Microsoft's Cloud Successes Based on Sales Not Usage?

Microsoft's Cloud Successes Based on Sales Not Usage?

If you were to believe everything you hear, you'd consider Microsoft's Azure a pure win for the software company. Microsoft regularly praises its push into the Cloud industry as successful and monumental. But, an article from Business Insider this week tells a different tale.

Apparently, Microsoft's Cloud is selling extremely well, thanks to its sales army and lower than normal pricing and Cloud credits, but customers aren't actually using what they are buying. The price for Microsoft's Cloud is appealing and entices customers to try it, but once they do, the majority give up and go back to normal operations. And, this really speaks to what we've known all along. Like most new technology initiatives, businesses test the waters to see how it could fit within the business and when it doesn't pan out like it was marketed, the cord is cut.

If customers stop using the Cloud components they already rent, they won't become return customers – they won't buy it again. This is a problem for Microsoft.

To fix the problem, Microsoft's CEO, Satya Nadella has revealed new initiatives to put the responsibility for customers using its Cloud on the sales teams. To do this, bonuses have been altered to be based on "consumption" rather than straight sales. According to the Business Insider article this has caused a lot of angst among the sales teams, and caused some to leave Microsoft. Sales is a tough job already, but with additional constraints like these on bonuses, which is the lifeblood of a salesperson, the job is even harder. I mean, a good salesperson can sell anything, but how can force a customer to what they bought?

Azure, and most other Cloud services, work from a pay-as-you-go, or pay for only what you use model. So, if companies aren't consuming those services constantly, Microsoft doesn't make money. You can see the problem.

Microsoft wraps Office 365 into its Cloud reporting, which does actually see considerable use, and in some way might be a cheat. The price of Office 365 is low and it provides real, day-to-day value. But when you think of Office 365, it's hard to consider it a Cloud service when compared to Azure. Microsoft says that a whopping 80% or more of Office 365 customers consistently run two or more workloads, but 60% of Azure customers use at least one premium service. Microsoft states that as a good think. But, think about that. As much time and effort as the company has invested to build Azure into multi-headed, multi-service beast, just over half are using something beyond the initial offering. The low cost of Azure is supposed to entice customers to pay for more for premium services, but this says that plan isn't working.

Is there really a rush to the Cloud?

Again, if you believe everything you read, more companies are utilizing the Cloud to migrate on-premises operations outside the local datacenter to allow a Cloud provider to manage infrastructure and operations. But, our community here at WindowsITPro says something completely different. The Cloud makes sense for the same reasons it always has, and very little has changed. Data backups and some email remain the top reasons, despite Cloud advancements. Microsoft isn't the only one suffering here. Stifled Cloud adoption is happening across the board. Companies like HP and IBM, who are struggling in the Cloud industry, are finding these things out the hard way.

There's a fix. Cloud vendors need to start listening to businesses instead of preaching at them. There is value in the Cloud, but only where it makes sense to the business. Microsoft and others continually make plays around the IT department, selling to c-level executives who make decisions based on a flowery presentation and a golf game. If sales was the determining factor for success, there wouldn't be a single server left in any on-premises datacenter. But, consumption seems to tell the true story here and proves that vision and application are two very different things.

 

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