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How Microsoft is thinking about Industry Clouds (and acquisitions)
Microsoft increasingly is going vertical when it comes to selling its cloud services. Here's a bit of the why.
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Microsoft execs make occasional appearances at various banking-industry tech conferences. And sometimes these appearances include some interesting insights into the company's thinking on a variety of topics.

Dave O'Hara, who is the Chief Financial Officer for Microsoft's Commercial business, all-up, was the Microsoft guest at the Deutsche Bank Technology Conference a few months ago. When asked about Industry Clouds (members)—Microsoft's growing family of (mostly) vertically focused cloud bundles for the financial, healthcare, retail, manufacturing, non-profit, and "sovereign"/government markets—O'Hara said Microsoft execs think of these as vehicles for "onboarding to Azure." He acknowledged while these clouds are industry-specific, they aren't "super deep," functionality-wise.

"It's really just industry, some industry functionality runs on Azure and gets people onboarded under our cloud," he said. Microsoft's goal is to leave plenty of headroom for partners to build on top of these clouds, he added.

O'Hara told conference attendees that he spent a lot of time on thinking about Microsoft's $19.7 billion Nuance Communications acquisition, both before and after it happened. He said Nuance is both an app and a platform, in that even though it can be embedded in other apps and services, it also provides an industry-specific base layer that partners and ISVs easily can build on top of.

"Would we do more stuff like Nuance? I think to the degree that we can have something platformy that works with the ISV community and provides differentiation that they want, yeah, absolutely," he added.

"I think before, historically we might have done a lot of product acquisitions, a lot of tuck-ins, and we still do some of those, but now I think we'll probably be just looking for stuff that's differentiated, strategic and impactful. We're buying fewer companies, maybe slightly larger, but they need to fit culturally and they need to fit strategically. And they probably are going to be adjacent to something we're already doing, because I just don't think we're going to run that far off field," O'Hara said.

Microsoft increasingly is focusing on verticals when it comes to marketing and selling Azure, Microsoft 365, Dynamics 365 and its Power Platform wares. Just recently, the company moved Corporate Vice President Alysa Taylor from her previous role, in which she oversaw marketing for the Business Applications (Dynamics) side of the Microsoft house to Azure + Industry.

Microsoft takes another stab at securing the supply chain
Microsoft's new Supply Chain Platform is one more bundle of MIcrosoft cloud services and tools with the ability to hook into non-Microsoft ERP systems.
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Microsoft recently took the wraps off the "Microsoft Supply Chain Platform" in November, calling the bundle of AI, collaboration, low-code, security, and SaaS applications a "composable platform" for organizations focused on their supply chain investments.

What, exactly, is this thing? Is it yet another Microsoft industry cloud without the typical naming convention (which, in this case, would have been “Supply Chain Cloud”)? Is it a rebrand of the set of Dynamics 365 Supply Chain Management (members) offerings? It has connections to the Power Platform, Dynamics 365 Supply Chain Insights, and Order Management. And the Microsoft Cloud for Sustainability is part of the core, which Microsoft says will orchestrate data from not just Dynamics 365, but also SAP and Oracle SAP ERP systems.

Lately, Microsoft has been rebranding a lot of products and services without explicitly calling their relaunch a "rebrand." (See “Microsoft Syntex,” the product formerly known as “SharePoint Syntex” and Cosmos DB for PostgreSQL as just a couple of recent examples.) But the new Supply Chain Center isn't so much of a rebrand as a new bundle.

The Supply Chain Platform and Supply Chain Center " specifically address organizations’ supply chain execution, management and orchestration needs. Microsoft’s supply chain capabilities can be integrated into any Industry Cloud, and their Industry data models to quickly adopt and support their supply chain agility needs," said a company spokesperson when I asked for additional clarity.

"The Industry Clouds are a holistic solution for an industry-specific customer, whether it’s financial services, or retail, or manufacturing. But any of the companies in these industries still have the supply chain function, they have a marketing function, sales function, service function. Microsoft works very closely with the industry team to provide the foundational solution, so they can create the vertical extensions," the spokesperson added.

Microsoft is not dropping support for the existing Dynamics 365 Supply Chain Management module. Instead, in a similar way that it is doing with its Viva Sales (and other coming "role-based" Viva offerings), Microsoft s including hooks into non-Dynamics products with the Supply Chain Platform, the spokesperson confirmed. One more interesting positioning tidbit: Microsoft considers the new Supply Chain Platform to be both an app and a platform, similar to the Microsoft Digital Contact Center, which is anchored by Nuance's contact-center technology.

It's worth noting Microsoft isn't the only cloud vendor eying the potential of managing customers' supply chains. AWS announced in late November that it also has a supply-chain-management app, AWS Supply Chain, that is now in preview. AWS' product offers unified data lake, machine-learning-based insights, recommended actions, and in-application collaboration capabilities. It will be interesting to see if customers are willing to share this kind of data with a vendor that is all about its own supply chains.

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