NATAN: Hi, Diego.


DIEGO: Hi, Natan.


NATAN: Thank you for joining Augmented. You run the manufacturing category for the Microsoft commercial marketplace, right? Is that right? 


DIEGO: Correct. 


NATAN: Tell us a little bit. What do you do? What does that mean?


DIEGO: [laughs] Sure, sure. Yes, I'm the Category Manager for Manufacturing for the Microsoft commercial marketplace. For those who are not familiar with the Microsoft commercial marketplace, it is basically a catalog of solutions from our independent software vendor partners, such as Tulip, that run on the Microsoft cloud. And when we talk about the Microsoft Cloud, we are talking about Azure, Dynamics, 365, Microsoft 365, and the Power Platform. So, collectively, we call that the cloud. 


And what do I do? Well, I like to use the market analogy. I look after the health of the manufacturing aisle in this marketplace. I'm pushing the supermarket analogy. My job is to make sure that we're stocking the right products on the shelves and that these products are selling and helping the developers grow. And I also help our own product team. The marketplace is a product. We consider it a product. I help them providing the voice of the industry to help them identify features and capabilities that will make the marketplace more valuable to industry partners and customers.


NATAN: That's great. It's a really good baseline to start our conversation because I think you would agree —I'm actually interested in your opinion —that, you know, we are witnessing, I'd say, the past few years in an accelerated fashion but I feel it's been going on for...yeah, I would even venture to say for the past decade, massive acceleration and a change that is happening in what we call the factory stack, the set of software and solutions, and obviously, the infrastructure that runs modern production environment. What do you think? What do you see?


DIEGO: Absolutely right. You're spot on, Natan. I mean, there's several migrations going on, right? One is towards the cloud, and another at the same time is how do we, as a cloud platform provider, can provide functionality that is industry-specific, right? So we are infusing our cloud with industry-specific capabilities. You can think of the industry clouds that we call...and, by the way, we have released industry clouds for retail, healthcare, financial services, sustainability, and manufacturing is coming soon. So you can think of those as layers of industry-specific functionality, data models, and connectors that sit on top of our general-purpose Microsoft cloud, right? 


So, for instance, the Microsoft Cloud for manufacturing has connectors to factory equipment, industry data models, et cetera. And the goal is twofold of having this industry cloud accelerate the innovation from our software partners. So we take care of the plumbing if you will, that is common across the industry. But more importantly, is that with a common data model to which the applications read and write, we are enabling interoperability and also, increasingly important lately, interrogation of the data, particularly by AI.


NATAN: Okay. We have reached the point that we've said AI.


DIEGO: [laughs] We say AI.


NATAN: Five minutes in. That's awesome. 


DIEGO: It took us too long. 


NATAN: No, actually, I'm glad we didn't hit on AI, like, a minute and 37 seconds into our conversation. But since you've raised it, and we'll circle back to the here and now in a little bit, but I wanted to kind of tie it together. Because, you know, all the stuff you're describing on, you know, what you called, you know, providing the infrastructure and the common data models such that interoperability and the ability to kind of, you know, you call it interrogation. I think we all are in the same business of giving our customers access to data and help them distill value from the data, you know, whatever that value be, you know, training, quality, and better planning, and so on and so forth. 


I'd say this is in the here and now. So it's not easy to build. It's not, like, flip a switch, and suddenly everything works and flows. And we all know that's not a simple thing to take operations that maybe not so deep in cloud infrastructure, maybe slightly older IT stack, and kind of move them over to, you know, everything cloud, plug and play solution. We know that's not a reality, but at the same time, the technology is here. So the provocation is like, well, if that's all in the here and now, and before we talk more about what's available, where is this actually going? Like, what's going to happen if this is the here and now in a decade?


DIEGO: Are you referring specifically to AI or?


NATAN: No. I mean, AI, I think, is part of it, but it's funny because, like, when you start building software for operations, then people used to talk to me about, oh, you know, we have a factory of the future. And that was...some of the early conversation has been a decade ago. 


DIEGO: [laughs]


NATAN: So, is the future now, [laughter], you know? And then people had like, oh, we have an operational 2025 program. And that's like, okay, it's going to be over in, like, 18 months.


DIEGO: [laughs]


NATAN: So I want to help our listeners, and I want to kind of challenge you a little bit. Like, from your perspective on the marketplace, where is it going in a decade with all the here and now?


DIEGO: Yeah. How is that the saying goes? That it is difficult to make predictions, especially about the future, right? [laughs] I'm not in the business of predicting the future. But I can tell you...extrapolate from what we see now, right? Set aside the whole factor of the future industry 4.0., all that, and the hype associated with that. There is an acknowledgment that in manufacturing, the data is important, and access to data. And this is very clear to you, and empowering the worker to be part of that. 


So the whole IoT, data analytics, sensors, and all that, I think that, in a sense, has gone mainstream, and manufacturers is mainstream where they're collecting and acting on data, right? The vision has always been decades ahead of the reality, right? Do we even want to reach full automation? I don't know. I don't think we have, right? But the fact that we are democratizing and really mining the production data, engineering data, and giving it, like, first-class citizen status, I think it's now.


