Sep 13, 2022
I had a chance to sneak up on Vahe Torossian, a Microsoft Corporate Vice President and the man in charge of Sales for Microsoft Business Applications. While Vahe has been with Microsoft for 30 years, many of you may not know him, so I wanted to fix that. Vahe is no ordinary Seller; he’s the “Top” guy who sets the sales strategy and motions for the entire global team. Vahe is also the guy who runs the really big enterprise customer meetings, and he’s super-friendly, as you would expect for the Chief Rainmaker. We covered a lot of ground in this one, so enjoy!
Transcript Below:
Vahe:
Hey, Vahe Torossian speaking.
Steve:
Vahe, Steve Mordue, how are you?
Vahe:
Hey Steve. In fairness let’s say Charles mentioned that somehow you
were going to call me. I didn’t know when, but it’s great to talk
to you.
Steve:
After I interviewed him, I asked him who would be a good person to
talk to? And he dropped your name. So it doesn’t surprise me that
he gave you a little heads up. Have you got a few minutes to
chat?
Vahe:
Yeah, of course. Thanks Steve.
Steve:
Oh, perfect, perfect. So before we get into it, maybe we can tell
the listeners a little bit about what your role is. I know you’ve
been at Microsoft forever, I think like 30 years or something like
that, and you’ve held a lot of different positions. But now you’re
in the business application space and that’s been fairly recent. So
there’s probably a lot of folks that might not be familiar with
you, who should be.
Vahe:
Oh yeah, thanks Steve. You’re right. I’ve been celebrating my 30
years anniversary at Microsoft in April in 2022. I actually took
the helm of the Biz Apps sales organization globally in late 2020.
So basically I took my one way ticket to Redmond in December 2020.
And the plane was almost empty, it was during the pandemic. And it
was kind of a strange feeling for someone who has been traveling so
much in the past. And of course, let’s say I came with the lens of
the business application, of course. Having led let’s say Western
Europe in my past role, having all the businesses of Microsoft. And
I think Western Europe was quite successful on Biz Apps, our
trajectory growth. And I guess that was also in fact the good match
to some degree to try to take it at the global level.
Steve:
So is it a little easier to think about a smaller segment of the
product mix, now really being able to focus like a business
application? So I think before you were looking over all sorts of
different things, weren’t you?
Vahe:
Yeah, actually it’s a great question. Because I think it’s very
different way of looking at the business. When you are, let’s say
almost you are the CEO of Microsoft in the countries that you are,
let’s say leading. You have all the levers to engage customers,
partners, government, in different circumstances. And you try to
leverage as much as you can the portfolio that you have to maximize
the value. In the context of let’s say the business application. I
think it was, the interesting bet to some degree Steve, was to say,
Hey, this has been a portfolio at Microsoft, whether you call it
Dynamics 365 or Dynamics only as a brand in the past. And if you go
back 20 years, let’s say almost, with the Navision and Axapta, and
Solomon Software and Great Plains. All these stories, all these
product came together. And 20 years later, I think it has been part
of a portfolio somewhere.
Vahe:
And you had almost what I will call the strong, let’s say,
portfolio of Microsoft, the platform, the modern workplace and
environment. And I felt the work that James Phillips in the past,
and with Alyssa, and Charles, and Amy here now on the marketing
side. Have been a strong inflection point to bring together both
the technology in the cloud environment. But at the same time, a
market environment that requires very different, let’s say tools to
make the most of this transformation. And I felt that there’s one
piece at Microsoft that requires a huge catalyst leveraging the
innovation. But responding as much as we can to what the customer
need or even don’t know yet what they need. And I think that’s what
I think to me was almost a bet. It’s almost like all of a sudden
you move to the little dog, if I may say. But with a huge potential
of transforming something with great asset for Microsoft, and the
customers and partners.
Steve:
Well I have to say, having been involved with Microsoft for a
while, we have a phrase over here called redheaded stepchild, which
is kind of what Dynamics was for many, many years. It was off
campus, it was just this thing out there and under Satya, when
Satya came in, he’s the first one that I think came into the
position that recognized this should be another leg on the stool,
not some remote thing out there. And I think that’s made a huge.
Difference because I was involved in the years before Satya with
business applications and they were not just something over here on
the back shelf, and now they’re right front and center. I think
that between Dynamics and what’s happened with the power platform,
cloud in general. Microsoft’s ability to get into and help
customers is massively different than it used to be. And in your
role now, you’re dealing with a lot different type of customer.
You’re talking about Office 365 or Azure, you’re dealing with IT.
And now you’re mostly dealing with business users. It’s a
completely different audience you’re having to work with today,
isn’t it?
Vahe:
Absolutely. I think also you’re right since Satya took the helm of
the company, to some degree you of course we have seen how we
tackle the cloud computing hyper-scale environment. But at the same
time, in fact what happened with the Covid in the last two years,
have seen an acceleration of what we call in the past, the
productivity tools to become more and more collaboration
environment. And from almost an application or a set of
application, it became more and more a platform on its own. And so
it’s almost like when you think about where we are today and we
were talking about the Covid, I don’t think the Covid is yet over
fully everywhere. But now everybody’s talking about recession,
right? And there’s no one headline that you look, you say, oh my
goodness, what’s going to happen? Which just means in terms of
planning for 22, 23.
