KATHLEEN MITFORD: Hello everyone,
and thank you for spending time with us today.
I'm Kathleen Mitford,
Corporate Vice President of Azure marketing.
Today, I'm excited to be back in the studio with
Dave McCarthy for a discussion
on Cloud and industry trends.
Dave is a research Vice President at IDC,
where he is the lead analyst
for Cloud and Edge infrastructure.
He has so much experience and expertise and how
Cloud platforms can provide
the foundation for next generation workloads.
Ultimately enabling organizations to innovate faster,
optimize costs and achieve digital resiliency.
Thank you for being with us today, Dave, and welcome.
DAVE MCCARTHY: Thanks.
It's great to be here.
KATHLEEN MITFORD: You and I
had a great discussion
earlier this year in
our migration and modernization virtual event.
But so much has happened since then,
and I'm delighted to have
the opportunity to speak with you
once again about what we're both seen from customers.
Let's begin with a discussion on how
customers are approaching Cloud adoption today.
With so many evolving global events
and macroeconomic conditions,
businesses are facing challenging times.
When the global pandemic
disrupted everything two years ago,
we saw Cloud adoption accelerate.
Dave, how do you think businesses
are approaching their digital strategy now?
DAVE MCCARTHY: Well, I can say
with great confidence that
no one is taking their foot off
the gas when it comes to Cloud adoption.
It's a key element of any company's digital strategy.
In our research shows that two-thirds of
business operations will be digitally
focused within the next five years.
In an uncertain business environment,
Cloud becomes the obvious choice.
Customers view it as less risky than
the traditional way of managing IT,
because of the speed and flexibility it offers,
and the agility it provides helps companies
react faster to changing requirements.
It also helps them conserve cash
by eliminating capital investments.
The fact that you can scale up and scale down
means that you can always write size
the environment to your current needs.
Now I know Microsoft has
a strategy of helping its customers do
more with less and there
couldn't be a more appropriate time for that.
KATHLEEN MITFORD: Yeah, I agree with
you and we're definitely
committed to helping our customers do more with less.
Can you tell me what patterns
you're seeing and hearing from customers,
specifically for migration and modernization.
Other certain characteristics when
customers choose to migrate,
which we call lift-and-shift versus modernize and as
the approach migrate or
modernize change with the economic downturn?
DAVE MCCARTHY: Well,
customers have definitely reached
a new level of maturity and how the adopt Cloud.
Now there's still plenty of lift and
shift migration happening for legacy applications.
But almost all new development is
taking a Cloud-native approach using
a microservices architecture and taking advantage of
serverless technologies like
functions and managed databases.
An IDC survey,
86 percent of respondents noted that their organization
had modernized over half of
its legacy applications and that's up
from just 65 percent the year before.
We're also seeing a lot of interest in how
machine learning and artificial intelligence
can make applications smarter,
enabling faster and more accurate business decisions.
IDC data also shows that on average,
37 percent of applications are using
some form of AI or ML today.
We expect that to grow to 51 percent and just two years.
KATHLEEN MITFORD: That's interesting.
When we talk about migration and modernization,
do you see patterns on what type
of workloads customers are prioritizing,
both moving from migration and
then building new with Cloud-native?
DAVE MCCARTHY: Yeah, I'm
seeing an uptick in
more complex and mission
critical applications, moving the Cloud.
To me, this is an acknowledgment from enterprises if
they trust the Cloud enough
to bet their businesses on it.
I'm also seeing more activity and
high performance computing or HPC.
Cloud is made technologies that were once only available
to companies with the largest budgets
accessible to everyone.
KATHLEEN MITFORD: I know this is going to
be a funny question,
but can you describe mission-critical?
We talk about mission-critical applications,
we talked about business critical.
What is mission-critical mean to you?
DAVE MCCARTHY: Well, it just means that if
that application isn't running,
there's some severe impact of the business.
It could be more internally
focused in terms of like operational,
or it could be how that
company interfaces with its customers.
In either case, it's situations where the company
is really relies on
these systems to maintain day-to-day operations.
KATHLEEN MITFORD: I would imagine that that's
industry specific as well.
For example, in healthcare,
a mission critical workloads can be a little bit
different than in a financial services?
DAVE MCCARTHY: Yeah, absolutely. I think
in all of these industries,
there's certainly what I might
call horizontally applicable workloads.
