Q&A: Avanade on why Microsoft is your best strategic partner for the future

Avanade CEO Adam Warby details how a $2 billion IT services company is capitalizing on new Microsoft cloud and collaboration capabilities to power digital transformation projects.

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Warby: The fast growth is in digital. It’s a smaller base. There is a lot of experimentation in digital and there aren’t as many clients who are going full scale on that at the moment. Our cloud business is growing extremely fast off the back of Office 365 and Azure’s growth. We measure that change and we use the same phrase Accenture does, our rotation towards the new business.

Our goal is to get 30 percent of our business this year to be in that cloud and digital arena and we think that will continue to scale. By 2020 we expect 60 percent of our business to be in that new area.

CIO.com: That makes sense. When you are engaging with customers around these digital transformations, what are the things that customers are struggling with? One of the things it seems to me they are struggling with is how do we make this beyond a one-off kind of thing? We can think of one thing we can do. How you make it a cultural thing seems to be an issue.

Warby: I always start with business case. In any of these things it’s easy in some ways to envision how things could be better, but to then put that into dollars and cents and to understand are you going to increase revenue, what’s the value of customer satisfaction going up, what’s the value of employee satisfaction going up?

There’s a fun example, another airline example actually, where we were working with the IT department on collaboration and whether they should move to Office 365 in the cloud. It was going to cost several million dollars to make the entire change and they were struggling with the business case and the pace at which they could do it. So we started to ask more questions about where is this collaboration happening. Lo and behold, one of the big business problems for an airline is on-time departure of their planes. I think we all recognize that.

There were major incentives and a major budget in the system to improve the way planes could get away on time. Of course, it’s a collaboration problem but it’s more than just a collaboration problem, you have to have other things work. But once we started that conversation, were able to talk to the team that was focused on that issue, the budget opened up because we could actually affect the business goal that they were focused on.

I think everybody struggles with it at some level and for us it means we need new types of skills as well. We have more advisory services now in helping think through business case, change management, all of those things. You’re right; it’s a cultural change too. Now instead of working in my little silo, I am collaborating across 15 different things to get this plane off on time.

Slattery: The other area I would add is experimentation to execution. How do you get from proof of concept to actually running as a digital business or having a particular digital process or work stream? You can create some ideas, you can get up some pilots and some proof of concepts, but when you actually have to integrate it into your core operations, make sure that it’s robust and looked after properly, that raises the scope of the engagement and the challenge.

I think that’s one of the places we do quite well at helping our clients. That’s what we were formed for back 15 years ago. Arguably, Microsoft is cool again.

CIO.com: Adam, you had mentioned in several instances the line of business role in this in addition to - I won’t say vs. IT. How are you seeing this ownership of innovation changing? Are you seeing IT shops taking the bimodal IT strategy that Gartner has discussed?

Warby: Maybe before we go there I’ll just comment on two other problems I see that are really important and I think they play into what’s the role of IT vs. the business and what’s happening, which is speed and skills. Once you’ve got the business case and once you’ve got through the experimentation, it’s let’s hurry up and get the business benefits. If you don’t do it your competition is doing it.

The example I gave of the European retailer, you’ve got to get this in time for the particular season, the end of the year season or whatever it may be, and I’ve got to go roll this out across multiple countries. There are big changes when you start to fundamentally change the way people do business, change the way people work. Then, whose got the skills? Do we have the multidisciplinary skills to take something like this on? I just wanted to mention those two because I see them as key.

Your question of where are we in the shared roles and responsibilities? I think the Gartner model is broadly true, in that there is a somewhat bifurcated role that the core IT needs to drive out the business benefits to pay for the change. Exactly how that lands in a particular industry and a particular structure does vary as far as what I see in with clients. I think on the innovation side it almost exclusively does lie with the business. What we try and do with these iDays is make sure that there is IT and business in the room at the same time so that we’re having a collaborative dialog.

Slattery: I think that’s exactly right. We see great results when we have both at the table and when we can show the art of the possible. They can then set it in the context of -- here’s my particular problem. We can iterate on that idea, which is the whole purpose of the iDay, and a focused discussion will come out of that with a list of some great opportunities.

Then we can go back to the business case, the experimentation and how do we drive those into reality. But that combined thinking from the people who execute on the business every day with the people who have to support the operations of it from a technology perspective is critical.

Warby: I think one of the interesting things about that also is the ability to bring cross-industry experiences into the discussion and the willingness of a banking client to listen to a story of Omni-channel retail or a mining company hear the experiences of an airline business or a manufacturing business -- to get people’s minds out of their normal way of thinking.  

Retail is one of our focus industries and we have a very strong presence there. There we were telling a very industry-specific story around the digitally enabled fitting room or whatever it might be. But I would say in the early stages, in the experimentation phase of that across industries, it surprised me how interested people are in what’s going on outside their industry right now.

CIO.com: Who do you consider to be your competitors?

Warby: I think it gets broader with the digital world. We have our traditional systems integration competitors from the Indian pure-plays to IBM or Capgemini, through to the broader Microsoft sets of partners. Sometimes it’s competition with categories like the agencies. We’re working in a couple of clients very closely with major agencies now.