Vahe:
So I think the assets that is now quite unique to some degree, or
differentiated as you said, between the Dynamics 365 platform
components and the Power Platform, it’s almost bringing together.
But I think, I don’t remember Steve, in a few years back, I think
Satya was talking about the mobility of the experience. And that
was more from a device perspective initially. But actually what you
see now is that with Teams as a platform, the system of
productivity almost connect with the system of record more and
more. And it’s re-transforming the way you are thinking. It’s
almost like, you think about, you don’t have to go to a CRM
environment or ERP environment to get access to the data. It’s
almost like wherever you work, if you use an Excel or if you use
Teams or whatever, you get access naturally, almost intuitively to
your data set. And the data set are that’s almost fulfilled
naturally. And so we have no additional task.
Vahe:
And so I think that’s the transformation world in which we are.
Which connects cheaper well. We almost do more with less, right?
And that’s going to be almost the conversation we’re going to have
in the coming month. And it started already with many customers and
partners. How we can optimize the assets that they have, how they
can let’s say increase the deep provisioning of some assets that
they have. They are paying too much to concentrate a bit more, to
get more agility. And I think this is where also, from a partner
perspective, Steve, I see a lot of potential. You are referring to
Power Platform, it’s fascinating to see what it was in the very
beginning, this notion of citizens developer, what does it
mean?
Vahe:
People didn’t know exactly what it is, we’re quite afraid to touch
it. But now when you see the shortage of developers in the market
in general. And how you can make the most of some absolutely
topnotch people who are not developer, touching the last mile
execution challenges. Have been facing crazy environment and
situation that they say, I can’t believe how my IT guide doesn’t
solve these things. I’ve been telling them the customer pain point
for so many years. And now with some, let’s say [inaudible
00:08:45] place, let’s say available for them, along with some
let’s say technical assets, you can really make the magic in the
very, very, very time.
Steve:
Charles came up with a term on the fly, ambient CRM. Kind of where
we’re heading here when you talk about things like Viva Sales and
some of these pieces that are really wiring all these components
together. Covid was a terrible thing, but it certainly was a
perfect storm for pushing the technology forward into a place that
it’s been fighting to get to, it’s really been fighting to get to
that point. And Teams was a great product. But certainly Covid
created the perfect environment where Teams made insane sense for
companies that were maybe just thinking about it or dabbling with
it, and suddenly they’re all diving into it. And you guys of course
poured the investment on top of that. And I think that the silver
lining of Covid, for technology, is how far it really allowed it to
advance in that period of time. Maybe we just need a pandemic every
five years to push a technology forward. I don’t know.
Vahe:
No, but I have to say that even in my previous role when I was
running Western Europe. Even the most skeptical people in regard to
the cloud or the transition to a cloud environment. Having the one
that rushed in the first, almost to a cloud environment, once the
pandemic has been a bit of a real situation to face, and to drive
the economy or the public services let’s say on. So I think you’re
right, so you don’t want to wish for another pandemic or whatever,
but it has been absolutely a forcing function in many domains. And
that’s true.
Steve:
I think the challenge we have is particularly in the business
application space. You guys have launched so many things in such a
short period of time. And as you mentioned before, Power Apps,
people picking it with a stick, they don’t even know what it is.
And there’s also this first mover fear, I think. Microsoft has
been, in my mind, kind of famous for coming to the game late and
then just taking over the game. We were very late to the cloud, but
once we got there we just took over the cloud, and it seems to be a
pattern. But when you look back at the early days of cloud before
you guys stepped into it, it was wild west. And all sorts of
challenges with cloud. And I think that that gave a lot of people
fear about, I remember I moved into cloud early and we got
destroyed.
Steve:
And so I think there’s a lot of folks out there, just from a
technology standpoint, that have gotten their hands burnt by moving
too quickly. And we’re at that point with the platform and
dynamics, where these are not new anymore. Relatively in history,
they’re new. But they’re not new products and they’re not built by
some garage shop somewhere with a couple of developers. This is
what 15,000 people building this stuff back there. This is
professionally built, well built stuff, that is ready for prime
time. So the first movers have already come through and they all
survived. So I really feel like we’re at that point where it should
just take off now, it should just absolutely take off. And I’m sure
you guys are seeing this.
Vahe:
Yeah. And Steve, I think one thing also is that you’re right,
there’s a usual thing about let’s say the first mover advantage. At
the same time from a customer perspective, you don’t want to be the
Guinea pig, right? On any situation, especially from the technology
standpoint. I think that increasingly what I see in the
conversation is that there’s almost now, because of the quality of
the native integration of the several different applications.
Whether you are in the customer experience environment, on the
service side, on the supply chain, on the finance or the local no
code or app. All these components are absolutely connected to each
other. And basically whether you have Teams as a platform in your
company, or Azure in environment, all these component are connected
very, very easily to each other.