Everybody has productivity tools,
everybody has some CRM system and things like that.
But you're absolutely right that when you get
into vertically specific industries,
you start finding things that are very specific to them.
In a lot of cases,
this is where these things
don't always solely run in the Cloud,
but this is where the edge computing story comes in,
because they extend these Cloud platforms
into what they feel like,
are there industry environments
that could be the retail store,
it could be the health care setting.
It could even be somewhere in
like manufacturing and a factory.
KATHLEEN MITFORD: That's interesting.
We wanted
to hear from our customers directly to,
and we conducted a global survey
of more than 1,200 companies.
We found that the pace of migrations isn't
slowing down with future proofing their businesses,
cutting costs and growing
revenue as the top reasons for doing so.
Is this aligned with what you're
seeing and hearing from customers?
DAVE MCCARTHY: Absolutely. In fact,
the conversation with companies has completely flipped.
It used to be a challenge to justify
why workload should be moved to the Cloud.
Now, you have to justify
why workload should not be moved.
In general, like IDC expects spending on
Cloud infrastructure to reach $90.2 billion in 2022,
surpassing non-Cloud infrastructure for the first time.
It's just an additional proof point that Cloud has
become the de facto standard for technology investments.
KATHLEEN MITFORD: That's really interesting.
I'd love to see
those numbers and we're hearing
loud and clear that our customers need
to keep a keen eye on their costs,
but still grow revenue while
delivering value to their customers.
They're looking to make the most
out of their investments,
save costs to re-invest in
security and other business critical needs.
While simple migrations to
the Cloud seem to be a top priority in the past,
today we're seeing more customers focus on truly getting
the most out of Cloud for modernizations.
And our study that showed that modernization was
a priority for 80 percent of organizations.
From your experience, what are some decisions you
are seeing organizations make to do more with less?
DAVE MCCARTHY: As customers become more
familiar and comfortable with Cloud,
there are also becoming more savvy on how to optimize
their costs and this usually happens in three areas.
The first is the modernization of
applications with Cloud-native architectures.
I mean, how you build your application definitely has
an impact on what
your cost basis might look like in the Cloud.
The second area is
automation of the management of resources.
This is very much like an operational role
like are you being smart around?
Are you rightsizing resources
and when you turn them on and off?
Then finally, taking advantage of commercial terms like
reserved instances and other incentives like
Cloud providers offer are
just another piece of the puzzle.
But to be honest,
that's really only part of the story.
Most of the cost benefits when we talked to customers
that they see aren't reflected in their monthly bill.
It shows up in how they can
develop new applications faster,
reducing time to market.
For example we've talked to companies that's say,
an application that would take four months to develop
can now be done in one month to huge savings.
Or they see staff productivity
through the time they save with automation.
Then there's also the
whole aspect of how
reliable the Cloud is when they
move off of on-premises environments,
and how that improves overall up-time and
availability which directly
translates to user productivity.
KATHLEEN MITFORD: Those are great things that
you're saying there Dave,
and there's one myth that optimization,
which is a big part of
savings when you move to the Cloud.
Does that happens like once you've already moved,
but we really like to help
our customers optimize from the very beginning.
Like a good example of that is Azure Savings Plan,
where you commit to a certain amount of Cloud spent,
and you get a bigger discount on that.
Great to see the benefits that you're seeing.
Now I know that you recently
coauthored a white paper titled
The Business Value of Migrating and
Modernizing with Microsoft Azure,
which was commissioned by Microsoft.
Can you tell us a little bit about your findings?
DAVE MCCARTHY: I'd be happy to. It was
a great project to work on.
IDC interviewed as part of this business value study,
Azure customers in
several regions including North America,
Europe, and Asia Pacific,
representing industries including retail,
transportation, financial services, and healthcare.
I must admit, it wasn't hard finding
business value resulting from their adoption of Azure.
Here's just a few statistics that
you can find in the full report.
The first is that these companies realized
a 37 percent lower three-year cost of operations.
There's your direct cost benefit.
But they also saw 53 percent more efficient IT teams,
meaning that those companies could really focus
their staff on more higher value activities.
Then from the developer side,
46 percent higher developer velocity,
meaning that they could just get things
done faster, and then finally,
86 percent of companies realize less unplanned downtime.
These are all great statistics,
but what was really meaningful to
me is that it didn't matter what
industry that customer was in or
how big a company that they were,
all of them found significant
benefits in their move to Azure.
