“The old on-premises model justified a sales mindset, now we have to find people who are service focused,” says Michel van der Bel, managing director of Microsoft UK. “We are on a journey to find people that have the mindset for a changing industry.” Van der Bel has been leading Microsoft in the UK for three and half years, arguably at a time of great change for once dominant provider of applications.
“We are, as a company, going through a massive transformation, just like our customers, and just like our rivals,” he says at the UK headquarters in Reading. “The UK is doing very well on cloud adoption and the UK is good at risk and experimentation,” he says of the local market. That comfort with risk and change has placed challenges at the doorstep of Microsoft which, as the producer of Windows, receives strong criticism and always lives under the spotlight.
“We have embraced the change. We love the iPad,” he half jokes. “We are moving to put the user at the centre, rather than the technology and that is a pretty massive shift,” he admits. “Our discussions with customers are radically different, because they [customers] are moving away from on-premises to the cloud. How we monetised in the past and how we do so in the future, that’s very different,” he says of gradual demise of the software licensing model that had previously ensured Microsoft revenues were recession proof. That was until the 2008 crash, which ushered in greater cloud adoption.
Microsoft is a significant organisation in the economy of Great Britain. It employs 3,500 people and a further 120 at its research organisation. Its presence in the UK is 30 years old and was one of the first openings of Microsoft as it expanded out of its Redmond headquarters in the US.
The change in customer behaviour has meant that Van der Bel’s tenure as Microsoft leader has been focused on changing Microsoft UK to remain relevant.
“We need to make sure that we are in the right shape, so the culture change we have made and what skills we have for technology and marketing is changing. I spend a lot of my time on the people agenda.
“Today the customers are the CFO and CMO as well as traditional IT leaders. This is a lot of work and it’s based on how people see myself, showing different behaviour, it is not a speech, it’s about how every day. I share a lot of notes with the people who are customers because every transformation in the UK is important and specific. I spend sixty percent of my time external and that’s where I get the most energy and the most learning,” he says when asked about his focus, whether it be internal or external. Van der Bel says that external facing culture is what he brings to the UK operation and says observers would be surprised at the level of autonomy he has as the UK MD.
“There is no Microsoft playbook that tells you what to do, so there is an opportunity here to define the strategy in the context of the UK,” he says, adding that the adoption of cloud by UK business leaders means his strategy is to accelerate Microsoft's move towards becoming a cloud service provider.
“We are competing with IBM, Salesforce and Oracle and we are collaborating with them. We have to make sure our customers are aware of the collaborations,” he says of the new enterprise technology landscape.
From software to service
“Our revenue streams are changing and that is why we are changing. The monetisation is a big difference, but it is still a profitable business,” Van der Bel says of how Azure and Office 365 cloud services are a major part of Microsoft’s future, but potentially less lucrative than the Windows licence model.
“I’m not sure there is a financial risk, it is just how the business is changing. Infrastructure-as-a-Service is a commodity and we have that to offer. Platform-as-a-Service (PaaS) is the interesting part. If you look at UCAS in the UK and how Azure helps organisations prepare for spikes,” he says.
University entry management organisation UCAS moved to a cloud business under CIO/COO Steve Jeffree following an embarrassing outage in 2011. UCAS uses both Microsoft Azure and Amazon Web Services. Amazon provides the back end commodity infrastructure, whilst Azure supports the front end admissions process, the unique differentiator for the UCAS business. Back and front ends of the UCAS system undergo significant spikes every summer on the day of the A-level results as the UK’s student trigger their university applications, UCAS told this title that its systems handled 385,910 transactions in 2013.
“In the past it was hope and see, but UCAS is a great example of how people are coming to a realisation of what PaaS can do.
“We are hosting non-Microsoft applications and more and more Linux as we open up the Azure environment,” the MD says. As Azure gains traction Microsoft is re-skilling to ensure it has the ability to grow Azure and not lose out to Amazon.
“We’ve been adding architects so that it is a technical relationship and sell. In the cloud people are instantly using your services, but if your customers don’t consume a service, then it is not adding value. So we have to be articulate on how we are going to help your organisation consume cloud services in the right way; that is the new frontier.”
Microsoft has always relied on its wide range of partners, from massive global systems integrators to resellers and boutique vertical market specialists. But a changing business model means a changing partner network. Some traditional partners are dropping away as specialist skilled organisations like Adatis in the analytics space, for example, provide real value to customers and drive up Azure usage.
“The partner market is not saturated. If I look at the channel of the last five years it was focused on the old on-premise model. The partner market is moving to the cloud, so that is a massive disruption and a massive opportunity to reach thousands of customers in the UK. We are trying to make sure that our partners are part of that transformation.”
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