In 2020, Microsoft launched the first of what would become a growing family of Industry Cloud offerings called the Microsoft Cloud for Healthcare. As of Oct. 1, 2022, there are now seven Microsoft Industry Clouds, with more expected in the coming months and years.
When Microsoft execs first outlined their strategy for these vertical cloud bundles, I felt like we were back to the old Microsoft “Better Together” strategy. More than a decade ago, Microsoft officials pitched to customers the idea that by sticking with their software, end-to-end, they’d get a better integrated, more seamless, and less problematic set of products. How and why Microsoft is pushing Industry Clouds is a bit more complex than that, but still definitely rooted in the idea that a Microsoft Cloud foundation is superior to anything else out there.
Also: Microsoft: Hackers are using open-source software and fake jobs in phishing attacks At Microsoft’s Fall Ignite conference, which kicks off Oct. 12, Industry Clouds will be a big theme. And over the past couple of months, several Microsoft officials have talked about the company’s thinking around Industry Clouds during various tech conferences.
The seven Microsoft Industry Clouds (and counting)
Microsoft is hardly the first or only cloud vendor to latch onto the idea of horizontal and/or vertical integration. A Forrester Research report from 2021 notes that as early as 2010, companies were using Industry Clouds at every layer of the stack to fuel growth. Microsoft’s Industry Clouds build on top of Azure, Microsoft 365, Dynamics 365, Power Platform, and other Microsoft tools and services. They package together common data models, cross-cloud connectors, workflows, application programming interfaces, and industry-specific components and standards. Microsoft officials say their Industry Clouds are meant to connect front-end productivity tasks to backend data management. There are productivity and security services that are common across Microsoft’s Industry clouds, such as Teams, Office apps, and Power BI analytics. But there are also a number of integrations, interfaces, templates, and other capabilities unique to specific industries. The Microsoft Cloud or Financial Services, for example, includes a prebuilt Loan Manager and Banking customer engagement. The Cloud for Nonprofit includes donor management, volunteer management, and fundraising functionality. Microsoft also is touting AI capabilities it offers in its Azure, Microsoft 365, and Dynamics 365 platforms as key to its Industry Cloud efforts. Currently, the Microsoft Industry Cloud lineup consists of: Microsoft Cloud for Healthcare, Cloud for Retail, Cloud for Financial Services, Cloud for Manufacturing, Cloud for Nonprofits, Cloud for Sustainability and Cloud for Sovereignty. Cloud for Sustainability and Cloud for Sovereignty are not industry-specific; they’re more horizontal than vertical. Cloud for Sustainability provides customers with a framework for measuring and managing their environmental sustainability footprints. Cloud for Sovereignty is a set of compliance, governance, security, and other services for customers who need to adhere to certain government requirements around data residency. Microsoft officials have acknowledged that the way to think about these Industry Clouds is a layer of functionality on top of the Microsoft Cloud. By design, they are not meant to provide a deep set of capabilities. Dave O’Hara, Microsoft’s Commercial CFO, told attendees of the Deutsche Bank Tech Conference in September: “It’s not like we’re creating a vertical product that goes and competes with the ecosystem. It’s really just industry, some industry functionality runs on Azure and gets people onboarded [onto Azure] under our Cloud.” Microsoft is counting on its reseller and integration partners who have expertise in certain vertical industries to fill in missing pieces of its Industry Cloud portfolio by integrating them with other software and services. O’Hara said Microsoft also will be looking for future acquisitions that complement its Industry Cloud strategy in the way that its acquisition of Nuance Communications does. Microsoft execs viewed Nuance as both an app and a platform, O’Hara explained, as a number of other health care providers and software vendors embed Nuance technologies in their own offerings. “The thing we liked about (Nuance) is, it’s not a vertical app. It’s really a platform app that is very industry-specific,” O’Hara said. Industry Clouds also are central to Microsoft’s sales approach, which encourages salespeople to look at customers as Microsoft partners. Microsoft would rather sell customers on the idea of a ready-made suite of subscription services than just a single product sold as a single transaction. Its Industry Clouds strategy, which requires customers to have licenses for not just Azure, but also other Microsoft cloud services, dovetails with this approach.
