The digital journey of Microsoft reflects the entire personal computing revolution, spanning from the DOS and early Windows desktops era, through the adoption of the Azure cloud, to the present-day engineering era, which is highlighted by the advancement of artificial intelligence. The company has grown into a global organization with upwards of 220,000 employees. All of them rely on the capabilities of Microsoft Digital—the company’s IT organization—to provide the tools, technologies, and solutions that help them accomplish more every day.
The Need for Digital Transformation
The history of information technology is marked by constant change, and the pace of that change is accelerating. The AI capabilities and other groundbreaking innovations unveiled in recent years demonstrate the potential to fundamentally transform our world and change how we think about and operate all IT services. The shift to remote work and collaboration during the COVID-19 pandemic underscored that digital transformation is not always linear or predictable. Microsoft has adapted its IT organization to meet the latest challenges faced by employees and partners, marked by strategic shifts that reflect our ever-changing world.
Mapping the IT Journey
Microsoft Digital is currently responsible for powering, protecting, and transforming the digital employee experience across all devices, applications, and hybrid infrastructure within the company. Using its deep knowledge and experience in enterprise IT, Microsoft Digital is leading the company’s AI transformation while also giving its customers the ability to reshape their businesses and IT operations. To understand where the organization is headed, it’s helpful to look at its past.
This article examines the key eras of Microsoft’s IT history, and how they shaped the company’s IT strategy today. The four eras include: On-Premises IT, Cloud and Culture, Modern Engineering, and AI.
On-Premises IT (Founding to 2009)
For the first three decades after its founding in 1975, Microsoft operated with on-premises IT systems, where setup, operation, and maintenance of onsite physical technology (servers, datacenters, and other hardware) were the main focus. IT roles were narrowly defined, and IT team members primarily functioned as “order-takers.” Funding inconsistencies limited growth, and reliance on vendors was common. Where there were gaps in support, so-called “shadow IT” efforts occurred.
Security has been a priority from the beginning. Co-founder Bill Gates launched the Trustworthy Computing initiative over twenty years ago, emphasizing security, privacy, and reliability across Microsoft products and services. The On-Premises IT era established the foundation upon which the company’s future digital transformations would be built.
All In on the Cloud: The Cloud and Culture Era (2010-2018)
Former Microsoft CEO Steve Ballmer spearheaded the move to the cloud. This transition, which began in 2010, marked a significant break from the physical IT infrastructure of the past. The launch of Windows Azure, the company’s cloud computing solution, signaled a shift away from a Windows desktop client-focused approach to a platform-agnostic view.
Cloud infrastructure offered several advantages for customers and for Microsoft. It had an impact on Microsoft’s Customer Zero concept, and the company started by moving productivity workloads (Exchange and SharePoint) to the cloud. They then migrated new development projects to Azure and optimized applications to run in the cloud. Today, 98.5% of IT systems supporting employees run on Azure.
Another key shift during this time was the profound reshaping of company culture led by CEO Satya Nadella, who took the top job in 2014. Prior to Nadella, Microsoft had a highly competitive “know-it-all” culture where individuals were measured by their accomplishments. Nadella championed a growth mindset, encouraging employees to be “learn-it-alls”. This shift placed new importance on how employees contributed to the success of others, a value that was incorporated into individual performance reviews. Nadella made this transformation his personal mission.
“Achieving our mission requires us to evolve our culture,” Nadella said. “It all starts with a growth mindset—a passion to learn and bring our best every day to make a bigger difference in the world.”
Some of the key principles that made up this new culture had a direct impact on our ongoing digital transformation journey. These included:
- Being willing to try new things and being unafraid to fail fast
- Obsessing over what matters to customers
- Seeking collaboration across teams rather than working in silos
- Making a difference in the world
A New Vision: The Modern Engineering Era (2018-2023)
During this engineering era, Microsoft’s IT transitioned from a department that followed orders to one that took the lead on IT. Every group within Microsoft Digital then created its own clear, targeted vision grounded in the needs of its customers and the overall goals of the organization.
Role Transformation
The transition to cloud computing led to a new paradigm for roles in the engineering organization. Modern IT professionals collaborated more closely with business groups and needed strong strategic business skills. DevOps and user-centric design principles became more important. Microsoft helped employees gain these skills, emphasizing continuous learning and a growth mindset. At the same time, they hired talent with these skills to work alongside existing team members.