Vahe:
And so I would say that the beauty of it now is that you have all
almost the notion of marginal cost. If you really want to leverage
many of the assets that we can bring, and you don’t have to take
all of them at once, of course it has to be matching what you need
now. But the right is that, let’s say there’s an almost fully
integrated benefit all the connectors with the rest of the world
outside of Microsoft environment, which is a great value for the
partners, ISV and [inaudible 00:13:58], and at the same time to the
customers. Who think now, hey I should do more with less. How
should I think about my investments for the next, let’s say five
years? Most of the customers now are really thinking about the
longer term relationship. And defining what’s the value SLA almost
that you’re expecting both from the partner of the vendor and the
vendor itself.
Vahe:
And so it’s almost like, you remember when we transition from a
world of build revenue and licensing, to now more consumption and
usage. It’s almost the user and consumption discussion is a forcing
function about the customer success, how we align on the same
definition of the customer success. And what’s the time to value
that you committed? What are the key milestones, in full
transparency, that you need to bring in? And I think that’s where
we are now. And because Microsoft, I think overall as a company,
have been increasing tremendously the level of trust. From the
security standpoint, the compliance components, and so on, and the
scalability.
Vahe:
I think that’s the great leverage for us now in terms of the
conversation and making sure that the customers are getting the
value that we have been selling to them. How we show how much skin
in the game we have to make them successful. And then it’s a flying
wheel. It’s almost like the innovation will help you to bring new
things, respond, anticipate, take the feedback of the customer to
the engineering, develop new stuff quickly to the market. So I
think it’s what we are heading to now, Steve. And I think from a
partner perspective you might even see and feel it, right, more and
more.
Steve:
Oh yeah, I mean I think the sales motion has changed completely.
Only a few years ago we go into a customer and try and convince
them to replace Salesforce with Dynamics. And they’d say no, and we
were done. We’d say okay, well we’ll come back in a couple years
and ask again. We had nothing else to sell them. And now today, I
mean if they have Salesforce, fine that’s great, keep Salesforce,
let’s add some things around it. Salesforce will work with Viva
Sales, Salesforce will work with Power Platform.
Steve:
There’s so many doors now, I think, for a seller to be able to get
into a customer and solve problems for that customer without having
to do the one big yank and replace. Which is very difficult to do,
it’s difficult to do on opposite as well. I mean once a customer
gets a big solution like Salesforce or Dynamics 365 installed,
those are very difficult to uproot, it takes a very long time. And
you guys have created now, this product mix, where we don’t have to
uproot something to sell that customer and to get engaged with that
customer. We can go all over that business without having to uproot
something. And I think that’s huge.
Vahe:
I agree Steve. And I think that it’s almost this notion of rip and
replace type of strategy, right? In some cases it works because
this is what the customer wants. They are fed up about let’s say
competitive environment that didn’t deliver on the expectation. And
we should be ready to cope with that and respond, and we have a lot
of this. But at the same time as you said, what we call the
strategy of having a hub and spoke, let’s say, almost environment,
gives us for every line of business. That we decided as a company
to go and have a significant acceleration of growth and market
share, is very much to give that option to say, Hey, you know what,
Mr. Customer, Mrs. Customer, you decide to be on that type of
environment, who we are to ask you to change?
Vahe:
If you are happy that’s fine. But what we can bring you is almost
to enhance what you have with some component that absolutely will
be transparently integrated to what you’re using. And it’s a great
circuit, an additional circuit for the partner, it’s a great value
for the customer. We don’t feel harassed to change something
because we know the cost of transitioning from one to another one.
And then it’s up to us to demonstrate the value we can bring and
eventually we can take from there to the next level in the
future.
Steve:
It’s got to put some pressure on the competitors also. I if think
of, I might just use Salesforce because they’ve always been the big
competitor. I’m sure that they were confident sitting there at
their large customer when all we had was trying to replace their
instance that was going to be difficult to do and then we’d go away
and they didn’t have to worry about us. Now we’re coming in and
we’re circling around, and we’re solving problems in this
department, and we’re building apps in this department, and we’re
literally bolting into Salesforce. And one potential outcome is
that the customer decides over time that wow, all of this Microsoft
stuff that we’ve brought in works really, really well.
Steve:
That’s gotta put some pressure on the incumbent big application in
there that hey, you’re surrounded by a bunch of stuff the customer
is very happy with, you better make sure they’re happy with your
stuff and they don’t reach that point. Cause like you say,
oftentimes when you see those rip and replace, it’s because the
product, or the company, or something hasn’t met the expectation.
And to be fair, that could actually happen with any of us, right?
It has a lot to do with implementation, design, how thing was put
together. Less to do with the application itself, that could happen
to any vendor. But certainly raises the bar to some of these
competitors when they’re surrounded by well performing Microsoft
products that are satisfying customers. Would you think?
Vahe:
Yes. Absolutely. And that’s why there’s a continuity between what
we sell, how we sell, to who we sell, and how we drive the
implementation. It’s an ongoing wheel that is a very different
mindset that we all learn in the transition to the cloud, let’s
say, environment. But absolutely. I think it’s a good forcing
function to raise the bar to some degree, raise the bar for the
benefit of the customer. You mentioned the competitiveness of what
this type of hub and spoke strategy can create. You’re right. But
in the end, the biggest, let’s say winner, will be the customer,
right? Which I think is always and should always be the north star
for us and our partners.
