On this episode, we are talk about the Azure Marketplace in the retail space: how the Azure Marketplace can help retailers, and how it may be important for your business, both as a customer or as a solution publisher with our guest, Orlando Fernandes of XNFY Labs.
On this episode, we are talk about the Azure Marketplace in the retail space: how the Azure Marketplace can help retailers, and how the it may be important for your business, both as a customer or as a solution publisher with our guest, Orlando Fernandes of XNFY Labs.
Episode Links:
Episode Transcript
XNFY
Microsoft Cloud For Retail
Azure For Retail
Guests:
Orlando Fernandes works in Innovation & AI for the retail segment. He has the goal to create solutions that could change paradigms and create unique value.
Follow him on Twitter or LinkedIn. Or visit his blog: https://medium.com/@orlando.ribas.
Sahir Anand is the Principal Category Lead for the Microsoft Azure Cloud for Retail and Data & AI.
Follow him on Twitter or LinkedIn.
Hosts:
Paul Maher is General Manager of the Industry Experiences Team at Microsoft. He was formerly CTO at Milliman.
Follow him on LinkedIn and Twitter.
David Starr is a Principal Azure Solutions Architect in the Marketplace Onboarding, Enablement, and Growth team at Microsoft.
Follow him on LinkedIn and Twitter.
DAVID: Welcome to the Azure for Executives Podcast, the show for technology leaders. This podcast covers trends and technologies in industries and how Microsoft Azure is enabling them. Here, you'll hear from thought leaders in various industries and technologies on topics important to you. You'll also learn how to partner with Microsoft to enable your organization and your customers with Microsoft Azure.
Hello, listeners; today on the show, we're talking about the marketplace in the retail space. We'll get into what the Azure Marketplace can help retailers do and how the marketplace may be important for your business, both as a customer or as a solution publisher.
Orlando Fernandes, who's joining us today, works in innovation and AI for the retail segment and has the goal to create solutions that can change paradigms and create unique value. Welcome to the show, Orlando.
ORLANDO: Hi, David, thank you for having me.
DAVID: Absolutely. And I also want to welcome back to the show Sahir Anand. Sahir is the Principal Category Lead for the Microsoft Azure for Retail and Data and AI. Thank you for joining us again, Sahir.
SAHIR: Thanks, David. And hi, Orlando. Good to be back.
ORLANDO: Hi, Sahir.
DAVID: So, Orlando, you have a really deep background in artificial intelligence and retail as an industry vertical. So you've also recently created XnFinity Labs or XNFY Labs, which helps startups succeed and is also a research center. Can you tell us a little bit about XnFinity Labs and the work that it does?
ORLANDO: Sure, David. So I think the lab is the natural result of my background and past experience in innovation and AI, and the result also of the gaps and the needs that I saw in retail. Because 10 years ago, I started my own startup to be focused on innovation and AI. And we started with a product called PaperVault that was a smart digital receipt platform where besides passing from paper receipt to digital one, we added a lot of metadata. And with that, we could have very interesting insights about the customer and how the retail can engage more with the customer.
And during that period, we got a very interesting memento and awards. At the same time, we started meeting with a lot of retailers worldwide, so in Europe, America, Latin America, Asia, and of course, with other startups in different events. On that point, we started our partnership with Microsoft and started using Azure.
The product never scaled as we expected. And we detected that the business cycle time in this industry is too long for a small startup to survive. But at the same time, the retailers need a lot of innovation. They love innovation, but usually, they don't have the team, the time, or the resources to explore all these innovation opportunities. Seeing that, I challenged Microsoft to launch together this initiative, the XNFY Lab, with the goal to minimize the cost and risk of innovation for the retailers.
So our goal is helping retailers to drive and test innovation through a unique ecosystem that combines our best-in-class startups, retailers, and our internal R&D team. And every time that it is possible, we bring other stakeholders like universities and research centers. And of course, we're always looking for the support of Microsoft for the global reach that we can have with Microsoft.
The good of that is the lab was very recently launched, but after a very short period of time, we are already featured by CB Insights as one of the 34 Corporate Innovation Labs in Retail together with labs like Walmart, Kroger, Nike, et cetera, and that recognition was very important for us.
DAVID: Well, that's wonderful. It sounds like you're having some great success there. And I assume that you're really looking for innovative startups, those that are bringing something new to the table. So, how do you select the right startups for your organization?
