Microsoft pushes deeper into Dynamics 365 industry clouds

Microsoft Dynamics 365 users in several vertical industries will soon get their own clouds to fast-track customer experience improvements.

On Tuesday, Microsoft said new clouds for retail and financial services are in preview; clouds for manufacturing and nonprofits will be available in the near future. Microsoft released a healthcare cloud last fall.

The industry clouds were built with experts from each vertical working alongside engineers to address workflows and technology challenges specific to each. They include common data models, cross-cloud connectors, workflows, APIs, and industry-specific components and standards. They connect to cloud services such as Microsoft 365 and Teams, Azure, the Power Platform app builder, Dynamics 365 and security tools.

Development of new industry clouds was underway before COVID-19 forced remote work and accelerated digital transformations for many companies, said Satish Thomas, Microsoft vice president of engineering, during a virtual launch event for the industry clouds. But the pandemic spurred fresh urgency in their development.

Microsoft's industry clouds arrive in the wake of Salesforce and Oracle, who offered their own industry clouds for CX. Salesforce acquired Vlocity last year and quickly rolled out four new vertical clouds for telecommunications, media, government and utilities. Oracle rolled out a telco cloud, and while nothing further has been officially announced, the next industries could look a lot like Salesforce's list.

The pandemic drove these industry vertical clouds to market because Salesforce, Oracle and Microsoft users had to shift priorities quickly and didn't have time to whittle down choices of applications, services and functionality to figure out what they really needed, said Nicole France, analyst for Constellation Research.

It makes sense that software vendors are going to look across these vast suites of applications they have and find faster, more tailored ways of helping their customers get what they want, quickly.

"[Each industry] has significant operational differences and priorities," France said. "It makes sense that software vendors are going to look across these vast suites of applications they have and find faster, more tailored ways of helping their customers get what they want, quickly."

For CX, common data model is key

The recent industry cloud phenomenon isn't just confined to CX. It's part of a broader initiative in other technology areas to connect, for example, ERP and logistics to analytics as users migrate more and more of their IT infrastructure to large public clouds offered by AWS, Microsoft and Google.

The success of Microsoft and its competitors' CX industry clouds will hinge on the vendors' ability to show the benefits of a common data model across an enterprise. While that's an abstract concept, the data model is the foundation for customer experiences built on cloud services and applications, France said.

"The data model is the path to unlocking ease of use, flexibility and extensibility of these systems -- especially when you're using them across departments and across teams," France said. "All of these pieces need to work together in order to deliver what customers expect."

Personalization is the key to customer engagement at a time when they are inundated with messages from retailers, said Lydia Williams, senior creative product manager of Microsoft Business Applications, in a demo of Retail Cloud. She showed how browsing data, social media data, customer service data and transactional data shape product recommendations for a customer of Microsoft Retail Cloud customer Patagonia.

"It's more crucial than ever that we deeply understand [customers] at every stage of their experience to keep them excited to buy from us," Williams said.