Selling Microsoft Office 365 Commercial

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Jordy, can you explain your role and responsibilities at Microsoft in the last four or five years you were there?

Yes, I joined Microsoft to run the worldwide communications business. That entailed driving Lync into the cloud that drove our Skype for Business team. I think it morphed into moving from a global role into running an Americas time zone, which incorporated the entire Office 365 suite, which included all the elements I just named and all of the productivity tools that we had underneath the umbrella. As I left Microsoft, I was primarily running the Modern Workplace team across the Americas, which brought in the Enterprise Mobility Suite and some of the things we were doing around the analytics piece with Power BI and others. The world continued to evolve, and the Modern Workplace team was affectionately known at Microsoft as a black belt team. It was a semblance of an incubation organization used to drive the business's velocity and the customer segment that allowed penetration, success, and a move into the mainstream selling ecosystem. That was my role in the last four years of my time at Microsoft.

How was the team structured? Did you strictly sell Office 365, or did you also work with the Azure team, for example?

It was pretty siloed. We would operate the Office 365 productivity suite and elements of that as a standalone effort. It was very interesting because we had had such a head start on what we were trying to accomplish from a revenue, growth and share perspective on Office 365; as you looked at Azure at the time, it was well below size, scale, and resourcing than we were. I remember there were a lot of discussions about how large the Azure team was going to grow and how, in a year and a half, it would eclipse Office 365, and in five years, it would be 10x the size. We were somewhat skeptical of that happening, but that is all playing out. If you look at the revenue share that both organizations are driving right now, you see a massive eclipse on the Azure side of the business. They modeled it quite well, in my eyes.

How did Nadella change that when he came in as CEO?

I think Satya had the opportunity to benefit from a lot of what we call the hard yards put in place by Ballmer. The shift to cloud and the idea of creating Azure and driving that business was under Ballmer's watch. Ballmer had to deal with the stigma of real challenges between the product, the product management, the product engineering team, and this overall direction to cloud. There was a high risk of cannibalization of revenue. How do you sell against the current, on-prem business that's viable and doing really well when we needed to make a cultural shift?

About the time that was all going on, Satya joined. And Satya was almost like a spiritual Gandhi for the business. He was someone that took hold of this concept of being enlightened and being empowered with the work you do. He dived into a growth mindset taking a look, end to end, to see if we were looking at things from a closed mindset perspective or a growth mindset perspective? Did we fear failure? Were we learning from the things we were failing with? That sparked a very different direction, culture, and leadership style. It was amazing to be a part of how that cascaded down in the organization under his leadership. I think, to this day, it will go down in history as one of the fastest cultural transformations ever seen from a large company, that's talked about with many of my peers, friends, and coworkers that are still with the company.

How did he change the sales teams' incentives to be more ‘enlightened’?

He led the way to change to much more of an ARR type model, which is being able to move towards a net growth on your software sale instead of looking at contracting on a renewal, for instance. Paying an account executive or a team on a renewal didn't move the needle. We had to think about a cloud subscription model in terms of how you grow the business from year over year, transaction over transaction. That really shifted a lot of the compensation modeling plans and what ultimately landed down into the field.

Can we walk through exactly how you led this black belt team and sold Office 365 to commercial customers? Let's say I'm a Fortune 1000 company looking to switch on-prem to cloud. What is the first step or the entry point into the account from you, at Microsoft, leading that sales team?

If we take out that they’re on Office 365, let's say they were an on-premise customer and we were trying to move them to Office 365, the first thing you had to do was to move very quickly. We knew that there were certain elements of a go or no-go decision that we had to be very quick to identify. We didn't have time to waste on a lot of these accounts, so we had a customer success framework that we created, and we used that to quickly qualify in or qualify out customers. Whether there was buy-in or pushback from the chief information security officer had never been a criterion before moving to cloud. Now, suddenly this was an empowered individual inside the organization. You could get to the end of a sales stage, ready to close, and suddenly that individual had veto power. So if you hadn't discussed that or understood that earlier on, you were really in hardship because you had spent numerous cycles, resources, and what have you. Moving very quickly to that opt-in or opt-out was a big part of it.

As it related to the customer, you were in an interesting dialogue at the time because many of these customers had stood up large data centers. They were very proud of their data centers. They planned to fill their data centers with their own private cloud type of approach. And here we are coming in and telling them that that investment was pretty much null and void as cloud started ticking off, so you had the dealing with that capital cost, so to speak, moving them, and shifting their mindset to that operating cost.

What also became quite interesting was that the organizational structures that had been stood up in these IT organizations over decades were pretty deep. They had many people. You would often go into these discussions where you were told flat out not to discuss headcount. Headcount was off the table to look at for dollars saved for some of these moves, and yet in many cases, it was probably the number one element of cost savings or total cost of ownership that would have swayed the Office 365 journey in your favor. So we spent a lot of time discussing elasticity, agility, how do you move quickly. We were using your typical M&A experience where it might take two and a half years to move systems together. When you get into a situation where both organizations are on an Office 365 platform, that could happen in a matter of weeks. That ability to move a team with velocity into a productive state was a lot of where we moved into what I'd say is the non-hard-dollar cost and much more of the soft dollar cost.

We also looked at a lot of the E SKUs and how you move a customer from an E1 to an E3 to an E5 type of SKU. The stair-step was quite honestly Microsoft's strategy; if you could anchor on three good products, you had the opportunity to afford all three of those plus the other ones in the larger bundles. That was a strategy we used as well. We tried to understand where we had the most traction in accounts for usage and model our licensing plans around those. Where some of it was refuted, for instance, if a customer was on WebEx or if a customer was still using Notes, you'd build your value proposition across a lot of different elements to make it one of the freemium pieces they had in the suite. Then you'd work from a customer success perspective to implement an adoption strategy around that. So that's how we found traction and grew that at light speed success.

Why does the CIO have so much power in that decision-making process today?

I think it's shifted a lot, but the CIO has been primarily an operations leader for many years. Their job is to maintain a high level of SLA around critical systems. At the time, there was no more critical system inside of a business than email. Before we had this confluence of video and strong use of Teams or Slack or other collaboration tools, email was it. If email ever went down, that was truly the lights-out situation for a lot of our enterprise customers. So by just the nature of having so much of that operational responsibility, it allowed them a ton of responsibility of making decisions that were important to the business.

At many times, though, we would find ourselves starting with the CIO and finding either neutral or even passive or active resistance to moving forward. We'd quickly tried to push it up to a business discussion with the CFO where we would start talking about what in business you want to be? Do you want to be in the business of managing emails and managing operational systems, or do you like to parse that off to someone who is creating a complete business model around this in such a way that Microsoft could demonstrate? Those discussions helped us move the needle very well in developing deeper relationships outside of IT that have continued to carry Microsoft’s journey in driving cloud business.

What was the decision-making process for the enterprise customer? You go in, and you have this suite of software. How do they make this decision to purchase Office 365 or alternatives?

One of the attributes we had working in our favor was, in almost every case, you had a customer that was already well entrenched with Microsoft’s on-premise productivity suite.Excel was ubiquitous across the organization; PowerPoint, ubiquitous; Word, ubiquitous. So you had this base already established with usage. Early on in my career at Microsoft, I spearheaded a lot of the movement from the Notes environment to the Exchange environment. We had already won that battle, so to speak. We already had the Exchange environment with an active directory and all the benefits. So you were starting from an enviable position anyway.