Microsoft-Walmart Partnership Takes Shape

Sometimes a customer is so big, and the engagement so broad, that Microsoft refers to the customer and the deal as a partnership. One such case is the Walmart deal unveiled over the summer, and details of the arrangement are starting to come into focus.

The companies announced a five-year agreement in July that included Walmart engaging in digital transformation projects with Microsoft and committing to enterprisewide use of Microsoft Azure cloud services and Microsoft 365, the end user package that includes Office 365, Windows 10 and Enterprise Mobility + Security (EMS) functionality.

As one of the first steps in the agreement, the companies on Monday unveiled that they would be jointly staffing a "cloud factory," basically an expansion of Walmart's existing technology center in Austin, Texas, early next year. In all there will be 30 technologists in the office, which will include an undisclosed number of Microsoft engineers mixed in with the Walmart technology specialists. Walmart is headquartered 550 miles away in Bentonville, Ark., but maintains the technology center in Texas to tap into Austin's vibrant tech community.

"With this partnership with Microsoft, we started talking, 'Hey, what's the best way to accelerate all the stuff we're doing here? We need help and expertise. We want to move fast. How do we partner our smart people with Microsoft's smart people?'" said Clay Johnson, Walmart executive vice president and enterprise chief information officer, in a Q&A that posted on Microsoft's site on Monday.

"Then it was obvious: 'Why don't we just co-locate the teams together.' We haven't done something like this before with co-location, but I think the outcomes are going to be huge and strengthen our partnership even more. You're going to see a lot more co-innovation around IoT, computer vision, big data and real-time analytics," Johnson said. "We're going to learn a lot from each other. We're going to learn a lot from Microsoft -- which apps make sense to get to the cloud quickly and which don't."

The cloud factory's assignment includes a lot of the types of projects Microsoft has been routinely encouraging customers to undertake. In the lift-and-shift category, they'll be migrating thousands of internal Walmart business applications to Azure. The team will also be building new, cloud-native applications.

Beyond modernizing applications into the Azure cloud platform, the collaboration will include work on emerging technologies. For one thing, Walmart already has Internet of Things (IoT) sensors in a lot of locations.

"With our IoT work and sensor enablement, we're looking at our energy consumption and other factors to predict equipment failures before they happen. Improving equipment performance can result in enhanced energy efficiency, which lowers costs and our carbon footprint," Johnson said. "Putting IoT data into edge analytics lets us look at data at a store level and backhaul it to Azure to look at it across a region or the whole U.S. We started talking to Microsoft about this concept of a set of stores being a 'micro-cloud,' and you roll them into Azure for data analytics and insights."

Artificial intelligence (AI), chatbots and natural language processing -- three more hot areas of digital transformation -- will also get tested at a massive scale in the Walmart environment, spearheaded by the Austin-based joint team.

Projects will include internal chatbots designed to help Walmart's 2.2 million employees navigate benefits, chatbots for managing supplier interactions, and natural language processing of terabytes of unstructured text to improve business operations.

"Microsoft's going to get to see stuff at a scale they've never seen before," Johnson said of the Walmart environment. The retailer had $500 billion in revenues in fiscal 2018 and operates 11,200 stores worldwide. "I think they'll learn a lot from our footprint. Co-locating top engineers from both companies will deepen the technical brainpower for creating disruptive, large-scale enterprise solutions for Walmart."

Posted by Scott Bekker on November 05, 2018