platform. And this is the move that Walgreens is making from just being a pure play retailer to a healthcare provider, a retail healthcare provider.

“And so making that shift, they have to combine all the data for more than 100 million members of the Walgreens Boots Alliance Loyalty Program into a very singular, unified view of their customer so that they can deliver on personalized experiences. So they know the customer in a digital capacity and they know them in an in-person physical capacity and are able in both mediums to serve up relevant offers, to make sure that they have access to the data they need to be able to get the healthcare, and their pharmaceutical distribution, all aligned in a way that enables data privacy and security. 

7. Manufacturing Cloud.

“I would call out this digital factory of the future. How do you have a rapid-response supply chain?,” Taylor said in describing how Microsoft and a big partner helped a ventilator manufacturer boost production from 50 ventilators per week to 1,500. “And there’s new things like intelligent order-management capabilities because now again, if we go back to the customer side of manufacturing, as a consumer, you want to know, when you order something, where it is in the entire process of build through delivery? And that can only be done through intelligent order-management capabilities, and that will be part of the Microsoft Cloud for Manufacturing.”

8. In it to win it: “investing deeply” and expanding into subsegments.

“We’ll continue to invest deeply in the individual capabilities of these industry clouds. And if you think about, there is the top-line industry and then there are all of the verticals underneath. So we’re continuing to build roadmaps to meet the needs in healthcare for not only just the providers but also the payers and med tech and pharmaceutical. And that means we have to make sure we have the most comprehensive set of assets that we can provide for our customers and for our partners to be able to build on as a platform as well.”

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