Digital transformation is not about using digital technologies because it only tells half the story.

Making a change is a difficult thing to do in a corporate world, especially if you want to make a dramatic change that guarantees success with an optimal outcome. In the digital age, every day, we are bombarded with new technologies and information, and it seems like we can do things easily. Or we can grab that success maybe just an inch away if we apply the right method and make the right decision. There seem to be thousands of opportunities and ways to achieve our goal. In reality, the path to success is narrow, and there are not enough time and resources to try them all, and it could be a few or just only one.

Every business is unique, not just in terms of the products and services that they offer, but both the resources and environment are also unique. You cannot duplicate success by copying someone's digital transformation playbook. There are both successful and failure cases of digital transformation, regardless of the company's age or size.

Redefine the business around the customers instead of products is something in common in every successful digital transformation, and this could be the secret key to making a successful change.

Let's examine the reinventing of the sales organization at Microsoft since perhaps it was the most extensive reorganization in the technology industry. It may shed some light on how Microsoft can accomplish such a daunting task in the four steps of digital transformation journey.

1. Reimagining the Business to Deliver New Values

During the period between 2014 and 2016, Microsoft struggled to position itself from a windows-based product company to a mobile and cloud company. As cloud services became the core of Microsoft's business, a transformation in sales organization was inevitable and yet a daunting task.

At the beginning of the journey, Microsoft recognized the importance of customer success since by empowering the customers in the early stage of the sales process, it resulted in better possibility of closing sale deals and higher customer satisfaction in the long run. The newly structured sales teams are big with diverse expertise, which aims at earning customer's trust and gaining customer's confidence about the products at the initial selling stages. The sales professionals can quickly understand the business needs and assemble their team members to set up working prototypes that demonstrate their products in action to the customers. In a short amount of time, the entire effort could impress the customers when they see how relevant technology can be in helping them achieve their business goals in real scenarios. The sales teams would continue to support the customers through the entire journey from pre-sales to post-sales. Later, we'll examine the structure of the new sales team closely and understand how Microsoft achieves its goals.

2. Reorganizing to Build for the Future

In July of 2017, Microsoft began a massive restructuring in its sales and marketing organizations, aiming at focusing on selling cloud solutions. This reorganization effort also affected the internal reorganization of other teams in the Cloud and AI Research units and developers. For managing partners, the vision of One Commercial Partner was created, where all partners are being recognized as a Partner, rather than managing customers by its needs or business models, like SI (System Integrator) or ISV (Independent Software Vendors) or LSP (License Solution Provider). The new way focused on delivering capabilities and solutions than products. With a dedicated sales team, the communication became easy since there was only one single contact point.

The new sales teams are big with diverse digital talents, which consist of three units that work in concert, and depending on the course of the sales journey for the customers, each unit plays a different role.

The Account Team Unit (ATU) responsible for revenue generation and the overall relationship within a given customer. This unit consists of two members: Account Executive (AE) and Account Technology Strategist (ATS). The AE focuses on the sales process, and ATS has an enterprise architecture and cloud background that focuses on technical expertise. ATS understands the business needs and solutions that are relevant to the customer's business. Both AE and ATS work as a team, which provides the sales experience interfacing with the C-Suite executives and pitching their technology solutions. In short, ATS delivers pre-sales knowledge, and AE closes the sales. Since Microsoft sells a wide range of products and services, when the customer has a specific need for a product and service, the Special Team Unit (STU) will come in play and takes care of a given product set. For example, Azure Infrastructure Specialist (AIS) takes care of the customer by providing Azure and Datacenter Infrastructure solutions and helps customers to make the right decisions for their businesses. Besides a Solutions Sales Professional (SSP) like the AIS that takes care of a specific product, there is the technical sales called Technology Solution Professional (TSP) to team up with SSP to create this specialized team unit or STU.