User-Centric, Coherent Design
The design philosophy at Microsoft focuses on the user—an employee or guest—when making decisions at Microsoft Digital. This philosophy helps to align all services with the needs of the people. The goal is to simplify tasks that previously might have caused friction. User-centric design introduces a consistent and logical flow between services, and coherent design across all the company’s products promotes employee usage and adoption.
Embracing Work-from-Anywhere Capability
During the pandemic, the organization began planning for the new hybrid workplace. The company identified three key dimensions of the employee experience:
- Physical spaces: In partnership with Global Workplace Services.
- Digital capabilities: To support users in a remote environment.
- Culture: In partnership with HR.
Customer Zero at Microsoft
Customer Zero means the team is continuously working to improve employee’s experiences at work. At Microsoft Digital, taking the Customer Zero approach means being the first customer for a wide variety of Microsoft products and services. The team focuses on its employee experience to create products that enable every person on the planet to be more productive.
Being Customer Zero means creating deep partnerships between IT and product engineering teams. In this way, the team can envision the best experiences and co-develop innovative solutions. Then, they take insights gathered from employees and put them into action. This collaborative approach helps keep the team grounded in how employees use Microsoft’s products.
Managing Shadow IT with a Culture of Trust
Shadow IT is the unknown set of applications, services, and infrastructure developed and managed outside of standard IT policies. Microsoft is focusing on managing this phenomenon. The company uses Azure best practices to optimize shadow IT and Microsoft 365 governance policies to ensure its standards for corporate security, privacy, and accessibility are met.
The AI Era (2023 to Present)
AI is now integrated into all operations. AI drives efficiency and innovation. The AI-focused investments are a solid foundation for future innovation.
“The potential for transformation through AI is nearly limitless,” said Nathalie D’Hers, corporate vice president of Microsoft Digital.
Microsoft Digital focuses on three high-level priorities: security, service fundamentals, and corporate functions growth. These areas will be improved with AI tools and technologies.
Securing Our Future
Security is the highest priority at Microsoft Digital. The Secure Future Initiative brings together every part of Microsoft to ensure cybersecurity protection across the company.
“Prioritizing security above all else is critical to our company’s future,” said Nadella.
The Secure Future Initiative is built on three core principles:
- Secure by design
- Secure by default
- Secure operations
Foundations: Service Fundamentals
The second priority is to maintain high standards for service fundamentals. These are the essential capabilities and practices for delivering reliable, secure, and compliant services.
These fundamentals break down into six areas:
- Privacy
- Tenant management
- Service resilience
- Accessibility
- Engineering fundamentals
- Compliance
Deframenting the Employee Experience
One of the ways the company is improving the employee experience is with Microsoft 365 Copilot, which functions as a “UI for AI” across employee services and tools.
“We see AI as the key to unlocking the full potential of our employees, delivering personalized experiences that empower us to work smarter, faster and happier—unleashing the innovation and collaboration necessary for our success,”
Corporate Functions Growth
The third priority is to improve support for corporate functions organizations, including HR, legal, and building services. AI will play an important role in transforming business workflows while improving operational efficiency.
“With AI, we have so many new ways to innovate,” said Patrice Pelland, a partner engineering manager for Microsoft Digital. “From saving valuable time for our legal professionals, to optimizing building occupancy, to helping our HR professionals support employees in the hybrid workplace, we have incredible potential to make our corporate functions more efficient and impactful.”
AI will innovate in the following areas:
- Human Resources
- Legal
- Global Workplace Services
- Travel and Expense
Microsoft’s digital transformation is a long-term story of change. The company is committed to streamlining IT operations while prioritizing security and corporate functions growth and development.
“We’ve been through many eras of IT at Microsoft, and I’m so excited to lead Microsoft Digital during this era of AI,” D’Hers said. “The future of IT has never been so exciting!”
The company’s journey offers lessons for other organizations, including:
- Be vision-led
- Foster a growth mindset
- Invest in people
- Insist on security
- Focus on collaboration and partnership
- Seek continuous improvement
- Embrace AI
