Why You Should Care About Microsofts CEO Choice

Microsoft announced today what most of the business world presumed last week: Satya Nadella is the new CEO of the Redmond, Wash.-based software and technology giant.

Surprised? Probably not. We understand.

But the company also announced something that may surprise othersBill Gates is still around. Previously chairman of the board, Gates is now the board's founder and technology advisor. John Thompson, lead independent director for the Microsoft board, maintains his role and is now also the board chairman.

Cloudy Days

But forget this executive musical chairs stuff for a second. What does Nadella at the top mean for the industry? It means the No. 1 in software and technology is investing heavily into IT technology and software in the cloud.

And if the No. 1 is doing it ... well, you know what that means. As Nadella himself said in Microsoft's news announcements today: "Our job is to ensure that Microsoft thrives in a mobile and cloud-first world."

Enterprise software and technology in the cloud is a business estimated at more than $2 trillion, Nadella once blogged. And Microsoft’s commercial business, spanning nearly every area of enterprise IT, represents 58 percent of Microsoft’s total revenue, Nadella said. 

So why not Nadella to lead Microsoft into this era of the enterprise cloud, where businesses are constantly striving to be in the enterprise? 

"Microsoft is in a state of transition, transforming itself from an on-premises software company that developed products for PCs and servers, to a company that offers mobile-first, cloud-always services for businesses and consumers," Richard Edwards, principal analyst for Enterprise IT at Ovum Research, told CMSWire this morning. "Oh, and it’s in the hardware business, too. What company wouldn’t find that a continuous struggle?"

'Incredible Cloud Capacity'

Nadella was Microsoft's executive vice president of cloud and enterprise and served as the president of Microsoft's server & tools business. He supported the company’s move to the cloud and the development of one of the largest cloud infrastructures in the world supporting Bing, Xbox, Office and other services. The Microsoft cloud business unit is at $19 billion.

In his first email to employees today, Nadella mentioned the word "cloud" five times. 

"I believe over the next decade computing will become even more ubiquitous and intelligence will become ambient," Nadella said in the email. "The coevolution of software and new hardware form factors will intermediate and digitize -- many of the things we do and experience in business, life and our world. This will be made possible by an ever-growing network of connected devices, incredible computing capacity from the cloud, insights from big data, and intelligence from machine learning."

Changing Industry

Aaron Levie, co-founder of Box.com, predicted back in 2012 the cloud enterprise battle would be up for grabs.

“The market (Enterprise Cloud)," he said, "is just a fraction of where we could be from a size standpoint,” so much so that "in the next three to five years it won’t be a competitive issue in terms of growth in the future … It’s an open market because there is no declared leader in enterprise cloud.”

A year later -- last fall -- Gartner called the Enterprise Content Management market growing with vendors forced to cater to demands for mobile and cloud capabilities as well as functionality for specific verticals. It also noted the emergence of lightweight cloud environments as vendors try to keep their clients from exploring the increasingly diverse functionality of some of the cloud-based file sharing environments that are quick to deploy and relatively cheap.

Who led? EMC, Hyland Software, IBM, Microsoft and OpenText. 

If SharePoint established Microsoft in the ECM space with the 2007 edition, it has continued to develop those capabilities with the release of 2010 and 2013. It has also now gained traction with its Online edition in Office 365, ensuring strong market penetration everywhere, Gartner reported.

Microsoft has built an enormous ecosystem around SharePoint with many third-party vendors now offering extensions and integrators for SharePoint, Gartner added. It has a strong place in many enterprise environments while the 2013 edition has improved on many areas of perceived weakness like search and social interaction. Microsoft has also indicated that it will continue to invest in ECM capabilities.

At the same time last year, Forrester in its Wave on ECM said the market is changing with agility, mobility and cloud offerings now commonplace, and with deployments a lot easier to install with a lot less initial capital expenditure in the case of cloud offerings, the entire market is undergoing fundamental change.

If you want to hear more about Nadella's views on the cloud, take a look at the following video — the source of our title image.