Microsoft Cloud and AI chief Scott Guthrie on what's new and next for Microsoft Cloud customers

Microsoft Executive Vice President Scott Guthrie shares his takeaways on Microsoft's latest cloud, data platform, AI, Dynamics and Power Platform announcements this week at Ignite.
Written by Mary Jo Foley, Senior Contributing Editor
Scott Guthrie in an office space
Credit: Microsoft

Microsoft Executive Vice President Scott Guthrie runs some of the biggest businesses at the company. He's in charge of Microsoft's Cloud + AI Group, and oversees everything from Azure and Microsoft's Data Platform, to Dynamics 365, the Power Platform and GitHub. I had a chance to talk to him on Teams at the end of Day 2 of Microsoft's Ignite 2022 conference, which is focused on the IT pro and dev audiences.

Here's a transcript of our conversation, edited slightly for clarity.  

MJF: For anyone who's interested in the Microsoft Cloud, what do you consider to be the top three or four "hidden gems" at Ignite? I'm thinking topics which may not have gotten enough attention or things that people might be interested in if they knew more about them.

Guthrie: I think I'd say one macro trend that we've talked about before this Ignite obviously is the integration of the subcomponents of the Microsoft Cloud, and the fact that you can take advantage of these pieces that are not required but are preintegrated to get faster value.

I think a hidden gem would be a lot of the continued enhancements we're doing with Power Platform, Power Apps, Power Automate, and in particular some of the AI capabilities we're adding into it, including some of the GPT3 work around auto-completing Copilot functions for Power Apps. Because it connects with Teams, it connects with Azure, it connects with Office 365 and Dynamics, that would be a hidden gem from my perspective.

I think the PostgreSQL support that's coming to Cosmos DB is another one that developers are going to be really excited about, and really lets you leverage the global scale and extreme capabilities of Cosmos DB from a performance and scale perspective, with one of the most popular relational database APIs, which is PostgreSQL, on top.

I think the work we're doing with Viva Sales, which again takes advantage of that integration of the Microsoft Cloud and enables you to dramatically improve your sales experience in the context of Teams, and integrates with both Dynamics 365 as the CRM, but also Salesforce as a CRM. And that ability to dramatically improve the productivity of your sales organization, regardless of what the existing system of record you have, I think is a hidden gem for a lot of customers. It basically means every customer can benefit from it.

MJF: I wanted to ask you more about Dynamics and Azure together, because as you mentioned, there's a lot of synergy there with the Industry Cloud work that you're doing now. But I'm curious from an engineering standpoint what is going on with Dynamics and Azure, because I feel like the organizations are getting increasingly close. How do the AI capabilities in Dynamics get there? Do they come from Azure or do AI capabilities developed in the Dynamics org come over to Azure?

Guthrie: Both teams work for me, and I think to your question, the fact that they seem increasingly integrated and leveraged across each other is by design. Dynamics 365 is an Azure-native app. It really takes full advantage of Azure up and down the stack, including the AI capabilities. It uses our Azure Communication Service to integrate in Teams and to do video and telephony. It uses our Cosmos DB and SQL DB data services as a PaaS (platform as a service) service. It integrates with Synapse. It uses a common data model. And it integrates with Teams and the Office 365 offerings, obviously in a very deep way as well. It's I think one of the best examples of kind of deep integration up and down the stack that we've done.

And there's times when they are leveraging the core AI capabilities of Azure directly and building on top, and there are definitely times where Dynamics 365 has used the core Azure platform to build something that we then moved down into Azure, because we think it is now broadly applicable to even more customers and more use cases.

And so, I think you're going to continue to see us drive that integration and that synergy up and down the stack, and I think that's part of what makes the Microsoft Cloud special.

MJF: What's an example of something Dynamics developed that came back to Azure?

Guthrie: I think one of the areas that has really helped improve Azure has been the way Dynamics 365 does database management. It's all built on top of SQL DB and it's per tenant, so each customer has its own SQL DB database. And that has been instrumental to building out a more general-purpose SaaS (software as a service) platform inside the Azure SQL database.

Things like elastic pool support, things like bring your own key, things like just the ability to manage millions of databases as a SaaS provider, a lot of those features were built originally in Dynamics, and we've now moved down into the core underlying Azure SQL database platform that now allows any SaaS company out there to be able to leverage that same capability.

MJF: I have an all-up AI question. I'm wondering if Microsoft's strategy is to create more commercial Azure AI services, or is it to integrate AI capabilities into existing Microsoft products like Power Automate and Microsoft Designer, or is it both?

Guthrie: Both. I think there's going to be places where we will deliver applications and workloads in use cases that leverage AI to solve very specific problems. GitHub Copilot would be an example, or the new Digital Contact Center work that we're doing would be another example. Nuance with the health care solutions that they're delivering would be a third.

But we are also very much a platform company, and we recognize that one application does not solve every possible use case in the world. And so, to the extent that we can also offer those services as lower-level APIs that either a business can build on directly, or other software vendors can build on and sell to businesses, we think that's the best opportunity for everyone.