ORLANDO: We always try to scout the startups that can bring real value for our ecosystem. So we scout worldwide. What are the startups that are aligned with the needs of retailers and that we can quickly show results? For instance, we always try as possible to show and bring them visibility for our ecosystem and put together in events that we are invited to.
For instance, we were invited last year to be part of the Retail Innovation Conference, where we present six of our best-in-class startups. I can give some examples; one was a last-mile delivery platform. It was in the middle of COVID, so that was a very hot topic. The other was Machine Learning as a Service. We had another one that was a deep location company. At the time, COVID was very hot, and the show gives unique visibility for those startups.
And what we're trying to do is validate what are the best startups that can bring value and what can we do very quickly for retailers that have specific needs? And together, put different startups, our team, and the needs of retailers what we can do very fast for them.
I can give you very quickly an example. We prepared a proof of concept for a U.S. retailer. And together with two startups, in two weeks, we prepared a proof of concept where we could prepare a retail catchment analysis insights report for its flagship stores. So we could give two startups unique insights about the retail stores' customers that they didn't know. And that was very fast; it was in two weeks and without any store data.
PAUL: That's awesome, Orlando. It's super exciting. So piecing it all together, the XNFY Labs, you're bringing new innovation to retail. And I love the theme around AI in the retail segment. And thank you for introducing some of the work that you've been doing.
What we like to do for all listeners is kind of make it real. And so perhaps you could think about maybe one or two of your favorite startups that you've worked with and perhaps share what was the business problem, and what was the innovation, the solution that you built together with them and brought to market?
ORLANDO: I can bring here one example that was where we could prepare...that was an opportunity because here in Europe, we have access to, for instance, European grants, and that comes with the opportunity to create a consortium. So we put together two retailers and two startups to prepare these consortiums for this application.
And the goal was to prepare an AI on-demand platform, so that was the need of those retailers. Together with the specific abilities of those startups, we could put together in the consortium for this application for a grant. But that was not limited for the grant; that was the opportunity of the grant because, in this case, the grant could completely minimize the risk of disruptive innovation and the cost, of course.
PAUL: That's great. Thanks so much. And, Sahir, of course, let's bring you into the conversation. I'd love to get your thoughts on...let's look at AI in particular. How are you seeing AI being used in the retail industry? And we are, of course, living in very different times over the last 12, 18 months. So, could you share some thoughts and perhaps how AI is coming to the forefront and has helped drive new innovation and needed innovation in retail in our current times of need?
SAHIR: Absolutely. So AI in retail whilst about four or five years ago, was beginning to find its foothold…so the fact that AI has been around in retailers for a very long time is a known fact. It was just known within different technology categories. For instance, if you think about e-commerce search, e-commerce search can be termed in many ways. Advanced search and Elasticsearch can be termed as being part of the whole AI machine learning family. And also, if you think about forecasting tools, especially historical forecasting and inventory forecasting, that can also be termed as a form of machine learning for sure. It was always a part of a very different genre of retail technology, given how retail technology has evolved from being a very legacy and siloed technologies to more integrated technologies that we know today, including how we know how Cloud for Retail has evolved. And Microsoft is at the forefront of this innovation around Cloud for Retail, which is all around integrating the different data silos and bringing in innovation around data and AI. And that's at the forefront for Cloud for Retail at Microsoft.
So the three areas where I've seen AI evolve in retail the most in the last 12 to 24 months the first area is definitely natural language processing, using natural language processing for call center omnichannel analytics related to contact center, call center related efficiencies. So using natural language processing for making it more efficient for customers to interact with your brand, whether it's for just day-to-day customer service or getting automated answers to their complex customer service inquiries or not-so-complex inquiries, whatever the case might be. And it helps retailers save time and also labor costs to sales. So that's one area where I think retailers have employed good automated tools to improve their time to response for customer service.
The second area I've seen, and we at Microsoft have seen a lot of innovation happen, is the area around common data models and using machine learning algorithms to predict different activities in retail. So, for instance, shelf level inventory availability is one area where you can use automated shelf level predictive patterns to identify when inventory will be out of stock or when it can be replenished. So that's a good example. And we've done this innovation at some of the largest retailers in retail through Microsoft and its partners and adopting automated shelves and related technology using machine learning algorithms.
