How does a global corporation with 2 million employees, 10,000 brick-and-mortar stores, daily revenue of $1.37 billion and a booming e-commerce business become a lightning-fast innovation engine driven by staggering amounts of real-time data?
For Walmart, the answer was to commit to a massive 5-year cloud deal with Microsoft that extends the two companies’ existing partnership and adds significant credence to my long-held belief that the world’s largest and most-influential cloud-computing vendor is indeed Microsoft rather than Amazon.
Of course, given Amazon’s recent forays into a few of Walmart’s strategic strongholds—including groceries, pharmacies, general retailing, and e-commerce—Walmart had pretty much zero incentive to give Amazon’s AWS cloud unit any of its business.
But the allure of the iconic Walmart brand and the size and scope of this megadeal without question burnishes Microsoft Azure’s already-strong reputation for being fully capable of handling some of the world’s most-challenging enterprise workloads, IoT opportunities, and emerging AI-centric processes.
In fact, I’ve predicted that for the quarter ending June 30, Microsoft will become the first Cloud Wars vendor to post $7 billion in commercial-cloud revenue in a single quarter, while I’m expecting Amazon to hit $6 billion in cloud revenue for the period.
And Walmart is “extremely excited” at the prospect of tying its strategic—and indeed, existential—digital transformation to Microsoft and its cloud capabilities, according to Clay Johnson, Walmart CIO and executive vice president of global business services.
In a phone conversation last evening, Johnson outlined Walmart’s expectations for the 5-year strategic partnership with Microsoft.
“If you think about Walmart’s transformations over time—for example, our development of the SuperCenters, our work in supply-chain improvements, and our work on distribution networks—it makes perfect sense for us at this time to really accelerate our digital transformation,” Johnson said.
And Walmart is “super excited” about the “continuous deployment of the cloud” that’s unfolding with Microsoft across the Azure line of services, including cloud apps around Microsoft products and suites, analytics, mobile, digital assistants, Cortana, IoT and chatbots.
In addition to the business advantages Walmart hopes to gain from all that modern code, Johnson said, his company’s aggressive move into the paired worlds of digital and data will also be essential in helping Walmart continue to attract world-class talent across every part of the company.
“We’re confident these moves will also help us attract the right talent across the board and not just in the IT department,” said Johnson, who joined Walmart as CIO from GE in January 2017.
“Digital innovation has become very important to our 2 million associates across the globe and how they work, how they’re better able to meet the needs of our customers and deliver great customer experiences,” Johnson said.
“And we realize that in today’s world, people want to work where they get access to information—to data—and where they can make a difference with mobility, analytics, predictive analytics and IoT in stores and in everything they do.
“They want to be able to work with data.”
And the cloud is absolutely the key to unlocking the staggering volumes of data across the vast Walmart ecosystem of customers, stores, distribution hubs and suppliers, said Karen Garrette, Microsoft’s worldwide lead for retail strategy.
“For retailers like Walmart, the cloud has totally changed the game in enabling them to try new things and spin them up if they work or move on if they don’t,” said Garrette, who was part of the phone conversation with Johnson.
“The cloud is now the key to their ability to bring huge volumes of data together at speeds they never could imagine before—and it’s essential for leading companies like Walmart to seize the opportunity at this particular point in time to do this.”
Asked how Walmart seeks to find the best ways to innovate rapidly in spite of its extraordinary size, Johnson chuckled and said, “It’s not easy. For example, take a look at our 5,000 Sam’s Clubs. What happens where you’re able to collect data from all those locations and crunch it to make predictions? That scale of 5,000 of that type of store helps you do things you couldn’t do before, and that’s one of the areas we’re working on with Microsoft: just how do you work with and take advantage of those large data sets.”
In a press release announcing the partnership, the CEO of each company offered some perspective on how and why this sweeping deal came together.
Walmart CEO Doug McMillon, describing his company as “people-led and tech-empowered,” said, “Whether it’s combined with our agile cloud platform or leveraging machine learning and artificial intelligence to work smarter, we believe Microsoft will be a strong partner in driving our ability to innovate even further and faster.”
Microsoft CEO Satya Nadella said, “Walmart is a pioneering retailer, committed to empowering its employees and delivering the best experience for its customers wherever they are. The world’s leading companies run on our cloud, and I’m thrilled to partner with Walmart to accelerate their digital transformation with Microsoft Azure and Microsoft 365.”
The extensive 5-year cloud deal is also an extension of an existing relationship between Walmart and Microsoft that includes Microsoft services for critical applications and workloads.
The new agreement will see the companies collaborate on machine learnings, AI and data-platform solutions that span customer-facing projects as well as those aimed at optimizing internal operations. The companies cited three specific areas on which the new partnership will focus—here’s a quick look at each with excerpts on each from the press release:
- Digital transformation: “Walmart has selected the full range of Microsoft cloud solutions, including Microsoft Azure and Microsoft 365 for enterprise-wide use to help standardize across the company’s family of brands. As part of the partnership, Walmart and Microsoft engineers will collaborate on the assessment, development, and support phase of moving hundreds of existing applications to cloud-native architectures. For example, to grow and enhance the online experience, the company will migrate a significant portion of walmart.com and samsclub.com to Azure, including its cloud-powered check-out enabling Walmart to grow with rising customer demand and reach more global markets than ever before.”
- Innovation: “There are also massive benefits to operating at scale as Walmart builds a global IoT platform on Azure – from connected HVAC and refrigeration units to reduce energy usage in thousands of U.S. stores or applying machine learning when routing thousands of trucks in the supply chain.”
- Changing how we work: “Walmart continues to foster a curious, collaborative, accountable, and agile culture to position the company for further growth. To do that, it’s critical to have tools that encourage those skills and traits. Through this partnership, Walmart is investing in its people with a phased rollout of Microsoft 365 providing associates with the productivity tools to foster a culture of collaboration, creativity and communication.”
High-intensity competition—free, unfettered, raucous and often ferocious—is the ideal engine of innovation, and Walmart is clearly looking to benefit from the savage competition that exists among the top cloud providers—including Amazon.
RECOMMENDED READING FROM CLOUD WARS:
The World’s Top 5 Cloud-Computing Suppliers: #1 Microsoft, #2 Amazon, #3 Salesforce, #4 SAP, #5 IBM
Amazon Versus Oracle: The Battle for Cloud Database Leadership
As Amazon Battles with Retailers, Microsoft Leads Them into the Cloud
Why Microsoft Is #1 in the Cloud: 10 Key Insights
SAP’s Stunning Transformation: Qualtrics Already “Crown Jewel of Company”
Watch Out, Microsoft and Amazon: Google Cloud CEO Thomas Kurian Plans To Be #1
The Coming Hybrid Wave: Where Do Microsoft, IBM and Amazon Stand? (Part 1 of 2)
Oracle, SAP and Workday Driving Red-Hot Cloud ERP Growth Into 2019
Microsoft has begun to publicly make the point that unlike Amazon, it does not compete with its customers. And as parent-company Amazon continues its hyperaggressive growth into more industries, Amazon might well find that businesses competing against Amazon for their very lives will be loathe to do business with AWS.
Whether that’s a factor or not, Walmart is clearly reaping the benefits of the extraordinary innovation pouring out of the leading tech vendors as the Cloud Wars drive relentless high-speed progress for companies making the transition to digital business.
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