This article was originally published in the Summer 2018 issue of The Record.
Microsoft is back. Although the technology giant didn’t really go anywhere from a business productivity perspective, the advantage Microsoft enjoyed in the e-commerce platform space in the early 2000s dissipated over the following decade. It was Microsoft’s vision of e-commerce, however, that got us to where we are today – with 79% percent of Americans now shopping online, according to Pew Research.
In the late 1990s and early 2000s, companies were either building their own custom e-commerce websites or selecting from a few enterprise vendors, but Microsoft was already on its third version of is Commerce Server solution by 1998. Hence, it’s no wonder that analyst firms like Forrester noted the company as a strong performer. By 2012, however, Forrester dropped Microsoft from its commerce evaluations because the company had divested the Commerce Server platform to Ascentium in 2011.
Today, Microsoft is poised to once again become a dominant technology, services and software provider for the buoyant e-commerce industry because of three key factors.
1. The cloud
Microsoft is a major force in the cloud industry between Google and Amazon because it’s invested heavily in enabling companies to power large-scale business systems on Microsoft Azure. The company is now a credible power player in the e-commerce platform space with clear competitive differentiators because it makes up for what both of its cloud competitors lack: solutions that meet the needs of real businesses. Microsoft Azure can be integrated easily into retailers to scale their business systems and provide a foundation for them to compete by effectively selling online.
The phrase “the enemy of my enemy is my friend” is also playing out to the tune of millions of dollars for Microsoft Azure. Retailers like Target and Walmart standardise their operations on Microsoft Azure to avoid using Amazon Web Services (AWS) and filling the pockets of their biggest competitor: Amazon. Walmart has even forced its suppliers to move their IT systems off AWS too.
Meanwhile, Microsoft’s independent software vendors (ISVs) like Episerver can use Microsoft Azure to provide additional cloud-based e-commerce solutions for retailers. Episerver’s Digital Experience Cloud is offered in a platform-as-a-service model so retailers can take full advantage of Microsoft Azure. They benefit from flexible code deployments, integration to blob storage, automatic failover, zero-downtime deployments and autoscaling using a single Microsoft Azure web app.
Competitors like SAP, IBM, Salesforce and Oracle simply do not deliver the same portfolio of cloud tools, while Google and AWS are non-existent in the e-commerce software market because they only provide the infrastructure. Therefore, Microsoft can own both the infrastructure and software sides of the commerce solution message.
2. Artificial intelligence (AI)
In the early days of e-commerce, increasing consumer demand for personalised experiences, combined with poor data quality and difficult-to-use e-commerce platforms stretched merchandising teams thin. Now AI, and more specifically machine learning, has been applied to thousands of e-commerce websites so retailers can personalise the content and product recommendations for each consumer based on their behaviour and assumed preferences. This has had great business impact – British shirt retailer Hawes & Curtis, for example, has increased revenue per session by 32% by using the Episerver Personalization solution.
Microsoft has been working on the foundational tools for businesses and independent software vendors to deliver AI-powered personalisation capabilities in their e-commerce solutions. Microsoft Azure’s Cognitive Services group provides a set of machine learning tools that processes large data sets and tunes personalisation models. Episerver uses these tools in its own personalisation capabilities and is beginning to use AI to run predictive models on customer behaviour on its thousands of e-commerce websites.
3. Complementary business applications
Customers who standardise their operations on Microsoft business suites will see lower total cost of ownership and benefits like a unified data model across channels. This will give them deeper analytical insights, the ability to use data from one channel in another and standardised integrations, which will save costs and headaches.
Together, Microsoft’s cloud foundation, AI tools and strong business applications give everyone the opportunity to build scalable experiences that attract and retain customers.
Ed Kennedy is senior director of commerce at Episerver