- REUTERS/Robert Galbraith
Microsoft’s board of directors wants the company to move faster to transform into a cloud-computing powerhouse, chairman John Thompson told Bloomberg’s Dina Bass.
Thompson says that cloud is a “very different model” for Microsoft than selling software the traditional way, but one that Microsoft has no choice but to embrace. The company knows that the pressure is on, he said.
“You can re-imagine things when you’re stressed. It’s a lot easier to do it when you’re stressed because you feel compelled to do something,” Thompson told Bloomberg. “I see a lot of stress at Microsoft.”
The reason why he wants Microsoft to move faster: CEO Satya Nadella says that total cloud software will generate $20 billion in revenue by 2018. That’s a considerable business, but it’s still a small fraction of Microsoft’s total revenues. In fiscal year 2015, Microsoft brought in nearly $94 billion.
Meanwhile, companies are running to cloud computing full-speed ahead, where they rent computers and software instead of buying it all and installing it in their own data centers.
The fear is that Microsoft’s traditional software businesses will shrink faster than the cloud business can grow to make up for it. Thompson said that he didn’t want Microsoft to “wake up one day” and be in IBM’s position. IBM has had 16 quarters of shrinking revenue.
But growing the cloud business faster will require a lot of changes for the company, which has already been through a lot since Nadella took over.
- Virtual Instruments
For instance, Microsoft needs to ramp up its cloud partner ecosystem – everything from consultants to software developers offering their wares on its cloud, Azure. The company’s current enormous partner system is still mostly focused around its traditional software, from Windows to its database SQL Server.
And Microsoft may need to change the incentives for its massive sales team, too. It has been tinkering with this for a few years, now.
As we previously reported, in 2014 the incentive was to get customers to add cloud to their umbrella software contracts, whether the customers wanted or used Microsoft’s cloud. In 2015, salespeople were pressured to get their customers to actually use Microsoft’s cloud.
But another overhaul to sales incentives could come in July, the start of Microsoft’s next fiscal year, Bloomberg reports.
Microsoft spokesperson Frank Shaw clarified:
“Delivering cloud services and expanding our portfolio for customers requires us to constantly look at ways to evolve and improve. We do this at regular intervals across all of our business areas. We’re pleased with customer response and proud of the efforts of our sales leaders and teams around the world.”