Microsoft's new sales chief talks about working with Boeing, competing with Amazon, and...butter

Microsoft Judson AlthoffMicrosoftMicrosoft Executive VP Judson Althoff

On July 7th, former COO Kevin Turner caused shockwaves at Microsoft when he announced that he’d be leaving the company, prompting CEO Satya Nadella to shake up his executive team.

One of the big winners from that reorganization was Judson Althoff — a longtime Oracle sales executive who joined Microsoft in 2013. Now, he’s the Executive VP of Microsoft’s Worldwide Commercial Business, making him the company’s top salesperson.

And he’s kicking off his reign with a bang: Microsoft and Boeing today announced a partnership that will see the airliner company bring its number-crunching analytics products for the aviation industry to the Microsoft Azure cloud.

That’s a good sign, given that Microsoft is banking big on the continued growth of its cloud business to anchor the company in the stormy waters of a shrinking PC market and a quickly-changing enterprise IT industry.

Althoff sat down with Business Insider’s Matt Weinberger to talk about Microsoft’s opportunity, competing with Amazon and Google in the cloud computing market, and what the company still needs to do to win the modern enterprise.

An edited transcript is below, but here are some highlights:

  • The world will have three computers. The world will have an Azure computer, an AWS computer and probably one from Google.” Althoff believes that Microsoft has to win developers over to Azure today, because the major cloud platforms will eventually be the spokes of future technology.
  • “I think the number one thing that we need to work through is velocity.” Althoff says that in a market changing this fast, customers are looking for Microsoft products to help them manage. He says Microsoft’s big challenge is delivering those products to customers faster.
  • “Today more than two-thirds of the assets in Azure are actually non-Microsoft workloads.” Under Nadella, Microsoft has opened Azure’s doors to one-time competitors like SAP and the free Linux operating system.
  • “Data is the new black.” Althoff thinks that with competition mounting from Amazon and Google, the thing that makes all the difference is the data that your applications can tap into. That’s why Microsoft is investing so much into tools that help analyse data — even, or especially, from industrial-scale internet-connected devices like tractors, like Land-O-Lakes is doing.

A lightly edited transcript of our conversation with Althoff is below.

Matt Weinberger: I understand that Microsoft announced a partnership with Boeing today. Can you tell me a little bit about that?

Judson Althoff: One of the big trends we’re seeing, and this was a huge theme this past week at WPC [Microsoft’s Worldwide Partner Conference], is that every company that we’re dealing with is becoming a digital company. There’s really four pillars of digital transformations that we see occurring across these companies.

They are, first, really thinking and reimagining how they do their own customer engagement and moving away from transactional moments and customers to more lifetime customer value and customer engagement.

Second, leveraging technology to accomplish the same. There is a renewed interest in true employee empowerment, not just providing tools but actually providing them an environment where productivity can be at an all time high and employees can actually feel empowered to get their work done.

The third area that’s actually a bit of a renaissance is this notion of operationalizing and optimising rather operations, which you could argue it’s sort of like the birthplace of IT anyway.

Although with connected devices, machine learning and predictive analytics, we’re taking it to a whole new level.

And the fourth area is what we call product transformation. Where people are actually using digital technology to transform the products they bring to market. But the really sort of genesis of it all is actually transforming commercial aviation.

And so they’re using our intelligent cloud platform and in Azure, the Cortana intelligence suite and IoT capability to build out connected aircraft, airline systems, predictive maintenance, fuel optimization scenarios, to really transform the products they bring to market. And prove better value for their customers and think of delivering their product more as a service moving forward. So it’s a great testament to the direction we’re moving in and we’re proud to consider Boeing a partner in this regard.

Weinberger: Tell me a little bit more about how Microsoft Azure and the intelligent cloud platform fits into this philosophy.

Althoff: Really the platform itself is the foundation for so much of this work and it cuts across a number of different scenarios. First is the infrastructure itself, being really the only hyperscale cloud platform that enables hybrid scenarios, so if you think about support for global systems that truly operate on a global basis.

Given all of the data privacy, security, and sovereignty constraints, you have to have a hybrid scenario. So the foundation for being able to offer any type of cloud, whether it be your own data center and our public cloud or any permutation in between is a huge differentiator.

The second piece of it is really the heavy investment we’ve made in heterogeneous support for application development over the last couple of years. You maybe sort of rewound back maybe three years ago, Microsoft was thought of really as a fairly closed system to developers.

But today more than two thirds of the assets in Azure are actually non-Microsoft workloads.

Today more than two thirds of the assets in Azure are actually non-Microsoft workloads.