KATHLEEN MITFORD: That's really
great to see Dave,
and thank you for sharing.
We love to hear about how Azure can help
unlock so many benefits for our customers,
like faster time to market,
and the immediate savings from moving.
We also hear how customers want to easily figure
out how much they can save just by moving to the Cloud,
and I'm excited to show you a new capability we're
building into our free self-service Azure Migrate tool,
where you can create a business case
during your assessment phase,
let's watch the demo.
SPEAKER 1: To understand if Azure
really makes financial sense,
start by creating
a directional business case with Azure Migrate.
This helps you understand what
the best migration strategy is for your business,
and how to gradually move from
a capital expenditure model
to an operating expenditure model,
where you only pay for what you use.
To get started, visit
the Azure portal with your active Azure subscription.
With Azure Migrate, you can see
key migration goals where you
need to click on "Assess" and "Migrate."
You can use an existing Azure Migrate project or
create a new Azure Migrate project
in the geography of your choice.
First, discover your on-premises environment,
with the Azure Migrate agentless appliance,
which collects configuration and
resource utilization data for
your servers and workloads in just a few minutes.
For this demo, you'll see
the discovery has been completed,
and we're ready to build
a business case based on these insights.
At this point, provide minimal inputs and select Build.
You can start reviewing the business case that was
created from your inputs and industry benchmarks.
You can also export the reports into Excel.
The first thing you see here is an estimated
on-premises cost versus Azure TCO,
and the potential savings possible by getting
rid of components that you'll no longer need.
This view presents a year-over-year cost breakdown
of the estimated current versus future state.
With Azure, you'll receive unique incentives,
such as Azure Hybrid Benefits and extended
security updates savings to help
drive technical and workplace innovations.
Based on the rich data insights
collected during the discovery process,
you'll find how to effectively migrate to Azure,
which underutilized servers to right size,
and which unused servers to potentially decommission.
You can dive deeper into
detailed Azure Infrastructure as
a Service and Platform as a Service reports.
IAS reports will provide you
recommended right-size targets,
and the most cost-effective offers based on your usage.
You can also identify the impact of
underutilized servers and identify
quick wins through software end of support,
and for zombie servers.
Similarly, you'll find recommendations in
the past reports to identify quick wins,
and the ideal right sized targets for
your database and application workloads.
Given the importance of what if scenarios
and customizations in the planning process,
use new settings to override default assumptions,
and build a business case for your migration strategy.
Present this business case to
your stakeholders and obtain buy-ins,
and know that you've taken the steps to
make the right decisions for your business.
DAVE MCCARTHY: That was great to see.
I think it really addresses one of the key problems
that you see as customers build their business case,
is that for so many it's been a manual process,
and even in situations where a Cloud provider offers
a calculator to help understand your costs,
you still have to know what to plug into
that to understand what your final number can be.
The fact that Azure now has
an automated tool that can go out and
discover those things and
help you get to that answer faster,
I can easily see that will help
customers as they make their business justifications.
KATHLEEN MITFORD: Yeah.
We're really seeing an increase in
customers and building those business cases.
We're really committed to helping
them build that case out.
Dave, my closing question for you,
we've had so many insights from our time together today,
but before we go,
I'd love to get your take on this.
What are the most critical things we as
Microsoft can do to help customers do more with less.
DAVE MCCARTHY: It's always
important to remember that
every company is at a different point in their journey.
While I've talked to some that have completely shut
down their datacenters and are all in with Cloud,
there are so many more that
are still just getting started.
Meeting the customer where they
are to help them understand
how best to maximize
their Cloud investments is essential,
and from the interviews I conducted with Azure customers,
they identified programs like
the Azure Hybrid Benefit and the Azure Migration and
Modernization Programs as great examples of how
Cloud provider can make the move to Cloud easier.
KATHLEEN MITFORD: Well Dave, thank you
so much for your time,
and for your insights today.
DAVE MCCARTHY: It was my pleasure.
Can't wait to do it again.
KATHLEEN MITFORD: Thank you to everyone
tuning in today.
We're always working on new features and
capabilities to help you migrate faster and save more.
We want you to then use those savings
to deliver more value for your business.
You can stay up-to-date with the latest by visiting the
Azure.com page tagged below. Have a great day.
[MUSIC].