Vahe:
And I would say the relevance of the innovation should be in fact
the pressure that we put to each other to make sure that say we
listen carefully to what the customer is facing as a challenge, but
potentially to translate their current challenge into the future
challenge, to push them also to think differently. Because I think
the notion of rip and replace [inaudible 00:21:06] One of the thing
was, I don’t know if you remember that the initial issue and worry
was that people were saying Oh, we are moving to the cloud,
therefore we are transforming. Well it was not that tried and true.
People were just keeping the same processes in the cloud and the
one that they had on premise. Which was not benefiting at all of
the scalability and the agility of the cloud environment. Yeah, you
remember that right? Yeah.
Steve:
They just changed the way they were paying for it.
Vahe:
Absolutely. Absolutely. So I think that’s what we have seen on this
application modernization, on some of the enterprise wide
innovation also opportunities that we had discussed, is how much
you can really say, in this new world of competitiveness, of
un-expected challenges. How you can, let’s say, keep your
applications fitting always in fact proactively the challenges that
you’re going to have too. As opposed to keep going with a quite
heavy code to maintain, with people who leave that cost you a
fortune to maintain. So I think this agility that the power apps,
[inaudible 00:22:22] to made, have been bringing I think is the
reason why we have seen this huge acceleration of growth, which is
today is six, seven times faster than the market growth of local no
code.
Vahe:
So I think it’s a great, let’s say indication, of what people start
to realize. And I think in the conversation that you had with
Charles when he was referring to, hey some of the AI capability
have been slower to be picked up by the vast majority of customers.
And it’s true because there’s a level of, let’s say, can I trust
this thing? Am I going to lose completely ground and control of
what I’m doing? All these natural thing. I think as we bring more
and more, let’s say tools, are manageable. The Power Platform
environment, or let’s say the device sales capability on top of the
teams or Salesforce environment. That people will start to test
this.
Vahe:
And I think we’re going to be more and more advocate about Hey,
what are the benefits of the organization that are using this
technology and how we can trust them lean forward. And I think
Charles was referring to our digital sellers. Their daily life is
very much, let’s say, using all these AI lead capabilities in terms
of reporting, in terms of let’s say incident management, in terms
of even coaching for themselves to do a better call next time, is
just fascinating to see. Maybe we should even do a kind of, let’s
say talk on this, once we have a bit more, let’s say after the GA,
maybe a few months after, we should have, let’s say what the key
learnings and [inaudible 00:24:00] from a customer standpoint.
Steve:
Yeah, it always makes a customer confident when they know that the
vendor is using the product that they’re trying to sell them. It’s
interesting, everything moving to a subscription has changed kind
of the mindset, not just of you guys obviously, where there’s no
big sale. There’s a sale of a big subscription, the revenue of
which will come over a long period of time. But the customer has
this option every month to say, you know what, I’m not happy,
you’re not solving my problem. In the old days they were kind of
stuck, they bought all this stuff and they had to make it work. Now
they don’t have to make it work, we have to make it work, we have
to keep them happy enough.
Steve:
We recently launched a professional services on a subscription,
which is an interesting model, that I lay awake at night thinking
about that same thing. That before a customer would pay you a bunch
of money to a bunch of stuff and now they’re paying you a little
bit of money every month for as long as you keep them happy. And
this bar of, I mean we’ve always wanted to keep customers happy.
But it’s never had the impact or importance that it does when
you’re on a subscription with that customer who can just any time
say, “I’m not happy, goodbye.” It raises the bar I think for you
guys to have to continuously innovate, what do you done for me
lately? You got to continuously innovate and bring new things. And
you’ve got more motivation probably than the company’s ever had in
history because of the subscription model. Do you feel that
internally?
Vahe:
Yes, yes. As I said, it has been a great enabler to raise the bar.
And it’s almost like you know can have a beautiful slide deck and
saying the right things, but the execution doesn’t match what you
are saying somehow, that you don’t walk the talk. I think you could
have been in that situation in a kind of on-premise environment. I
think the cloud has been a forcing function to say, hey you know
what, you can claim you are customer success, or you are customer
first, or you are customer obsessed. But the reality is that if you
don’t deliver the service properly, if you are not as responsive
timely, if you’re not proactive, customer will say enough is
enough, I can stop my subscription.
Steve:
I have options.
Vahe:
I have options. So I think it’s a good hygiene, how it makes you
having an embracing habits, that I would say are the natural thing
when you engage with customer. But I think it’s almost, let’s say,
for the one who might have forgotten that basics, it has been a
great, let’s say, opportunity to bring back the roots of what is it
to satisfy a customer, right? And I think that’s what the cloud
licensing model helped put together. And I think there are still
always room for improvement.
Vahe:
And similarly I would say, what you have seen on the collaborative
applications, what we have seen on the low-code, no-code, you are
going to see it now, also I would say on the supply chain
environment, which is shipper, shipper at stress because of what we
have seen on the Covid, but also in fact on the geopolitical aspect
and some of the recession discussion. And also, on the overall,
what I would say the contact center in our environment at large.