They’re open source workloads, they’re third party IP running Azure, and this open nature is really sort of attracting the modern developer from every paradigm. So that’s been a huge leap forward and I think there’s a big attractor for Boeing as well. And then the final piece is the heavy and rich investment we have in data.

One of the comments sort of off hand at WPC this week was that “data is the new black.”

Which was thought of this geeky data center paradigm of “Well, hey you know, we could have a data strategy,” is now a board room discussion because data fuels intelligence. Whether it’s the system or an application, the system can only be as intelligent as the data over which it reasons. And the fabric that we have built into Azure that allows you to have really every kind of data construct, from traditional, relational constructs all the way to non-structured machine learning constructs.

Weinberger: Tell me the importance of selling to developers in the current market landscape.

Althoff: You have to meet them where they want to be, so things like our Xamarin acquisition that allows a developer to take a single line of code and target thousands of different mobile devices and testing and regressively get their ideas to market faster.

Xamarin Nat FriedmanXamarinXamarin co-founder and CEO Nat Friedman

Supporting any kind of backend construct in the Azure platform itself, hugely beneficial to attracting the hearts and minds of the folks that will invent our future in this digital world.

Developers think of Microsoft as a partner, and if I even just think through some of the competitive scenarios we’ve been through over the last quarter where either ISV and/or commercial customers have moved away from some of the competitive cloud platforms. They have done so because they think of Microsoft and see Microsoft acting and working together as a partner.

And whether that’s a technology foundation that I’ve spoken of before, and being much more open in our approach, or the fact that we’ve actually structured our go to market teams to work with partners out in the field so that any kind of partner wins, and we’ve now sort of basically coupled tens of thousands of Microsoft sales people around the world to partner success.

It’s really creating this momentum where, you know a developer could go “Oh gosh, if I put my blood, sweat and tears into developing a business outcome or a transformational solution in this digital world, I know that Microsoft is going to be there to help me bring it to market and help me reach my potential.”

Weinberger: How do you see the competitive landscape?

Althoff: I don’t want to sound too much like a fortune teller in all this, you can sort of argue the time horizon, right, whether it’s in 18, 24, months, three, five years, ten years, let’s just put that aside.

The world will have three computers. The world will have an Azure computer, an AWS computer and probably one from Google. We see these three massive cloud platforms as being the cloud platforms of the future. And it’s why we’re so focused on providing differentiated value for partners, developers and customers in our cloud platform because we believe that it’s the one cloud platform that is public platform built for the public good.

The world will have three computers.

We want to provide for an environment that provides for a successful ecosystem. It’s not just about Microsoft’s success, it’s about the success of others. So without sounding too hypothetical and theoretical there, every layer we’re investing in, whether it be the cloud platform itself, the Dynamics 365 announcement that we made a little over a week ago now, Office 365 in and of itself.

Everything we’re delivering we’re effectively delivering as a platform.

Weinberger: How do you make sure that Microsoft’s internal culture is aligned with the new cloud-driven world?

Althoff: We’ve worked across the senior leadership team here at Microsoft to increase the enterprise momentum that we’ve already built today. We’re really proud of some of the gains that we’ve had and you see that in the Boeing announcement, the Land O’ Lakes blog that went out earlier in the day…or [GE CEO] Jeffrey Immelt on stage with Satya.

We want to enable really every Microsoft entity around the world to work at high velocity with their customers out in the field to do the same kind of work that we’ve done with the entities that I just rattled off there. To do that at scale to empower them to focus also then on a much more unified approach to supporting partners across all audiences, from you know the core and elite developers through to traditional ISVs, SaaS providers, and then also commercial developers that are trying to take their commercial entities and become digital companie. And then lastly, also provide the service fabric that provides for the kind of world-class enterprise support for customers that they’re really getting and it’s also a truly differentiated kind of offering from Microsoft.

Weinberger: And what’s the number-one hurdle Microsoft has to work through to get there?

Althoff: I think the number one thing that we need to work through is velocity.

And so if I think through what exactly that means, right, because those are some generic words that you could throw at any problem, it’s about teaching, coaching, enabling. Both technically and from an industry vernacular so that we can help companies accelerate their own intentions in the space. So that will translate to greater technical and subject matter expertise that we extend out into the partner community, that we extend out into customers. If you think about the investments that the companies made over the last year, so much of it has been around technical cloud solution architects and data solution architects that we’ve deployed on site at the customer as an investment to help accelerate their growth in these areas.

Weinberger: And what’s one trend in the market you’re keeping your eye on as you develop Microsoft’s commercial strategy?

