Transforming the Transformer: Inside Microsoft’s Never-Ending Digital Transformation Story

Since 2014, Microsoft has repeatedly reimaged IT and innovation. Here's a look at how and why.

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Microsoft Digital Transformation

For over 30 years, companies have turned to digital pioneer Microsoft to guide and enable their digital transformation. However, even digital transformers such as Microsoft are not immune to  organizational inertia. 

Though one would think individuals who work for a technology company would be more apt to embrace change and adopt new solutions, that is certainly not always the case. Like most other companies, Microsoft has had to reinvent itself time and time again to meet the demands of an increasingly mercurial market. 

Over the past 6 years, Microsoft has developed a vision-led approach to digital transformation. In conjunction with stakeholders and business units leaders across the enterprise, Microsoft’s Core Services Engineering and Operations (CSEO) team developed its digital transformation framework around 7 key priorities:

  • Cloud-centric architecture
  • Secure enterprise
  • Data and intelligence
  • Customer centricity
  • Productive enterprise
  • Launch Optimization
  • End-to-end process digitization

Here’s a look at just 3 of the ways Microsoft’s continuous digital transformation has come into fruition. 

 

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B2B Marketing Reimagined

Though Microsoft is a globally recognized brand, as the company grew over the years, it struggled to deliver consistent messaging across its various marketing channels and product lines. What “Microsoft” meant varied from one person to another, especially when it came to its B2B products. 

To facilitate the delivery of integrated marketing messaging, Microsoft built a centralized marketing system to track customer activities and, using advanced analytics, provide a 360 view into the customer experience. This enabled Microsoft’s marketing team to focus on the cultivation of integrated marketing messaging and strategy. 

In addition, as Microsoft’s U.S. CMO, Valerie Beaulieu, explained in a recent interview, “ On top of these insights, the ability to infuse machine learning to propose the best next step to the customer is our own attempt to personalize at scale. We do have high-level customer journeys based on top-level scenarios, but today we’re almost–and I’m emphasizing the word “almost”–able to have personalized journeys for each customer who is engaged thanks to this combination of data insight and the machine learning we’re putting on top to propose the most logical next step based on their experience.”

 

Finance & Accounting at the Forefront of Innovation

It’s no coincidence that finance & accounting teams are often the first to adopt intelligent automation (IA) and RPA solutions. The sheer volume of financial transactions and the need for absolute accuracy have made finance and accounting fertile ground for next generation solutions.

At a company like Microsoft, which oversees the movement of hundreds of millions of dollars per year, optimizing finance and accounting operations is a continuous endeavor. Similar to the marketing department, Microsoft built a centralized financial management system that, using Microsoft BI tools, provides complete visibility into all finance related data. 

“We’re using our software, cloud platforms and tools to make our jobs easier. We moved all our first-party apps to Azure, Microsoft’s cloud computing service, and reduced our infrastructure costs by 20% and related physical footprint by 60%,” George Zinn, Corporate Vice President and Treasurer at Microsoft, explained in a 2019 interview

Since then, Microsoft has continued to leverage these tools to develop predictive analytics capabilities such as data algorithms for cash flow forecasting. These more accurate forecasts have enabled them to more effectively manage risk and liquidity, reducing the pressure on business units and the treasury teams.

As for next steps? Zinn stated in a September 2020 interview, “We are experimenting with the Azure bot framework in our credit and collections team. With around 45,000 sellers that invoice customers, we see a large number of queries. Previously, this created significant resource constraints for our credit and collections team, but with “Edward” the chatbot, queries can be resolved immediately. We are also starting to use predictive analytics using Azure ML to identify which invoices are likely to be paid late.”

 

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Transformation in the Wake of Covid-19

In its Q3 2020 financial report, Microsoft CEO, Satya Nadella, stated, “As COVID-19 impacts every aspect of our work and life, we have seen 2 years' worth of digital transformation in two months.”

Not only did Microsoft have to, itself, transition, practically overnight, to a work-from-home environment, it also had to help its millions of customers do the same. “From remote teamwork and learning to sales and customer service to critical cloud infrastructure and security, we are working alongside customers every day to help them stay open for business in a world of remote everything. There is both immediate surge demand and systemic structural changes across all of our solution areas that will define the way we live and work going forward,” Nadella elaborated.

Without an agile, digital infrastructure and a highly adaptable workforce, achieving both objectives would not have been possible. In a 2019 article published on Microsoft’s corporate website, it attributes its internal digital transformation success to 5 key objectives:

  • Connecting outcomes to the vision and clearly prioritizing.
  • Placing user experiences at the center of our designs.
  • Building capability and depth within role-specific disciplines.
  • Investing in core platforms and systems to drive engineering productivity.
  • Using data and insights to continually assess and prioritize our approach, ensuring that we achieve our most important goals and that they align with our vision.

However, Microsoft’s ongoing digital transformation is far from over and significantly expanding in scope. Just recently Microsoft announced it would be investing over US$1 billion into transforming the ‘Polish Digital Valley’ into an epicenter of innovation and it plans to do the same in Sweden and Atlanta.

Afterall, as they put it, "Transformation does not have a finish line—it’s a journey. As we progress through our transformation, we’ll make mistakes and adjust our strategy accordingly, but we’ll also continue to move forward.”

 

 

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