How this world is going to change is going to be led a lot by the
capability that technology can bring, and the ability to listen
carefully to the strategies and the challenges of the corporation
that are involved in. So it’s quite exciting actually.
Steve:
I don’t get involved a lot with the call center operations. But I
picture the old call center is this massive building full of
cubicles and people with headphones. And I picture that now that
most of those people are probably working remote. A call center now
could operate at my desk, just about, and have thousands of people
all working from their home. So, that whole industry feels like
it’s changed significantly. And yes, I’m sure they’re starving for
the technology that fits the model that they’re being pushed to
adopt.
Vahe:
Yeah, yeah absolutely. I mean it’s interesting, if you summarize
some of the business challenges or the things that are coming from
multiple conversation. We had the nuanced [inaudible 00:29:04] a
few months back. And so it’s almost the first fiscal year where
we’re going to be able to strategize, operate together as one
organization. And it’s great because somehow you take their own
experience in terms of conversational AI and what they have been
leading in for many years. And at the same time you hear both,
let’s say, the customer feedback when it comes to, as you said, the
traditional contact center or call center evolution. How to
translate this into a modern service experience, right?
Vahe:
And how AI can contribute to that on the seamless integrated way.
How to think about customer retention in this world where people
are a bit more struggling with their bottom line. How to protect
the customer privacy as well. Because you talk about voice
capability and recording, but how you cope with the privacy and the
security during this service journey. So all these are absolutely
great opportunities for us to combine what we’re hearing, the
technology and the acquisition that we did a few months back, to
put that into a great component. And I would say the data analytics
that the power Platform Power BI gives us on the back end, is going
to be a great platform for us again to differentiate from the rest
of the world.
Steve:
Well and it’ll also help kind offset the fact that these people are
all remote now, right? They used all be sitting in this big room.
And people were standing up there looking over a rail at them
making sure they were doing what they were doing and available. And
you can’t lose any of the customer service quality just because
you’ve moved everybody out of the building and nobody can
physically see them anymore. AI is the only way to plug that hole
really of being able to know what’s going on in this organization
with all those people remote. In your day-to-day activities, I’m
assuming that since you’re head of sales that you get engaged with
all of the big opportunities that come to Microsoft. And you’re in
there leading the charge to get them to make a decision for the
services. What are the areas that you’re seeing among those larger
customers that they’re really excited about? Is it the low-code
stuff, is that very exciting to them? Or are they still wrapping
their arms around that?
Vahe:
No, no. I would say that the notion of, let’s say, application
modernization, which doesn’t mean I do the same thing I was doing
before in the cloud. Really thinking about, what do I want to fix?
And how much I can include some perspective about what could happen
in some, let’s say options or scenario? That capability that Power
Apps has been giving them. And now we see that the corporations who
are the most successful are the one who are almost creating a
center of excellence within their own organization, that let’s say
help the IT to monitor someone, in fact the usage rate. But also to
amplify the user experience and to spread it across the
organization. And the ability to almost measure the positive
impact.
Vahe:
The second thing I’ve seen is on the low-code, no-code, is the time
to value. It’s almost like you can almost now, and when I say “we,”
it’s almost we with the partners. We can almost say for this type
of let’s say expectation, or application, or challenge, it will
take three month to be ready, not three years, two years. Or we
have a heavy development environment. And so this center of
excellence, let’s say mindset or framework, is a very powerful one.
Because it helps to almost create a concentration of hey, what are
the most critical things to fix and how long it’s going to
take?
Vahe:
And people are almost, let’s say very impressed, about how quickly
you can have great quality because you bring both the expertise of,
as I said, almost the person who is facing the challenge every
single day. Being non-technical guy, we have in fact the support of
IT. And I think that’s the business decision makers along with the
IT. I think to me, that’s why we have been on this six, seven times
faster than the market rate. We have huge ambition there. And be
aware that we have also 20 million of users of Power Apps today
that came from the city campaigns. So people are actively using it,
not yet paying it. So that means that it’s great, it’s the future
almost by, for us to go after. Because people are starting to use
in fact at least the basic functions to get adjusted customers to
and so on.
Vahe:
The second thing I would say is that people have realized how easy
it is, and recognizing that Teams became a platform close to 300
million users. It started at 25 or 30 million almost pre-pandemic.
And so that became, almost as you said, you are at home, or you are
wherever you are and that’s the interaction that you have with your
customers, partners, ecosystem and employees. And so now it’s a
marginal component to say hey, can I have one tab that is going to
do that type of task? My forecasting, my thing. So this is again
the connection between what you use every single day at scale, and
the marginal cost of bringing a component of Dynamics 365, a
component of the application that you create quickly for Power Apps
or Power Automate from the process, implementation, and automation.
So I think that’s what I see the two biggest part of the customer
reaction, and I would say feedback for us. And encouragement to be
fair, to keep going in that direction.
