Microsoft cloud leader Scott Guthrie says companies aren’t holding off on cloud spending as inflation mounts

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  • Microsoft’s Scott Guthrie said the European energy crisis is prompting some organizations to accelerate their adoption of cloud services.
  • An organization scaling its Microsoft Azure cloud usage has seen energy costs increase by more than 65%.

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Despite an uncertain economy coupled with fears of recession, MicrosoftU.S. top cloud executive Scott Guthrie hasn’t seen organizations slow down their efforts to move software programs to the cloud over the past few months.

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His comments suggest that demand remains strong for cloud computing services, which a handful of large technology companies provide to governments, schools and businesses.

Slow consumer spending is raising fears that a recession may be on the way. In July and August, retailers such as Dollar Tree and Walmart lowered their profit estimates to reflect consumers being more careful with their money due to higher prices for food, gas and other products.

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Businesses are slowing spending on certain types of software in anticipation.

cloud software manufacturer UiPath And Viva A strong US dollar and challenging economic conditions have called for lower revenues in the coming quarters. Budget discussions are taking longer, and top executives are getting into talks about deals, UiPath co-CEO Rob Enslin told analysts on a conference call last month.

But Guthrie said that doesn’t seem to be the case with Azure, Microsoft’s cloud infrastructure service.

“I don’t see the current situation as a reason for people to stop to the cloud,” said Guthrie, executive vice president of Microsoft’s cloud and artificial-intelligence group, in an interview with CNBC.

An energy crisis has erupted across Europe this year after Russia’s invasion of Ukraine, with Russia claiming sanctions caused pumping problems. petrol price and Electricity shot up. The authorities responsible for information technology have taken notice.

“Are we seeing people increasingly move to the cloud because of the energy crisis? I think the answer is definitely yes,” Guthrie said. “Similar to Covid, I think what we saw with Covid in the beginning, specifically.”

Guthrie said he hasn’t heard companies say they will slow down their use of cloud computing because of higher energy costs.

“If you think about the current situation in Europe right now, where energy prices are going up dramatically, if you can reduce your workload ahead of time, and you can move it quickly to our cloud , then you can reduce the power draw you need, and that translates into real economic savings,” he said.

It has been a topic of discussion among the executives of the Paris-based health care company. Sanoficwho uses cloud services heroine, Google and Microsoft. “We’ve seen energy costs increase 65% year over year in some regions,” said Sam Chenore, vice president and global head of infrastructure and cloud at Sanofi.

Chenaur said that a metric of efficiency called power-use effectiveness, or PUE — the energy required for a facility divided by the energy used for computing — is very high at Sanofi, while it is very low for Azure. Yes, Chenore said. According to a recent one, Microsoft’s global PUE number is 1.18 blog post,

“If anything, I think that from a data center migration perspective, cloud economics are a lot more compelling now than they probably were in years past, and they were already compelling,” Guthrie said.

Sanofi began a major transition to the cloud 18 months ago, becoming more reliant on cloud-based virtual desktops that contractors and employees could access from any computer after the onset of Covid, Chenore said. Now Sanofi intends to add Azure resources in five locations around the world, said Hamad Riaz, CEO of Mobiz, a technology services provider that works with Sanofi.

“I would say we’re looking to lower the overall cost in IT, so we can free up that money, so that we can develop more drugs and drugs for patients,” he said.

With more demand in a downturn, other companies may look to the cloud to offer more services. For example, zoom video communicationWhich competes with Microsoft’s Teams communications app, leaned to the cloud to deal with the millions of new users who wanted to make Zoom video calls in 2020.

“I think we’re going to see different companies in different geographies responding to the challenges, and not just the energy crisis, but if you look at the supply chain and the supply chain restructuring happening around the world. Think, or when you think about inflation and interest rates,” Guthrie said.

Still, not every company is rapidly moving to the cloud, Guthrie said, as many are facing financial difficulties. coinbase, crack And Shopify Those are among companies that have cut at least 1,000 employees this year. Coinbase CEO Brian Armstrong told employees in June that a recession was beginning, and that the downturn could start a new bear market in digital currencies.

Meanwhile, Microsoft’s head of finance, Amy Hood, was more cautious on the company’s earnings call in July. She told analysts that Azure growth would slow to 43% in constant currency from 46% in the second quarter. CEO Satya Nadella said that Microsoft is not untouched by the current economic forces.

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