Althoff: We get asked a lot of questions about “Well gosh, is the entry point from a technology standpoint, is it Office 365 or is it Azure and do these things then lend themselves to other types of conversations or expanded solutions?”

So while I hesitate to say it to one thing, there really is a consistent driver across all industries. And that thing is IoT and the connectedness of sensors and sensor fabrics and feeding data and intelligence and systems that then provide machine learning, augmented reality, artificial intelligence to a greater good of systems.

And so, let me explain in context what I mean by that by talking a little bit more about Land O’Lakes. So, when I say Land O’Lakes, the image that probably comes to mind to you is a stick of butter.

And if I’m transparent with you, when I started working with Mike McCree at Land O’Lakes 18, 24 months ago, the image that came to my mind was a stick of butter, and I thought “Gosh, how are we going to help this scenario?”

But through our partnership and what we have built together, it’s the most amazing and intelligent assets that they are bringing to bear leveraging our platform. They have now amassed decades worth of satellite imagery that they can effectively extract from a singular farm, heat signatures and nitrogen alkaloids that effectively tell you how good a piece of soil is. And then they can use that data to then stream it down into intelligent tractors — so you might sort of argue IoT might stand for the “Internet of Tractors”

So you might sort of argue IoT might stand for the “Internet of Tractors.”

because they can then feed this intelligence into these planters and variably plant a field based on soil productivity.

The business outcome is that instead of producing maybe 100 bushels of corn per acre, they can now produce up to 500 bushels of corn per acre and feed the world more effectively through these connected and intelligent systems.

So what was once thought of as the butter company is now a company that is using IoT data and intelligence to feed the world more effectively and the story is so inspirational, because you meet with the farmers, which I have done, and they look you in the eye and they say “My family has farmed this field for generations, and yet you’ve taught us how to get more yield out of something that we thought we knew like the back of our hands.”

Weinberger: If we can revisit the cloud for a second here, tell me a little about how you think of the mix between cloud and more legacy products, especially when it comes to things like cost and margin.

Althoff: We worked best when we aligned our portfolios of intellectual property to what the customer wants to get done.

And so we had very deliberately taken a stance as not trying to force that one way or another, that there are certain business paradigms that we can you know deliver more effectively in the cloud, but we’re also very committed to delivering them in a hybrid capacity as well because especially when you take a global view to these things, there are geographic markets, there are industries that are all highly regulated. Forcing a public cloud paradigm on them will actually only inhibit or slow their potential success. It’s why across the board, whether we’re talking about Azure as a platform, our database, our business application Office and Office 365, why we offer a true hybrid choice across really everything we do. To us, it’s more of let’s solve for the customer and not have some predisposed position around how it must be done.

Weinberger: The Microsoft Azure cloud, is that still growing?

Althoff: Massively, massively. You know I can’t speak numerically. I think you’ll have to wait for earnings next week to hear about that but the momentum is stronger than ever and the competitive shifts have accelerated.

Weinberger: What do you think is attracting people to Azure, beyond the hybrid capabilities that we talked about?

Althoff: Well I think there are really two sort of dimensions and answers to that. The platform in and of itself sort of has so many attributes that are appealing to developers and commercial customers from the data privacy, security and trust cloud stance that we take as a company that’s truly differentiated. And differentiated because the scale that we have, we have a greater data center footprint than our two biggest competitors combined. And so intrinsically then, we’re operating in all of these different geos and working through privacy, security, sovereignty, local law much faster than that of our competitors.

The heterogeneous developer scenario that we talked about are a huge driver. The data and analytics capabilities are a massive driver. And then the marketplace opportunity and the go-to-market strategy is also a big driver for us and that’s sort of the second dimension that are really sort of the business drivers. ‘Cause once again all of these entities, I think of Microsoft as a partner.

Weinberger: Finally, what do you think is the most misunderstood thing about Microsoft’s commercial business that you wish people understood better?

Althoff: Wow, that’s a heavy one….we have really dramatically changed the company over the last two and a half years. To be the company that we believe can enable every person and every organisation on the planet to achieve more. We tell that story a lot, I think inside of Microsoft folks feel like we tell it so much that everybody ought to know it, but I still run into scenarios where people think that we’re the Windows, Office and SQL server company, and we have evolved so much from that. So in many ways the story that you’re telling is a big solve for the area where we’re most misunderstood.

We are an open company, we are a solutions company and we are a partner. And that is how we want to be known as well as a learning company that will continue to evolve to meet our customers’ and partner’s needs.

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