Steve:
We’ve got lots of examples that you guys have got out on the case
studies of large companies that have really got in head first. And
just thousands of apps in the organization solving thousands of
problems. And just excellent, I mean you just have to almost grin
when you look and hear about these things. But for every one of
those there’s still a bunch of them out there where, I don’t know,
IT maybe is still an obstacle. I mean IT has been, it’s interesting
because IT’s been a friend of Microsoft for a long time because a
lot of the products that they have engaged with were Microsoft
products, servers, et cetera. They’ve had to make this transition
to cloud, which was scary for them. But they ultimately did it for
the most part, not all of them, did it. And now here comes
low-code, no-code that’s got to scare the bejesus out of a lot of
IT folks. And how are you at that company size? Because frankly, we
struggle with the same thing in the mid-market. How, at that big
company size, do you deal with that occasional obstinance from
it?
Vahe:
Yeah, it’s a great point. You’re right. I think Microsoft in
general, I don’t want to generalize, but in general have been for
the last four years, very, very close to the IT decision makers.
And rightfully so, because there were so many and still so many
things to achieve in partnership with the IT and CIO environment.
At the same time, when it comes to business applications or
business process, I would say that you need to find the balance
between the business decision makers, who are the ultimate decision
makers when it comes to what is going to affect their business, or
the way they work from a Salesforce perspective, or the way the
marketing leaders wants to automate some of the processes that they
believe is important.
Vahe:
And so that we probably are in a unique business case at Microsoft,
where you have to talk to both. And the learning is that in the
very beginning where you were only talking to IT, for example in
the low-code, no-code, you could have signed a deal with IT, but
then you know almost had to start to sell it again internally.
Because you had to knock to all the doors of the business decision
makers to say, Hey, do you know that you have this thing in your
corporation, and anyway this is the thing that you can do, do you
mind starting over there?
Vahe:
And so that was basically almost a waste of cycle. And so we said
we have to do these two things together. We need to be able to
articulate what is the value of low-code, no-code, maybe in FSI,
financial service, or manufacturing, or in retail. And of course
there’s a strong common denominator. But there are some specifics
that may resonate more for some industries more than others, and
therefore the decision makers. And we have seen that when we do
these things well together in parallel, when you sign the contract,
or the deal, or the agreement, the time to move to usage or the
business case implementation is much faster. Basically you bring
more value both to IT and the business, and for Microsoft. And so I
think that’s the piece where I think it evolved on low-code,
no-code, from being afraid in the beginning or skeptical, to a
place where they are increasingly embracing this center of
excellence environment. Where they own it as [inaudible 00:38:55].
It is connected to the business decision makers, therefore it
brings value.
Vahe:
And so IT brings value to the business decisions or the business
unit and the line of business. And then what was missing so far
was, how can we give them the monitoring environment, almost the
control board to manage the budget, to manage let’s say, or having
warning to say, hey, business A, you know are over consuming.
Should we lower the investment or should we accelerate because of
what you are doing? So I think that the kind of tools that we are
bringing now to the IT, so that they are absolutely part of the
success of the company and they are connected to the business
decision makers. I think that’s the best way for us to demonstrate
value and keep it completely aligned with the business
directions.
Steve:
And the opposite would be true also if you’re going in trying to
sell the line of business owner without talking to IT. And you
convince the, now you got to go sell IT. So it’s two cycles.
Vahe:
Absolutely.
Steve:
You have to somehow get them both in the same room and do it at
once. So we’ve got so many products coming, we’ve got so many
products here. And if you imagine a generic customer of a large
size that you’re going to be going to talk to next week about all
the Microsoft has to offer. What are a couple of the key products
that you’re going to want to make sure you land in their head, that
you feel across all companies are extremely high value or
differentiators? The thing you don’t want to walk out of that room
without mentioning?
Vahe:
Yeah, I would say, and somehow you touch on it Steve, earlier on.
As part of the transition that we are driving, one of the thing is
also to simplify. To simplify the portfolio, to simplify the go-to
market, to simplify the strategy. We discussed the hub and spoke,
let’s say strategy. And so I would say at the very beginning, what
we said is that instead of saying, hey, there’s a proliferation of
products. And every year we add more and more and more. And at some
point you confuse your own sellers, you confuse the customer, you
confuse the product, it’s super tough to digest everything, and
even understanding what’s the hierarchy across all these
things?
Steve:
For licensing
Vahe:
And licensing on top all this complexity, right? I mean we have
gone through it, and it’s still not perfect. But at the same time I
think what we said is that there are the categories, or the line of
business, that we want to go in. We want to have a fair shot to
take a leadership position in the next let’s say years. And what it
takes to get to that point, from an innovation perspective, from a
go-to market perspective, from a part program perspective, from a
sales and seller investment capacity perspective. And so on. And so
I would say that’s more the starting point Steve, where we say we
define five categories, a fine line of business, where we believe
we have a shot to become a leader. And these categories we need to
be able to be clear on where the value that we bring.
Vahe:
For example, if you take the customer experience, let’s say OLAP,
which is more the connected sales and marketing, if I may summarize
at the high level. It’s going to be all the conversation about the
collaborative apps, the customer experience transformation. You
have already Teams for the vast batch of you, hey that’s what you
want to achieve. The Dynamic 65 sales is going to give you that
capability, or the LinkedIn Sales Navigator on top of it is going
to give you that type of insight. You know are not touching about
AI, you think about almost sales automation, Salesforce automation.