And the third area I feel is in the supply chain space. So within supply chain, it's not just within demand forecasting that you can use machine learning to identify demand patterns based on how you should purchase products and put together inventory for your customers, both in terms of seasonal merchandising as well as non-seasonal merchandising.
But another very important area where machine learning is pretty handy is traceability, supply chain traceability. So to be able to trace back the ingredients where it's being sourced from, and all the way to all the checks and balances that you need to put in place for products to be safe for consumption in different geographies, is a pretty interesting technology that now is being adopted by many retailers and manufacturers. And Microsoft is again at the forefront of helping in that area, and it also promotes sustainability. If you think about traceability and sustainability, they're very closely interrelated.
So that is how I feel. These are three ways where I think machine learning, natural language processing, and AI as a whole has become part and parcel of what retail is all about today.
PAUL: Thank you, Sahir. That was a really good summary. And so we've had the conversation so far around obviously introducing the lab. Again, great to have you on the show, Orlando, and hear about the innovation you're driving with partners.
Sahir, you've set the stage around what we're seeing in retail and opportunity. I'd like to now carry the conversation along, which is we worked with these partners. They've created their solutions, but of course, these solutions need to get to market and obviously, be sold and make money. And so one of the things we were talking earlier on about is in this new age of digital distribution and this new world of remote working, we have the Microsoft Commercial Marketplaces kind of new to the party, if you will, helping digital distribution of software and solutions.
And so I thought it would be good to hear from Orlando your perspective on how the Microsoft Commercial Marketplace is helping take the great work that you've done driving innovation with retail, with startups, helping you actually really drive new business and acquisition of those solutions through the marketplace. Orlando, can you share your thoughts?
ORLANDO: Sure, Paul. I think that the Microsoft Commercial Marketplace brought the business layer that was missing. I can give you the example of our last experience that through our research team, we launched…and that was one more topic that I can add to this AI topic, was using AI to generate fashion clothes. And through that process, Azure helped our research team a lot in order to pass from fundamental research to applied research and optimize the time to deploy models on the Azure, and through that, accelerate the time to market. That is the first layer that Azure helps a lot of startups research teams in order to bring products to the market. Indeed Azure was always fantastic in order to help with that process. And of course, besides that, avoid the upfront investment required in the past. The marketplace brings that business layer that was missing. And with that, we can very easily gain visibility worldwide.
My vision of that and on my past experience as a small startup here in Europe, to make business in Latina America was not very easy, also in Asia. Other regions, it's not easy. And the marketplace can put together these opportunities in a simple way, in a seamless way, and showing that potential and showing that upfront you can show your solutions worldwide without any strings attached. At the same time, we will not have any problems for the interactions and for the commercial transaction. That will be a plus for all the startups and innovations that we are working on.
PAUL: Thank you, Orlando. And, Sahir, you're working with obviously lots of partners in the retail space; anything from your side to add on the value that the Microsoft Commercial Marketplaces is bringing? And perhaps you can share some of the scenarios we're seeing of how it's helping partners and also customers in the retail space.
SAHIR: Absolutely. So retail as an industry, especially when it comes to software providers helping retailers, has evolved in many, many different facets over the last five or so years, especially when it comes to the level of integration of different solutions. So if you look at the disparate nature of retail solutions, the legacy nature of retail solutions, it's not an easy industry to sell software into from a partner perspective because the sales cycle is very long.
The replenishment or the replacement of software happens every...I would say if you take the example of ERP solutions, for instance, it happens every 10 to 12 years. So there's a long gestation period. And ERP is one of the mainstays in retail over a period of time besides merchandising systems and inventory management. Of course, in-store systems, POS systems get replaced…again, a long gestation period.
Since the prominence of EPOS and MPOS, it's become a little bit faster, but still, you're looking at automated and intelligent stores. Even in the essence of looking at where automated stores are going, the replenishment cycles and the replacement cycles for software is not that fast. You're looking and talking at least any given technology in automated stores is 5 to 10 years.
So when you look at this type of scenario, what do partners do? Partners cannot wait for 5 to 10 years. They have to find opportunities, and where sales cycles are as long as 12 to 24 months, you cannot rely on traditional channels alone. You have to seek opportunities for non-traditional channels such as our commercial marketplace and e-commerce marketplaces that have emerged as very strong channels for creating a unique path to customers.
