Microsoft: We'll be running 85 to 90 percent of our apps in the cloud this decade

Just over a month ago, Microsoft CEO Steve Ballmer sent a memo to a few key execs inside the company, asking them when Microsoft was going to be “all in” with the cloud and moving its own, internally-developed apps there.

What did one of those e-mail recipients, CIO Tony Scott, tell SteveB? He made it clear it was a top priority, and that as many as 85 percent to 90 percent of the company’s internal apps would be cloud based five to ten years from now.

It’s not surprising Microsoft is using its own cloud products, including Windows Azure and the Business Productivity Online Suite (BPOS) of products inside the company. But what is surprising is how quickly Microsoft is converting to the cloud.

Microsoft started its internal cloud conversion by creating a framework that took into account three questions, Scott told me this week at TechEd. The three:

1. What are the capabilities in our offerings? What’s our roadmap?
2. Which of our applications can be moved most easily? Which are already state-separated? Which can be virtualized? Which are not worth moving to the cloud?
3. What’s the business impact of moving each application to the cloud? (low/medium/high)

Microsoft moved its first internal application — its Giving Campaign auction tool — to Windows Azure a year ago. It has moved a couple of other internal apps as well. But the first big challenge will be to move the company’s licensing app to the cloud, Scott said.

Microsoft’s licensing application keeps track of all of its customers’ licensing agreements, so it is mission-critical. It also is a legacy application — it was developed back when Microsoft only had one product to keep track of (DOS 1.0), and has grown somewhat haphazardly since. Currently, it’s a collection of about 60 different applications, most of which “are not suitable for us to move to Azure,” Scott said. The licensing application is six months into a redesign, Scott said, and has another year and a half to go to completion. When it’s done, it will be a cloud-hosted application.

Moving internally developed applications to Azure is only part of Scott’s charter, however. He’s also moving more and more of Microsoft’s 90,000 employees to Microsoft’s own hosted application suite, known as the Business Productivity Online Suite (BPOS).

“Today at Microsoft, every employee runs in a BPOS-D (Dedicated, i.e., private) environment,” said Scott. The only difference between the BPOS-D Microsoft employees use and the BPOS-D Microsoft sells to its customers is Microsoft’s internal version includes dogfood versions of still-yet-to-be-released services, he said.

“All new application development inside Microsoft will be designed for the cloud,” Scott said. “Architecturally, it’s easier to start with the cloud in mind” than having to retrofit an on-premises app to run on the cloud, he said.

There is a set of internal applications that won’t be moved to the cloud, as there’s no business case for it, Scott acknowledged. “There will always be some applications that are end-of-life,” he said. But that’s only 5 percent to 10 percent of the total, he said.

Scott’s team is the biggest customer for both BPOS and Azure. He and his colleagues give lots of constant feedback to the teams. I asked what his biggest pain points were.

“They (Azure and BPOS) ave both been focusing on how to make these things run,” Scott said. “But CIOs still want to have operational metrics. Is the system up? Is it satisfying customer demand? We give them a lot of input on that.”

Scott said he’s also been focused on creating development methodologies, operational practices and protocols and a lot of project management documentation around Microsoft’s move to the cloud.

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