Microsoft CEO Satya Nadella says that IT modernization and ‘digital transformation’ is ‘becoming the most key to business resilience,’ rather than an optional project (MSFT)

  • Microsoft CEO Satya Nadella says customers are starting to view so-called digital transformation as key to their ability to survive disruptions like the pandemic, rather than as optional projects.
  • “No one can take away from the fact that GDP is going to be negative,” he said.
  • Microsoft released fourth-quarter and 2020 fiscal year earnings on Wednesday, beating analyst estimates in many ways, but falling short in key areas.
  • Are you a current or former Microsoft employee? Contact this reporter via encrypted messaging app Signal (+1-425-344-8242) or email (astewart@businessinsider.com).
  • Visit Business Insider’s homepage for more stories.

One of the lessons Microsoft CEO Satya Nadella learned from the pandemic is companies are no longer viewing the modernization of their IT as optional projects, but key to their ability to survive disruptions to their businesses.

“The thing that we have learned I would say in the last five months is that digital technology is…becoming perhaps the most key to business resilience,” Nadella said on a call with investors following the company’s fourth-quarter and fiscal year 2020 earnings release.

Microsoft’s sales pitch in recent years has used phrases like “digital transformation” and “tech intensity,” telling customers (and potential customers) that no matter the industry they’re in, they should adopt new technologies to help take their businesses to the next level.

Nadella’s comments suggest Microsoft’s pitch and the way customers view making so-called digital transformations has evolved from a means to elevate a business to a means to keep it afloat, especially during the economic crisis created by the pandemic. 

When Nadella thinks of digital transformation now, he said, he thinks about how Microsoft can help make companies more resilient to external factors — like a pandemic — by making business processes remote or automated in what he said is going to be an “ecommerce, contactless, reimagined world.”

That kind of rethinking is going to prove necessary across industries and sectors, he indicated, because while individual companies like Microsoft itself are doing reasonably well under current circumstances, looking at the bigger picture shows that in aggregate, the entire economy is reeling from the pandemic, touching the lives of everybody.

“No one can take away from the fact that GDP is going to be negative,” he said.

Microsoft released fourth-quarter and 2020 fiscal year earnings on Wednesday, beating analyst estimates in many ways by reporting $11.2 billion in profit on revenue of $38 billion for the quarter and $44.3 billion in profile on revenue of $143 billion for the year.

Microsoft’s cloud business once again appeared strong, reaching $50 billion in annual revenue for the first time, but Azure revenue growth slowed to 47% from 59% last quarter and Microsoft missed expectations for the key business unit that includes Office 365 and its Teams chat app. 

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