Why Microsoft Azure wins with enterprise customers

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As the old IT truism goes, nobody ever got fired for buying IBM. Now, in the cloud era, many are starting to apply the same logic to another well-known vendor: Microsoft.

For enterprises with extensive Microsoft footprints—spanning Office, Windows, Dynamics, Outlook, and other popular business applications—turning to Microsoft Azure services as part of a cloud strategy can certainly look like the path of least resistance.

“If you have to move to the cloud with constrained resources, it is a safer path to go with Microsoft and use many of the tools your employees are familiar with,” said Carla Arend, senior program director for software and infrastructure at IDC in Europe.

While Amazon Web Services (AWS) remains the for pure cloud infrastructure, Microsoft is catching up. And the lingering effects of the pandemic are helping it gain ground fast.

In a January 2021 earnings call, Microsoft CEO Satya Nadella touted record cloud earnings—which includes revenue from Office 365 and other business applications—of $16 billion for the quarter, which was up a staggering 34% year-over-year. 

Azure has since reached a 20% share of the cloud infrastructure market, according to , up from 10% in 2017. Microsoft’s ability to flex its sizable sales muscle and leverage its partner ecosystem to cross-sell Azure has helped it grow the cloud division into one of the primary providers in the market.

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At the time the university made its “all-in” decision, Microsoft had an established foothold across the UK education sector, so the university decided to build its future capabilities around the vendor and its partners. “We looked strategically at how we could establish a platform for transformation and worked with Microsoft to do that,” Proctor said. “There is always that inherent familiarity with Microsoft products within an IT team, so that would have helped with the migration.”

to appeal more to business decision makers rather than its core customer base of software developers.

“The buyer persona has shifted,” said Ed Anderson, a research VP at Gartner. “AWS did well in that early adopter phase where customers were more willing to embrace disruption and new models. That’s not typically the buyer profile today, which is more conservative and want to take a more incremental path to the cloud. Microsoft has marketed well to that.”

Using hybrid and multicloud to onboard customers—and keep them for the long term

Microsoft has also helped itself with the middle market by providing plenty of effective onramps for organizations to get to grips with its services.

Unlike AWS, which has long pushed back against what are commonly known as hybrid cloud systems, and Google Cloud, which has never had the same enterprise sales muscle as its rivals, Azure has long helped customers run applications where they want them to be.

This gives customers a convenient entry point to the cloud and a good reason to stick with Azure long term, even if they reconsider putting all their eggs in one basket to limit their exposure.

After going all-in on Azure in 2017, Staffordshire University has since shifted to a multicloud approach with some AWS usage, to protect against vendor lock-in. But it retains a significant portion of its cloud stack on Azure.

Likewise, Maersk has a multicloud strategy, running various workloads with its longtime partner IBM and also on Google Cloud. But most of its cloud adoption is being driven by a five-year strategic partnership with Microsoft Azure, which is set to run through to 2022.

The let customers use a set of resources and similar functional experience to the Azure public cloud, but from the comfort of their own data center. Azure Stack lets more conservative organizations slowly ramp up their comfort level as they start to identify the best workloads to move into the public cloud proper.

Microsoft continued to build on this approach in 2019 with the release of , which aims to help customers manage both on-premises and containerized resources in a cloud-like way, similar to what Google Cloud is doing with . AWS has made some moves in this direction, but has support.

Microsoft has also had some success with industry-specific offerings such as its healthcare and retail options, intended to ease cloud adoption in those specific sectors using the same incremental approach.

Is Amazon a friend or foe? That question colors AWS investments

Another under-the-radar factor that can help Microsoft when dealing with certain industries, especially in sectors like retail and logistics, is an organizational suspicion of Amazon as a competitor preparing to eat their lunch.

“As the ambitions of Amazon’s CEO expand into additional markets, the boards of directors for companies in potentially threatened verticals have directed their IT organizations to avoid the use of AWS where possible,” note the authors of Gartner’s 2019 for cloud infrastructure as a service. “IT leaders in these verticals should consider a contingency plan for board-level directives,” the Gartner analysts wrote.

Take Maersk as an example. “If I go back to 2017, we weren’t sure if Amazon was a friend or a foe in terms of the supply chain business,” Wigmore admitted.

Watch out, AWS. Microsoft is coming on strong

Depending on whom you talk to—and your appetite for knotty financial accounting questions like “Is Office 365 cloud?”—AWS and Microsoft Azure are the clear cloud market leaders today, and will be for the foreseeable future.

What is clear is that the various levels of familiarity and expertise Microsoft can bring to enterprise engagements enables the company to provide a comfort blanket that is greatly appreciated by more risk-averse organizations.

This not only puts Microsoft in a strong position to snap up , but also suggests a changing of the guard when it comes to cloud buyers, from developers with a corporate credit card to CIOs and architects with a clearly defined strategy, one that will play neatly into Microsoft’s master plan.

Copyright © 2021 IDG Communications, Inc.

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