Let’s show you how the AI infused capability within Dynamics 365
sales and marketing, give you that asset absolutely naturally
integrated on your team’s environment.
Vahe:
And same thing on Viva Sales, the sales productivity, we can
measure it the way you want, and you’re on control of that. And by
the way, if it works on the environment that you are working, could
be Microsoft, could not be as we discussed, that’s more the
conversation that we want to have. And of course on the back end
you are going to have Dynamics 365 sales, and marketing, and Viva
sales, most of the time for that line of business. If you think
about let’s say low-code no-code, I would say you will have
probably three type of conversations. You know will have a
conversation about hey, you’re a large enterprise, multi-deals
coverage. And basically the benefit of having an enterprise wide,
let’s say engagement, what does it mean? What’s the framework for
you to make the most of it? And how we commit with our partners to
deliver you the value.
Vahe:
And so you can commit on five years maybe with Microsoft and how
much value we can bring already to you. Or it’s purely an
application modernization. You move to a hyper-scale environment,
but you have all these old fashioned applications. So basically,
you are a platform that is modern but all your application are
still old fashioned. How low-code, no-code is going to help you to
accelerate that transition. And let’s start with one company, one
app. Pick one and let’s do it right, and then replicate from there.
And then potentially, in fact, the last one which I think is going
to be the biggest one potentially, is the business process
automation. Think about the forecasting process. I have to say that
when I was running my business in Western Europe, we have been
doing this traditional forecasting process, which in every company
when we talk with business leaders or CFOs, that’s the same thing.
You ask the forecast at the lowest level of the organization, then
the manager of that organization, do a judgment. That judgment
moves to the next level of management. The management do another
judgment.
Vahe:
So all the way up to the top level, who does a judgment anyway on
top of it. Or they find, depending on who is doing the forecast,
almost let’s say a coefficient of let’s say correction based on who
is doing the forecast. When you start to do that thing into AI and
you say what, we know the behavior of people [inaudible 00:45:26]
potentially, you come after 18 months or one year to a trend of
forecast that is so close to in fact what you were getting before.
That you say how many hours, thousands and thousands of hours of
productivity saving I’m going to have just because of this AI
forecasting capability? That’s the kind of example of it, for say
an application for low-code, no-code, that is just checking in fact
the behavior or the intelligence so far to help you to drive your
business.
Vahe:
And so we have been running that internally as well and it’s quite
impressive. And so that’s the kind of conversation that you want to
have both with the IT, but you see this perfect example of hey,
having that conversation with the CFO, or the sales leader, is a
great one. Because it’s a marginal cost again, to what you are
using already. And the same thing happened on finance, and supply
chain, and service when it comes to, all right so where you, what
are you using? Are you still on-prem? The vast majority of ERP, the
vast majority of contact center and call center are still on-prem.
So you can think about hey, what does it take to move to a cloud
and more agile environment? What are the best that you want to do?
Which is the strategic partner or vendor, who are going to take
this? Because you’re not going to change this environment every two
years. It’s a 5 year, 10 year bets, right?
Steve:
The marriage.
Vahe:
It’s a marriage. Yeah, absolutely. So I mean does it help
Steve?
Steve:
Yeah. And I think interesting, one of the things I think about AI
in forecasting, is it doesn’t have any personal bias. And obviously
in larger companies I’m sure there’s a lot of checking and cross
checking. In the middle market it’s a bunch of optimistic sales
people coming up with optimistic projections that have no basis in
history or anything else that’s going on, of what’s going on. And
I’ve been in meetings where we’ve been displaying some AI facts, or
figures, or forecasts, or projections. And listen to senior people
just adamantly disagree. That number is absolutely not correct. And
I’ve had them tell me I’ve been doing this for 30 years, I know, I
know. And then here comes next month and guess what was right? The
AI model was right and the guy who’s been doing it for 30 years is
making up some excuses.
Steve:
So I think that the world right now is fraught with bad projections
on everything. Cost projections, sales projections, there’s too
much personal bias involved in the process of creating those
things. And as leadership of a company, you’re relying on these
things. They’re going to drive you right over a cliff potentially,
if you’re not careful, if you don’t have good information, if you
can’t get the bias out of it. And I think that’s one of the big
things that AI brings that I’ve found resonates with leadership
sometimes, is kind of remove all the bias. I mean it’s just
removing all the bias. You don’t want to hear smoke, you know want
to hear reality so you can act accordingly. You’re surrounded by a
bunch of people who want to make you feel good, but AI doesn’t care
how you feel. It’s going to tell you the truth, doesn’t care if you
get mad.
Vahe:
Steve also, it’s interesting because sometime, you point to this
that sometime when you are too early on the innovation, some people
might be again scared or skeptical as we said. But I remember we
were looking at let’s say some numbers when it comes to, are we
operating consistency, for example, in the world? Or there are some
that say practices that are bringing more growth or more relevant
than other places. And so, one thing was interesting was in the
services line of business or category, you think of case
management. And it’s one of the opportunities. And you might say
well case management is not super innovative. Well, it’s something
that is quite well known. But case management was one of the
fastest growth in majors. And that was because it was responding to
the fact that vast majority of the case management processes are
still on-prem today.