CIO.com: By agencies you mean...

Warby: Marketing agencies in digital marketing projects. As their business tends to look more at technology as well, we’re at least bumping into them more. One of the big things in our strategy as we look over the next five years is rethinking the ecosystems around what we do, how different they look and who do we have to partner with.

To be honest, I worry less about competition. We tend to focus more on what it is we need to do to deliver benefits to our clients and what skills do we need and where can we get those skills because they are, on the whole, going to take a while to regenerate. What might have been a competitor yesterday could be a partner tomorrow because we need to pull together these quite diverse sets of capabilities.

CIO.com: You’re working on opportunities and problems that are not vendor-specific within these organizations. Does the close tie to Microsoft sometimes become a set of handcuffs, if even from a perception aspect?

Warby: Yeah, we thought about that quite deliberately in our vision and we did include Microsoft in our new vision. I still feel that being focused around an ecosystem like Microsoft on the whole is a benefit for our customers. We start being non-technology specific in the way we talk about helping our clients realize results through digital innovation.

It could be some sort of constraint, but right now we don’t see it as such. We think that there’s a sufficient marketplace out there where companies have Microsoft technology, Microsoft is doing a nice job in re-expressing itself in the mobile-first, cloud-first world that we’re finding plenty of opportunity to go after. We’ve grown. We were $2.4 billion in sales last year and growing at double digits still so we think that that positioning is about right at the moment.

CIO.com: In terms of who you’re selling to today, is it more line of business today than it was IT in the past or is it a blend?

Warby: Definitely more line of business and business. IT is present, still spending plenty of time with the CIO. I talk to my CIO about what his role is and we have this idea of three things that I want him to do. One is to be a services broker. You don’t have to build everything. You need to figure out what services need to get delivered.

The second is being innovative and helping us think through our innovation. Third, for us certainly, is employee productivity. We have 28,000 professionals around the world. We’re waking up thinking about how can we make them all productive, can they get to the right information, can they get on Skype for business seamlessly? I think that has been helpful for me as a CEO to have a CIO that I’ve gone through this journey with as a business leader and to be able to think through how that looks from other people’s perspective.

CIO.com: You kind of live in a couple of different worlds -- the integration world and the consulting world. What’s your one-line explanation of Avanade?

Warby: The world’s leading digital innovator. That’s our aspiration and on our best day we can be. Then somebody says -- What’s a digital innovator?

CIO.com: How do you measure ‘leading’ in that description?

Warby: We would come back to our share in Microsoft’s marketplace, given that’s our world. We recently were recognized by IDC in their MarketScape as being the leading player in the Microsoft solutions provider area. It was a nice milestone - a really nice milestone after 15 years to have some public recognition of what we believe was a capability we built.

I think it’s time to step out and be clear about where people have got to go. We are going to have to change the way we do business because doing it the same way we do today, it’s the old definition of insanity, isn’t it?

CIO.com: We write a lot about Microsoft products, the company’s shortcomings and strengths, whether Microsoft is cool or not these days. Tell our readers what it is that perhaps they don’t see about the transformation Microsoft is going through. What would help them understand what Microsoft is doing, maybe a little differently than they see from their own dealings with Microsoft or listening to people like us?

Warby: Maybe I’ll just start with one really interesting example that I test our own people with, which is asking them, because they work around this ecosystem every day, what is Microsoft’s ambition for their cloud revenue? Actually it’s been very public about this -- $20 billion of run rate of cloud revenue by 2018 is a huge ambition.

I think at any level for your readers, for anybody who’s dealing with this company to underestimate the extent of seriousness and ambition that Satya [Nadella, Microsoft CEO] and the leadership team have in transforming this to be a cloud-driven, cloud-first business would be a mistake. I still ask that question today at leadership meetings, employee roundtables, whatever it is. That is a phenomenal ambition and it’s going fast.

Slattery: The part I think sometimes people miss and I think Satya has done an amazing job with this under his leadership, is that Microsoft can be an incredible catalyst for this digital transformation and rotation that enterprises need to go through. They can be an incredible catalyst, especially with their ecosystem partners, to help on the digital rotation.

I think sometimes that doesn’t come through because people focus on a particular subset, but when you step back and you look at the power of all these things that are coming together, which is another key thing for Microsoft, I think that is a really energizing conversation

CIO.com: Which is exactly to the point of the next question that I want to ask: Big enterprises have had a number of strategic partners in IT, whether it’s an Oracle or an EMC or a Cisco or an IBM, a whole collection of companies. What makes Microsoft their best strategic partner moving forward?

Warby: I think two things. One is the absolute, wholesale commitment to taking the product, the technology suite, into the cloud and the benefits that that will bring in terms of agility, flexibility, security and reliability, all of those things.

For most companies to contemplate building that sort of Web-scale capabilities themselves is pretty daunting. In our assessment, there are only three cloud companies in the world at that scale. It’s Google, Amazon and Microsoft. There are two that are serious in the enterprise, which is Amazon and Microsoft and there’s one that has true hybrid capabilities and a suite of applications that sit on top of it. That’s a pretty compelling proposition.

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