Lastly, we have the Customer Success Unit (CSU) that focuses on cloud-only products that drive the consumption of cloud. This unit consists of the Customer Success Manager (CSM) and the Cloud Solutions Architect (CSA). This unit usually takes care of existing customers or customers pass from the ATU team. The CSA builds a deep technical relationship with senior IT executives of large accounts by providing shippable codes and solves customer problems through cloud technologies. The result is to retain customers and keep users getting the most out of products.

As a result, a Microsoft team consists of ATU, STU, and CSU that creates a powerful team that can understand and partner the customer's ecosystem and helps the customer to leverage technology solutions to solve customer needs.

Each sales team will be assigned and focused on one of these solution areas: Modern Workplace, Business Applications, Apps and Infrastructure, and Data and AI. The customers are further segmented into two main groups: Enterprise and SMC, where SMC represents Small, Medium, and Corporate.

3. Reconnecting with Customers begins with an AI-ready culture

To maximize the ability to assist customers with the right technology, the organization must reinvent its sales processes, data analytical ability. More importantly, the leadership must create the right culture and environment to bring people together to contribute their unique expertise to the team.

The new digital platform infused with AI technology becomes the glue between salespeople and customers since it unifies all sales processes and enhances collaboration among different sales units. Without experienced users from the sales, finance, and marketing, the AI application by itself could not generate useful data and results. The AI application needs quality data input and creativity from users to create the appropriate training models to be used for making insight from massive data. The collaboration with the AI is where strong leadership must come into play because they need to create an AI-ready culture where people can feel comfortable and embrace the changes in process and technologies.

Besides, orchestrating the transformational changes in the organization can be challenging when deciding which steps to take in sequential stages of progress. For example, if we want to use AI to help us automate a process or give us a better predictive result, where should we start. People, data, or process. If it's from one of the business processes, but which one to choose. The choice we made could be critical. One should choose something simple and could have the greatest impact on the team. In this way, people feel more confident and motivate when people begin to try and contribute their ideas to the AI process. Making a good choice is a crucial step since the more interactions we have with the AI process, the more mature the process becomes. AI enhances the overall capabilities of the team to serve the customers better. The interactions with customers became more agile and responsive since the overall effort helped to connect customers in a new way.

4. Unleashing the Innovation with Digital Enablers

While creating an AI-ready culture, everyone has a clear vision that works as a team that transforms the entire organization moving forward. The full capability of technology is unleashed concurrently with the culture change phase. One of the key ingredients in the digital transformation journey is to choose the right digital technology, whether it's the one that helps us to capture and analyze the data or streamline our workflow.

Moving away from the older selling tool, Dynamics CRM 2011 solution, Microsoft creates a digital platform based on its own Dynamic 365 product and Azure Cloud Services. This unified platform extended AI capabilities in many of their mission-critical processes such as Sales Forecast, Churn Prediction, Cross-Sale Recommendation, Up-Sale Recommendation, deals prediction through machine learning. The combined efforts become the integrated solution called Microsoft Sales Experience (MSX), which aims to simplify and automate salespeople processes.

Microsoft also developed an AI-base guided selling application called the Daily Recommender, which gives the salespeople daily with a list of prospects to engage more actionable product recommendations. These unique recommendations are based on the AI predictions relevant to the customers. It also curates and presents to sellers with prepared sales plays, strategies, and sales processes. The sellers can quickly make a call or snooze it. The Daily Recommender not only reduces seller preparation but also enhances the overall conversion rate as the recommender app helps to target the desired customers. Best of all, all sellers' actions are recorded and analyzed by the AI platform to improve its relevancy and actionable predictive steps over time. The AI-infused application has integrated with the Power BI system, which further helps to create personalized customer engagement with AI-driven capabilities such as designing customer offers, reducing customer churn, and improving customer conversion. In each stage of the customer journey, salespeople can discover customer segments and identify which products a customer is most likely to purchase. Sales agents improve their productivity while they increase customer satisfaction. It is a win-win situation for salespeople and customers.

