Dive Brief:

• Microsoft has gone through a well-publicized transformation under CEO Satya Nadella. In a culture push, the company evolved by executing a philosophy of meeting customers "where they're at" and promoting open ecosystems, according to Scott Guthrie, executive vice president of the Microsoft Cloud and AI group, during a keynote Wednesday at the Gartner Symposium/ITxpo in Orlando, Florida.
• The scope of Microsoft's evolution extends beyond the surface of its portfolio. As the company peddled products and partnerships, it was also undergoing an IT portfolio overhaul that resulted in critical systems in the cloud. Microsoft was concerned about moving its SAP environment to the cloud, hesitant to make the transition because everything the company transacts goes through there, according to Guthrie. But, Microsoft discovered, moving its Dev-Test environments to the cloud was one of its single biggest cost savers.
• The company learned that the elasticity of the cloud was a huge cost saver for Dev-Test environments, because it would only spin them up periodically and the rest of the time they remained idle. For Microsoft, this highlighted the savings value of the cloud — and the importance of "turning stuff off," Guthrie said. "This model ... sort of unlocked a tremendous amount of hardware capacity that we were paying for in the on prem world and in some cases delivered more than 50% savings."

Dive Insight:

Microsoft has gone through an evolution that saw the birth of personal computing, the emergence of an IT world defined by proprietary systems and the eventual creation the modern cloud era.

But in tandem with the growth of a cloud-native technology landscape — and an acceptance of previously spurned open technologies — Microsoft had to modernize too. Or as Guthrie puts it, we had to "eat our own dog food."

The company had to adopt at scale the very technologies, software and services it sold its customers. Not only could Microsoft serve as an example of transformation in action, it could serve as a testing ground for future products.

Microsoft was one of the "first customers" the company focused on with implementing Azure, Office and Dynamics 365. And with $2 billion in internal IT spend and a vast internal technology stack, transitioning to entirely cloud native was an undertaking.

But there's nothing like running your business to understand what core capabilities you need to run at enterprise scale, according to Guthrie.

Mere cloud migrations seem like an outdated conversation, but the reality is many companies run on-premise infrastructure. Guthrie predicts the traditional data center won't be obsolete until the next five to eight years. Hybrid capabilities becomes a hallmark of the era, defined by a combination of on-prem or cloud technology from multiple vendors.

The understanding of cloud is changing, and enterprise IT strategies have turned toward "if, not when" adoption will take place. As it continues to evolve, it's important to reframe the conversation around the technology.

When people say cloud, they think infrastructure, Guthrie said. But we need to think of cloud more holistically and think of SaaS too. This shifts the technology conversation toward an end-to-end view of the enterprise stack as opposed to just virtual machines, storage or networking.