And the good news in all of this is that if you think about the sheer nature of software categories in retail where you've got over 10,000 providers, how do you differentiate yourself? Commercial marketplace lets you differentiate yourself, and that's first and foremost. Because you have a unique channel and you can not only increase the time to procurement, but you can also increase your reach by getting across to tens of thousands of customers who shop on the commercial marketplace. So that's very, very important.
The second point I'll make is if you think about the nature of buying that is going on in software, in retail, it's very complicated. Almost post-COVID, you're dealing with a scenario that in retail and CPG, there's an army of buyers. In the sense that previously, you will deal with, let's say, the CIO or somebody within marketing or somebody within merchandising or supply chain. Now when you present to a retailer, especially when you present a vision around Cloud for Retail, Microsoft Cloud for Retail, or our Common Data Model, or dynamics for commerce, or any of these integrated solutions, you're talking to a bunch of buyers. And they are like a committee in itself in terms of collaborative purchasing. And so, when you think about that, it can take some time to get across to that entire decision-making process.
In terms of the commercial marketplace, that decision-making is fairly agile, and it's driven by our Microsoft Azure Consumption Commitment because we are allowing our retailers globally to purchase solutions via the marketplace and be able to draw down their Azure commitment as a result. And it's a very powerful program being used by some of the top customers in retail and being leveraged in turn by our software partners.
So, in a nutshell, what it is doing is it is making procurement easier. It is making your time to market easier, and it is enabling a vision that retail CEOs, and CIOs, and CTOs have, which is built around digital transformation, and I think that's very powerful. It takes retail to the next level. Because one of the ways that you can take retail to the next level and prepare your stores for the next generation of customers is by being agile, by having the right technology at the right place at the right time. And I think that's what the commercial marketplace enables; it enables retailers to connect with the most innovative ISV partners. Currently, the types of partners that we have are some of the most innovative partners in retail as a whole, and Microsoft is at the forefront of this innovation.
DAVID: Sahir, thank you so much for that. I love to hear how our partners are able to take advantage of the Azure Marketplace to improve their business. That's a really powerful thing that they're able to do on a technology platform and our cloud.
So, Orlando, I'm wondering if there's anything else you would like to leave our listeners with. We're getting down to the end of the show. We could talk for a long time, but unfortunately, we're running out of time. So, is there anything that you would like to leave for our listeners?
ORLANDO: I can close by saying that in the lab, we will keep working on the disruptive innovation together with the best startups that are working with us. We're always looking for others that want to join us that can bring value, of course with the retailers also. And the goal to democratize innovation and AI, I think that we are there together with these platforms like Azure and the marketplace.
DAVID: That's great. And we'll definitely have links in the show notes to XnFinity Labs. And I'll move over to Sahir. Sahir, is there anything you would like to share from the retail space with regard to Microsoft for our listeners?
SAHIR: Absolutely. The work that Orlando and team are doing is driving innovation through the help that they're providing to startups and, in turn, connecting them with customers, which is incredible work.
The work that Microsoft is doing around Cloud for Retail, commercial marketplace and really enabling our retail customers and CPG customers to connect with innovative partners is commendable work, but it takes a village. It takes a lot of different teams working together to bring this type of innovation to customers and to our partners.
One point I'll leave you with is that when you think about digital innovation and cloud transformation, it's not an endpoint; it's a journey. During this journey, you will see several retailers joining the commercial marketplace bandwagon, buying applications from our unique partners who are selling innovative solutions via the marketplace. And today, we have over 200 such solutions in our commercial marketplace.
So what I would encourage our customers and our partners is to visit our Azure Marketplace and AppSource storefronts, e-commerce channels and experience our retail catalog. And if you have any questions, feel free to reach out to me or our team at any point. And yeah, these are exciting times.
DAVID: Well, thank you both. This has been a great conversation about innovation, both in the retail space and with regard to how folks are taking advantage of the Azure Marketplace. So I appreciate that very much. Orlando and Sahir, thank you both for being on the show. It's a pleasure.
ORLANDO: Thank you, David. Thank you, Paul and Sahir.
SAHIR: Thanks, everyone.
DAVID: Thank you for joining us for this episode of the Azure for Executives Podcast. We love hearing from you. And if you have suggestions for topics, questions about issues discussed on the show, or other feedback, contact the show host, David Starr or Paul Maher, through the social media links included in the show notes for each episode. We look forward to hearing from you.