The Microsoft Product Support team takes a proactive role. Instead of waiting for customers to call or cancel their service subscription for unknown reasons, they have a system that identifies which customers are not utilizing their purchased resources. For example, the Office 365 Support would try to contact the customer via both email and phone to ask if the customer needs any assistance when they identify that you have not utilized the available space on OneDrive for Business. This proactive service not only increases customer satisfaction but also increases the opportunities to upsell other services by transferring this potential lead to the sales team from the support team after a conversation with the customer.

Modernizing the workplace since 2017 was a pivotal contributor to the success of transformational changes as collaboration became more productive, plus employees were able to spend 50% more time engaged in collaborative work. By using integrated features offered from the Office 365 productivity suite and includes apps such as OneNote, Yammer, and Microsoft Teams, better communications, efficient workflow, and the uses of AI bots have greatly improved the sharing of information along with the right pace of change management in a sophisticated team structure. Ensuring effective collaboration across a multitude of business units forges an engine for innovation and creativity, and this is critical for the success of the transformation because digital transformation is about helping the organization to become more responsive to changes. Acquiring a technology may have a price tag, but forging a successful team is priceless.

For the Worldwide Inside Sales team, they need a different sell management system to fit their needs. Since they need to standardize their sales experience, tools, and operation across various environments, they need a centralized platform where they can unify and integrate other worldwide sales representatives with different systems and software tools. As a result, a unified calling and support center was built by extending the Dynamics 365 system to create the Unified Service Desk (USD) that customizes CRM functionality with consistent MSX. The USD system continues to evolve in the transformation journey with AI capability as it uses machine learning to capture new data from various online sources, include LinkedIn and Twitter, to provide sales leads as real-time alerts. The USD integration allows the seller to make a call, manage call notes, and build seller KPI data by tracking the number of unanswered calls and qualified leads. Now the sellers manage quotas and accounts just like corporate account sellers, where they can obtain insight for opportunities to cross-sell or upsell.

Results

The implementation of Daily Recommender helped to increase 40% in recommendation-to-opportunity rate as it assists in more relevant discussions with the customers and discovers their needs. The account executive team claimed that the AI-based guided selling applications help them to increase their productivity by about 60% in their daily calls and sell preparation time.

Many legacy seller tools were retired after the adoption of the new selling platform. According to Microsoft's implementation analysis of their overall sales activities, they reduced 75% of the time to create opportunities, such as researching and entering data, from 12 minutes to 3 minutes.

From the annual income reports, Microsoft reported revenue of 125.8B for FY 2019, an increase of 47.50% compared to FY 2016. Net income grew 133.60% to 39.2B.

As you can see from its stock performance, it continues to hit all-time highs since 2018 after the initial transformation in 2017.

Microsoft Stock Price from 2014 - 2020
Source: Yahoo! Finance

In the first year alone, Microsoft's commercial revenue was up from 90 percent, according to Gavriella Schuster, the Microsoft corporate VP for One Commercial Partner group. Microsoft continues to increase its revenue growth since the sales reorganization and reinvent its digital strategy since 2017. Recently, Canalys Cloud Channels Analysis reported in January 2020, showing Microsoft has increased its market share in the worldwide cloud from 14.5% in Q4 2018 to 17.6% in Q4 2019 with $5.3 billion from the infrastructure (Azure) business.

ConclusioN

Embarking on a digital transformation journey may seem daunting, especially in the ever-changing marketplace and the competitive nature of a sales organization. Reimagine the business around the customers and improve customer engagement will result in driving sales. Digital leaders must identify the core mission and create the culture that team members can thrive. Customer engagement is simple words, but it represents an organization-wide commitment, from its mission, cultivate culture, to tireless trial and error in designing and perfecting the sales pipeline with various digital technologies. The touchpoints in the customer engagement process have discovered through developing a deeper relationship with every customer from years of experience. A successful digital transformation journey needs everyone's buy-in and effort because everyone plays a part in the transformation, which makes up the entire entity of the sales organization. In this way, a successful transformational change is a guarantee at the end. The sales reorganization at Microsoft successfully reinvented itself in the digital transformation journey, and it was also one of the most massive reorganizations in the technology industry.

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