For each of those use cases I mentioned, GitHub Copilot, Digital Contact Center, as well as Nuance DAX, each of those, also the underlying APIs and AI platform capabilities are available to be used directly as well.

MJF: I noticed (CEO) Satya Nadella talked at length about the partnership with Microsoft and OpenAI during the opening Ignite keynote. Microsoft also has the Azure Service also called OpenAI, which Microsoft announced this week is getting DALL-E 2 as an additional capability. What's next for Azure OpenAI and how much of a role does OpenAI, the company, figure into what's going on with Azure OpenAI?

Guthrie: Well, we partner very closely. And so, the underlying models in Azure OpenAI are built together with OpenAI.

The thing that we add with Azure OpenAI on top of the raw models is even more enterprise controls, the ability of compliance and security and additional enterprise capabilities, like locking down virtual networks or bringing your own keys. Things that a lot of enterprises need in order to productize these models, we provide prebuilt enterprise integration as part of the Azure OpenAI service. But the underlying models, AI models are the same. And we deeply collaborate together in terms of building those models.

And all those models from OpenAI are trained on top of Azure. And so, not only is Azure OpenAI building on top of OpenAI, but then OpenAI is building on top of Azure. That partnership, as Satya and (OpenAI CEO) Sam Altman talked about in the keynote, is very deeply symbiotic and is a fantastic collaboration across the companies.

MJF: You talked about Cosmos DB a little bit, but I want to ask you about another database, SQL Server. I know a big release of SQL Server is coming soon, very soon. Why are people going to be interested in SQL Server 2022? What's the elevator pitch for this release?

Guthrie: I think part of what we're continuing to do is continue to enhance SQL in lots of different ways, both in terms of improved capabilities, whether it's analytics, whether it's operational, whether it's around more advanced security. We're hearing more and more in terms of confidential compute needs. And so, there's a bunch of announcements we made at Ignite around that.

And then also in terms of scale and hybrid capabilities and the ability to be able to leverage SQL not just in our cloud, but on any cloud, including edge, and really to think and manage that data service holistically across your environment is top of mind as well.

MJF: Another virtual Ignite session I watched this week was (Azure CTO and Technical Fellow) Mark Russinovich's what's next for Azure. And it made me wonder if there are any things changing in Azure at the infrastructure level that you think will bubble up to customers. I know you do a lot of work in your own data centers to optimize for power and performance and all, but will any of those features and enhancements bubble up into services for customers?

Guthrie: I think certainly how we provide the lowest cost infrastructures is obviously top of mind for customers, particularly right now. But then also, I think other things that we're innovating on that I think customers really care about will be around sustainability. I think increasingly organizations want to understand across their value chain and their supplier chain, what is your carbon footprint, how are you helping me lower my overall net carbon footprint.

And so, a lot of the innovations we're doing that Russinovich talked about in terms of leveraging green energy, water recycling, how do we think about kind of our net zero carbon targets and goals, not just beyond carbon, but really around water sustainability and the entire global supply chain are things where I think we're adding a lot of enhancements that we increasingly see customers asking about because they want to understand how it's helping them on their overall sustainability journey.

MJF: It seems to me like more and more Microsoft developer tools are being sold as services. So I'm wondering, is Microsoft planning to go all-in on subscriptions on the dev side, the same way it's done, like with Office and with gaming.

Guthrie: We do offer our Visual Studio subscriptions, our Visual Studio offering as a subscription service, and have actually now for several years. And so, we do have the subscription certainly.

I would differentiate maybe the commercial model, which is subscription. Does that mean everything will run in the cloud as a service? I think from a technology perspective, part of what we're trying to do is how do we leverage the cloud with things like Copilot, obviously things like GitHub, testing, build support.

I think we've done some amazing work inside our DevDiv team in terms of really delivering cloud-based services. And at the same time, how do we leverage the local machine that the developer is using? So whether it's with Visual Studio or whether it's with Visual Studio Code, we obviously continue to support local development, and I think where we see the real value and power is when you can leverage both, and they integrate together in a very seamless way.

MJF: Anything else you'd like to highlight from Ignite this week?

Guthrie: Just stepping back for a moment, there's no doubt we're living through a period of sort of historic economic, societal, geopolitical, and technological change. And whether it's inflation that's at a 40-year high, whether it's supply chains that are stretched, whether it's the energy crisis in Europe, the war in Ukraine, there's lots of challenges. We've just gone through a period of massive change with the COVID pandemic, and obviously that's still ongoing.

But I think we've seen, and no company is immune to these challenges, including us. I think we've said before, both Satya, me and Amy (Hood) from our CFO perspective, no company is immune to these global challenges. But I think technology is a unique accelerator that can help ensure that customers can do more with less.

A key part of what we talked about at Ignite this week was really around how do we help our customers maximize the value of their cloud investments, how do we enable them to really experience the full value of the Microsoft Cloud, and we're trying to make sure that we're laser-focused on helping our customers use our platforms and tools so that they can do more with less.

And as we kind of continue to manage through this period, we're going to continue to invest in future growth; at the same time, maintaining intense focus on operational excellence and execution discipline. And I think that's what all of our customers are looking for as well from us, and we're here to help them and support them.

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