Why 2020 Will Be an Even Better Year for Microsoft than 2019


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Microsoft had a strong 2019 and based on recent conversations I have had with enterprise customers, there is no reason to think things are going to slow down.  I would not be surprised if this time next year, in fact, we acknowledge that things got even better for Microsoft.  Here are a few reasons why I fully expect they will strengthen their position in the market and accelerate revenue in 2020.

More Cloud Customers

Although many enterprise customers have already moved from Office (on-premise) to Office 365, there are still enterprise customers that have only moved a portion of their entire employee base over to Office 365.  On top of this, some companies have not yet adopted the cloud to any degree and still haven’t migrated any of their users to Office 365.  You read that correctly.  These companies do still exist and they will have to start migrating to Office 365 whether they like it or not.  Microsoft will continue to do what they can to almost force them to the cloud by discontinuing support and making Office (on-premise) less desirable or unable to meet the well-known needs of the modern company.

One employee base that Microsoft will continue to focus on this year is deskless workers (retail shop floor, warehouse workers, field service technicians, etc.).  Most enterprises haven’t provided these firstline workers with Office 365 yet, so this group represents a huge opportunity for Microsoft.  Since firstline workers are often customer-facing and have an impact on customer success, enterprises have started to make digital investments in helping them succeed and these investments will ramp up in 2020.  Microsoft offers Office 365 F1 as a low-cost solution for firstline workers that is tailored to their specific needs.

Microsoft is also going to move more enterprise customers to the all-in cloud bundle Microsoft 365 (which includes Office 365, Windows 10, and Enterprise Mobility + Security) either out of the gate or as part of a renewal when a company is already using Office 365 and is perhaps considering EMS or needs Windows 10 since support for Windows 7 just ended on January 14th, 2020.  They offer Microsoft 365 E3, E5 and F1 as options for enterprise customers.

More Cloud Use

More enterprises will start to actually use Teams in 2020, thus making it much harder for competitive alternatives like Slack, Google Hangouts, and Workplace by Facebook to penetrate the enterprise and grab market share.  Microsoft knows that use is what makes cloud solutions sticky and more likely to be renewed.  Use within some departments will also make Teams more likely to be rolled out across the entire enterprise given the need for collaboration tools to be shared in order to unlock the full intended value.

Microsoft is going to offer enterprises help in getting this use and will make a concerted effort to ensure companies are actually rolling out and using cloud solutions like Teams.  This is especially the case when it comes to those Office 365 (which includes Teams) customers that have not yet used or fully rolled out Teams but have been paying for it.  Eventually, Teams will be the only option for enterprises which should also accelerate use.  Microsoft announced that Skype for Business Online will be retired on July 31, 2021.

More Cloud Products Will Be Adopted

Enterprises will start spending meaningful dollars on more Microsoft cloud solutions.  Specifically, Microsoft is going to push their established, longstanding large company customer base to adopt and start using LinkedIn (i.e., Learning, Recruiting, Elevate) more strategically.  Microsoft is already pushing for more conversations with enterprise decision makers around LinkedIn adoption.  They have also now allowed LinkedIn (at least some of the LinkedIn products) to be included as part of Enterprise Agreement (EA) relationships and are pushing for LinkedIn products to be part of an enterprise’s EA renewal.  Not only will this drive revenue tied to LinkedIn, but it will also help accelerate Dynamics 365 adoption and revenue given the natural value tethering.

Another cloud-based product that Microsoft is going to be pushing is Power BI.  CEO, Satya Nadella, recently stated during an interview at NRF 2020 that in order for retailers to be successful in today’s world, they need to focus more of their energy and dollars on analyzing the consumer data they already have and less on search ads (a shot at rival Google).  He mentioned Starbucks, Walmart, and Home Depot, all of which happen to be longstanding strategic Microsoft customers, as examples of retailers leading the way and doing it right.  Satya also happens to be on Starbuck’s board.

Based on this and the conversations I am having with retail customers, you can fully expect Microsoft to push their Power BI product and Azure Analytics services into more conversations with retailers (or any enterprise, since his theory pretty much applies universally) in order to increase adoption and revenue.

More Azure Wins

I am confident that Amazon Web Services (AWS) will maintain their market leader position in 2020 but the gap between AWS and Microsoft Azure will lessen.  The vast majority of large companies are also longstanding Microsoft customers. These high-level, longstanding relationships, along with more movement to Microsoft’s cloud solutions, gives Microsoft a significant advantage when AWS or even Google (GCP) tries to penetrate these same large companies to grab valuable market share.

Because of this, I fully expect ramped adoption of Azure which will result in increased associated revenue.  This will not only benefit Microsoft at the outset of these deals but the “fly-wheel” effect (Microsoft CFO, Amy Hood’s terminology) will drive potential accelerated revenue downstream as well.  Their entrenched position in large companies as well as significant government wins like the JEDI contract are going to result in Microsoft slimming the gap.

These are just a few observations I expect to see in 2020 as Microsoft strengthens their already strong position.  If you are an enterprise customer considering expanding your portfolio, whether it is during a renewal or not, how you prepare for your negotiation with Microsoft has never been more important.

Comment below, follow me Adam Mansfield on Twitter @Adam_M­ansfield_, find my other UpperEdge blogs and follow UpperEdge on Twitter and LinkedIn.  Learn more about our Microsoft Commercial Advisory Service.

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