Vahe:
And the one we’re moving to the cloud, especially in public sector,
to make sure that the queuing system is working, you have a full
up, let’s say email to tell you and tracing where you are on the
request that you put in place. All these things we believe is
generic everywhere, but it’s not, it’s by far not. And across
mid-market, and large corporation, and private sector, and public
sector. So it’s not always innovation that drives in fact the next
generation of work. It’s also in fact the basics that are not
fulfilled today and that create a bad customer experience. And
that’s interesting, in a way, to keep very humble about let’s say
what we still have on our plate.
Steve:
I can remember not that long ago, when you talk about customer
service, the goal of many companies was to provide as bad as
service as possible so they didn’t have to do it. I mean it was a
cost center for them. They hadn’t come to the realization yet, this
is decades, but hadn’t come to realization yet that customer
service is what drives future revenue. They just looked at as a
cost center and figured the worst it is, the less people will use
it and it’ll cost us less, so that mindset has changed. You talk
about fears that people have of technology. And so a lot of this is
people self preservation fears. They see something coming, we saw
it even in the partner channel, uh-oh here comes low-code, no-code,
customers are going to be doing all the work themselves, they’re
not going to need us partners anymore. And it’s like this first
reaction that people have about anything new, is how’s that going
to affect me? And generally they’re going to assume negatively.
Steve:
Our business is busier than we’ve ever been as a result of
low-code. So it’s actually been the opposite. But partners, and
just like people, you know need to be prepared to pivot into that
wind. If you’re just going to stand there with your arms crossed
and not move, yeah low-code’s going to hurt you. You know need to
lean into that. And the same thing with individuals that are
looking at new technology. It’s coming and you can either stand
there with your arms crossed and let it knock you down, which is a
foregone conclusion. Or you can bend with it. And to be honest, the
younger folks are more flexible than us older folks. So they’re not
having any trouble with this technology at all. We recently signed
a new customer, it’s all young people and man they just get it. I
mean there’s no explaining anything. They understand every single
thing you’re talking about, why and what. And I mean they’re born
with a cell phone in their hand. None of this is foreign, but we
still got to get rid of all of us old guys.
Vahe:
I agree, I agree. And time flies. And it’s almost like, often,
let’s say, you need read to embrace that. Always a zero regret
strategy in this type of, let’s say, evolving environment. Anything
that you postpone, to some degree, is almost let say a loss. And
that has been proven in the technology run. And when I look at, we
always have to be humble. It’s a highly competitive market, and
people are smart, and that’s great. Cause as we discussed, it’s all
good for the customer. But I think that when I look back to the
commitment of the company, the investment that we put in place last
year with the support of Satya, Amy Hood, [inaudible 00:53:27].
With more than 1000 sellers injected in the marketplace, we keep
going on the investment on the local no-code, even more so to drive
the acceleration of the growth in addition to the Dynamic 365.
Vahe:
When I look at every category that we are in now, and I think it’s
a good confidence level that we on the path here. That first of
all, we are between two times and three times the growth of the
market for each of these category, that’s a good indication. And I
think that also raise the confidence level of the product sellers
at Microsoft. To bring these different components together and add
more value to the customer. So look, it’s a journey Steve, and it’s
quite exciting to be on this. And people like yourself because we
have been there also for a long time, and you know what it takes to
transition. And you never fail, you learn always. And everything
that you learn and that works, it’s almost to think how we can
scale and bring that to the mass as quick as we can so that people
can benefit from it.
Steve:
Well success breeds success. And you know guys have got it going
right now. I’ve taken up enough of your time. Anything that you
want to get out there that I didn’t ask or we didn’t talk
about?
Vahe:
No, I think, Steve, you did a good overview of let’s say where we
are, how we think. Again, I think that the simplification, the
portfolio, the much more focused approach, the category, and more
consistent execution on the go-to market is really the next level
for us. And the hub and spoke strategy across all these categories
gives much more room to increase the business opportunity for us
and the partners.
Steve:
Yep, I think so, I think so. All right, listen, it was great
talking to you, I’m glad you made the time. And I definitely hope
to able to talk to you again in the future, get something new to
talk about. Any time you want to reach out, and jump on, and talk
about some stuff, let me know. We’re happy to get you on.
Vahe:
We are all, let’s say reading all these, let’s say headlines on the
recession. In a few months from now, between now and then of
calendar year, we’re to see a bit more clarity on how the planning
is happening for the mid-market, large corporation, how the public
sector is evolving in this dimension. And also, we’ll have a few,
let’s say product launched that we talked about, Viva Sales, any
learning from that, let’s say maybe the first two, three months,
would be interesting to see how people react. And maybe that could
be a great opportunity for us to chat. Also what’s going on the
[inaudible 00:56:17]
Steve:
Yeah, yeah.
Vahe:
Plenty of things to talk, I guess.
Steve:
Sounds good. All right, well hey, thanks again for your time.
Vahe:
Thank you. Take care Steve, have a great day.