SAP & Oracle Beware: Microsoft CEO Nadella Declares “Industry-First Focus”

As most of the world’s most-powerful cloud vendors invest massively in expanding their industry-specific solutions and capabilities, mighty Microsoft has boosted the stakes dramatically by declaring it now has an “industry-first focus.”

(On my weekly Cloud Wars Top 10 rankings, Microsoft is #1, Google is #3, SAP is #5, and Oracle is #6.)

That unequivocal commitment comes from none other than CEO Satya Nadella, who two weeks ago starred in a 9-minute video in which he described in passionate terms his company’s full-scale commitment to industry clouds.

And just a reminder about the company behind that all-in commitment to industry clouds: with a market cap of about $1.72 trillion, Microsoft has a very good chance of generating cloud revenue of about $75 billion in calendar 2021.

From that video released late last month, here’s Nadella declaring that the world’s #1 cloud vendor will intensify its “industry-first focus.” I’m going to run a fairly lengthy excerpt of Nadella’s comments because I feel it’s important for you to get a fairly complete sense of how he described the company’s accelerated and expanded industry-cloud strategy and portfolio.

Today we are building on this industry-first focus and announcing new clouds for manufacturing, financial services, and nonprofits. Each offering is designed to work as one seamless solution and to enable cross-industry workflows. 

For example, retailers and manufacturers can work across clouds to manage inventory and production in real time, from shelf to warehouse to factory. Our comprehensive and modern tech stack, along with our partner ecosystem, allow us to deliver this breakthrough value to organizations. 

These new industry clouds bring together the breadth of our offerings across Azure, Power Platform, Microsoft 365 and Teams, Dynamics 365 and Microsoft Security, and are underpinned by a common data model. 

We’ve also added new capabilities, customizations and standards unique to each industry. For example, in retail our cloud connects physical and digital experiences to better serve customers in new and more-personalized ways, getting them to the goods they want where, when and how they want them.

In manufacturing, our cloud ensures the safety of front-line workers and creates more resilient and agile factories and supply chains so companies can rapidly respond to changes in demand. 

In financial services, institutions can modernize core banking services like payments, manage risk throughout the organization, and create new innovative financial-services models…

Our industry clouds are designed to be modern and extensible so organizations can start with what they need today and adapt as they grow. They also create opportunities for our partners to build new revenue streams across the value chain. 

Our industries will help businesses make faster and more-intelligent decisions, ultimately providing better experiences for their customers and employees. And they will help organizations improve time to value, lower cost, and increased agility.

So as the world’s largest enterprise-applications companies, SAP and Oracle, crank up their own aggressive, wide-ranging, and innovative industry-cloud solutions, Nadella’s declaration of the new “industry-first” focus for Microsoft has some interesting ramifications:

For SAP, it means a tricky balancing act. The two companies are close partners on a number of fronts, including SAP’s choice of Microsoft Azure as a major and perhaps even preferred infrastructure provider for SAP workloads moving to the cloud. Will that collaboration be strained in any way as Microsoft begins to compete aggressively with SAP in industry clouds, which is a highly strategic growth area for SAP? It’s hard to imagine the relationship being unchanged by this imminent competition.

For Oracle, it means intensified head-to-head competition with Microsoft in all three layers of the cloud: infrastructure, where Azure has a massive lead over small but fast-growing OCI; cloud databases, where Microsoft executives have been quite blunt in stating that Cosmos and Synapse are aimed squarely at replacing legacy databases, of which Oracle is by far the dominant player; and now in vertical-market cloud applications as well. 

Late last year, Ellison said this about Oracle’s plans for industry clouds: “We have a lot of [on-premises] industry-specific products and a lot of industry-specific knowledge… Our industry applications are very unusual—nobody else has this kind of industry-specific applications to go with their horizontal applications.” 

You can read all about that in Oracle Takes on Google and SAP in Hot New Cloud Category, which I wrote in mid-November.

Just four months ago, Microsoft’s small industry-cloud business didn’t even merit a mention.

And today, led by Nadella, the company’s embracing an “industry-first focus”—yet another reminder of how fast things change in the Cloud Wars.

Disclosure: at the time of this writing, SAP, Oracle and Google Cloud are among the many clients of Cloud Wars Media LLC and/or Evans Strategic Communications LLC.

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