Global IT research and advisory firm Info-Tech Research Group has released insights that explore the industry cloud market, touching on Microsoft’s market expansion and what it could mean for industry-specific organizations looking to move to the cloud in 2022.
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As background, in the spring of 2021, Microsoft announced the expansion and public preview of industry-specific cloud-based solutions. These industry clouds are designed to provide an easy transition for various industry verticals to move quickly to the cloud and attain faster ROI with templated workflows, APIs, and analytics through artificial intelligence and machine learning.
“The industry cloud market represents one of the largest vertical growth opportunities for technology suppliers,” says Ted Walker, a Principal Research Director at Info-Tech. “More than five hundred industry clouds have already been created globally, and revenue in this space is expected to exceed $20 billion by 2023.”
Industry clouds focus on specialized processes with tools and business services dedicated to a specific industry. Designed with industry challenges in mind, these cloud-based solutions can enable organizations to jump ahead and deliver value at a record pace.
“These cloud-based systems are heavily customized to meet the needs of specific industry segments and accommodate the regulatory, business, legal, security, and other requirements within each particular industry,” explains Walker. “General cloud computing has a horizontal integration with similar services for all, whereas the industry clouds are vertically integrated into specific industry needs.”
Microsoft Industry Clouds
Building on lessons learned and experience gained from its specialized partitioned Cloud for Government, Microsoft is now focusing on expanding similar offerings to specific industry verticals.
“Microsoft continues to drive digital transformation with tailored industry solutions hosted on the Azure platform,” adds Walker. “Throughout 2021, Microsoft announced several new industry-focused solutions to build out a growing portfolio of pre-architected cloud-based solutions.”
Info-Tech’s research highlights the available industry-specific solutions from Microsoft, including:
- Financial Services (includes Banking, Capital Markets, Insurance)
- Healthcare (includes Vaccine Management, Payors, Life Sciences)
- Energy
- Manufacturing
- Retail and Consumer Goods
- Telecommunications
- Nonprofit
- Automotive
- Industrial IoT
- Media and Entertainment
- Education
- Government
Alongside Microsoft, Amazon’s AWS and Salesforce have been developing industry clouds. However, Info-Tech’s research shows that no clear leader has emerged in this market space.
“Industry-specific solutions are built on Microsoft workloads,” shares Walker. “They are not separate instances of Azure but rather a set of templated workflows, APIs, and compliance modules. These solutions are sold as tenant or user add-ons to other Microsoft subscriptions such as Dynamics 365, Power Platform, or Microsoft 365.”
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These industry solutions also leverage various Azure technologies, including Compute, Containers, AI/ML, SQL, BI, and Web. Microsoft also uses a host of non-Microsoft technologies, operating systems, and database environments to further expand the compatibility and reach of its industry-specific solutions.
Pricing Strategy
Microsoft pricing varies by industry and requirements. Add-ons can be priced per user or at the tenant level for up to $30,000 per month.
A pricing example of MS Cloud for non-profit may have add-ons with a variety of required qualifying licenses. It is dependent on the non-profit scenarios that are important in such areas, such as fundraising, volunteer engagement, and management. It’s a tenant-wide license available through the EA, CSP, and Web Direct. There’s a Basic Plan, which is free, a Standard Plan 1 (for fewer than 250 employees) at $750 per month, and a Standard Plan 2 for more than 250 employees at $2,000 per month. All are priced at the tenant level.
“For Healthcare, Microsoft offers a $95-per-user add-on that provides additional capabilities for Teams, Power Platform, and Dynamics 365, including Patient Insights, Virtual Health, Care Coordination, and more,” says Walker.
Most industry-specific add-ons will have an underlying or qualifying license requirement. This could be Microsoft 365, Dynamics 365, or possibly Power BI with SQL.
Microsoft Azure Ratings
SoftwareReviews, a division of Info-Tech research group, shows Microsoft Azure’s overall rating as a cloud platform based on customer feedback and reviews.
Source: Microsoft Azure on SoftwareReviews; accessed March 2022
Microsoft’s Cloud Solution Framework
Microsoft has designed the industry solutions with its Azure security-first methodology for the specific templates, configurations, workflows, APIs, and other Azure connectivity services.
Microsoft’s industry clouds are designed to:
- Accelerate organizations’ ability to implement industry solutions or bolster existing ones.
- Leverage and use the common data model while still aligning with compliance requirements within each industry.
- Make individuals and organizations more productive through effective workflows and application integrations, bringing timely data and information on demand.
- Use modular solutions with built-in industry standards that augment an organization’s current investments and are expandable as business needs evolve and grow.
“It’s important to understand that these industry-specific cloud solutions are not unique or physically separate Azure instances,” Walker explains. “They essentially extend the underlying cloud services and provide industry-specific value add-ons that are safe and easy to integrate. These value add-on modules can deliver workflow automation and AI and ML analytics for both structured and unstructured data sets. This will allow organizations to pivot data and gain insights with meaningful results.”
The initial announcement of these industry clouds occurred in the spring of 2021. Most were announcements of public previews. Throughout the year, public previews of additional industry clouds were announced that quickly rounded out the stack.
Info-Tech says that there can be many benefits of Microsoft’s industry cloud:
- Organizations can bring legacy infrastructure to the cloud and gain greater agility and scalability.
- The learning path is shorter since solutions are built on known Microsoft products and technologies.
- Operational efficiencies are improved.
- Configurations are compliant and standardized.
- Tenant add-ons and user-based SKUs can be consolidated into an existing licensing agreement.
Info-Tech’s Recommendations
“If you are already using several Microsoft cloud products such as Office 365, Dynamics, and Azure, using the Microsoft industry cloud would be a worthwhile consideration from a cost savings, ROI, and integration perspective,” says Walker.
As with any new product from Microsoft, organizations should look to leverage any incubation pricing discounts. The industry cloud is still in its infancy, and due diligence will be required to find and vet niche partners that can help with planning and deployment. Organizations will need to work with a partner to secure POC or pilot funding from Microsoft. Finally, companies should carefully investigate integration and APIs with the business services and systems since it is the highest dissatisfaction or challenge in the early stage of industry cloud growth.
“Since these industry-specific solutions are designed, built, and tested on Microsoft’s secure cloud infrastructure, customers can be confident that they will meet industry compliance requirements,” states Walker. “This will allow customers to be faster to market with cloud-based, industry-specific infrastructure and workflows. Microsoft will leverage its advantage of having existing mature products and platforms while continuing to engage industry partner knowledge and experience to further improve these solutions. Its goal to become the leader in the industry cloud segment will materialize much faster by focusing on a few market segments.”
Microsoft has not yet created partner certification paths for the specific industry clouds in its Gold Certified Partner Program. These partner certifications would differentiate their solutions and reward them for investing time and resources into the industry cloud segments and certifications.
“Industry clouds might be a quick avenue to the cloud, and there’s no doubt Microsoft will make it affordable for early adopters,” adds Walker. “However, experience and history show that Microsoft will eventually monetize the platforms further down the road. This could greatly deplete the ROI values that were initially defined by the organization. Similar to the Microsoft 365 deployments in years past, once an organization goes that deep into the cloud, there’s almost zero chance of going back to legacy processes.”
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