I think that we are looking at an inflection point...I mean, we've all been talking about AI and machine learning for a long time. But I think we are at an inflection point where now people are just feeding these huge amounts of data into AI and getting stuff out of it that looks almost like black magic, right? [laughs]


NATAN: Yeah.


DIEGO: I think that we are at an inflection point where I say, oh, now I've been collecting all this data and probably showing it in dashboards or something. But I haven't really reasoned or have anything that allows me to reason over and interrogate real time over this data. Now that's coming up. So the changes are incremental. I don't believe in revolutions, particularly in manufacturing. But it has...if you look back at ten years ago, I will say that you can see the changes around data collection and just getting insights out of data.


NATAN: Thanks, Microsoft, for getting us great plumbing. And now, on top of this plumbing giving us...what comes on top of the plumbing? I guess it's, like, sophisticated faucets different, like, vending devices of, you know, sodas and all flavors that you want. 


DIEGO: [laughs]


NATAN: It's self-correcting plumbing because, like, you know, you can reroute stuff if things are broken. So I guess, like, my view in 10 years...and I'm going to think about it, like, more from a human-centric approach as opposed through technology and then kind of work back. And I think it will jive with, like, what you said and see what you think about it. 


I think that in 10 years, like, a great success criteria is that the people in operation are in the center. So they become truly knowledge workers. And so now, you know, for that to happen, they need those first-class tools you're talking about. And they need the ability to manipulate data and commands. And, of course, by then, we're all wearing super sophisticated eyewear that connects directly to all the clouds and have all the large language model feeding it directly with interfaces that we are like, ah, you know, we forgot we don't want to upset our friends at Google. [chuckles] 


But, you know, you forgot the canonical search bar to some other, yeah, conversational interaction of sorts and its mutations. You know, that transition is natural and obvious. As much as today, you know, I'm sure that every time you think about some day-to-day action or a work project, I assume you still often start with search. So I think that would happen. 


But what I'm curious about, you know, if we assume that that actually happened and, of course, a lot of work needs to go into that because I think most of the models we're seeing now are very much generic. And a lot of the data you're talking about that people collected is living in silos, right? And very specific, like, how do we make it easy for people to get it over and share it? 


And this is, like, where I think there's a very interesting tension. Because when you think on what we're seeing today...and I'm sure you and at Microsoft, you have a front-row seat to this, but the numbers are staggering. You know, the last time I've checked, it's, like, the fastest technology to hit 100 million users over the same period of time. I forget exactly the chart. So pretty amazing when you think about it. That shows you this inflection point from an interaction perspective. It's like the internet is telling us we accept this way of interacting, or we're interested in this enough, you know.


But what enables that? Decades of open source, tons of information on the consumer internet, media, all those things that enterprises actually are pretty worried about because you have privacy, and you have a compliance framework, and you have proprietary IP data. And, in fact, you know, we talk about democratization. There's really no open source for operations. So, in a way, for that vision that we just discussed to happen, I feel like there needs to be, like, a dramatic "open sourcing," quote, unquote, of operation for that to work and potentially, like, a common data model. And what you talked about before is a way to usher that. What do you think?


DIEGO: Absolutely. I mean, my past life, I was deep into standards for engineering exchange information and all that. And I think that that's still the Holy Grail and that having a single standard, everybody agrees that this is how we shall capture engineering information. We have...even in standards; the standards are siloed. You have set standards for engineering data, PLM, and supply chain. You have ISO for manufacturing operations. And they kind of overlap, but nothing covers the whole picture, right? 


NATAN: Of course.


DIEGO: There is a known joke about standards that standards are like toothbrushes, right? Everybody needs one, but nobody wants to use somebody else's, right? 


[laughter]


And then you get vendors. And software vendors want to create ad hoc standards. I'm the standard, right? So, frankly, I don't see that getting resolved anytime soon, just because I've been watching for more than 20 years and nothing...From our perspective, we're not trying to design yet another common data model. We're not creating another standard, ad hoc or otherwise. What we are providing is the tools to semantically map and connect multiple sources in a sense to provide not the data model but the framework to have a digital thread, right?


NATAN: Yeah.


DIEGO: And we'll leave it up to the industry to define that. We're not a manufacturing standards organization. We're not even a manufacturing ISV. We're a general-purpose, right? 


NATAN: Yeah. 


DIEGO: So you're right. I mean, at the end of the day, everybody has to have some sort of common understanding that what do I mean by a pump? And what do I mean by this pump is in this location, right? If you don't have those semantic mappings, there is no way you can transfer the data because what you call pump over here, you call asset over there. How do you know that it's the same thing? 


NATAN: Right. So now, if we connect it, you know, we went a little bit to the future and potentially touched on a few things that are inhibiting or are required for this future that, you know, you described well from a technical perspective. I was more like, okay, let's imagine a future where reframed...people are respected on the shop floor because they're no different than a person working in a bank, for that matter, at least from the IT/OT stack perspective. [laughs]


How does it meet the reality today from your perspective? Meaning, okay, maybe we don't have all the infrastructure, and standards are not completely interoperable, but companies are doing awesome stuff. We're seeing real things. How does the marketplace play into that? What are the cool application? What are the trends that you're seeing from your partners that you're supporting that are helping this transformation, by and large, become reality?


DIEGO: The marketplace is kind of tagging along with the larger trend of solutions going to the cloud, right? And the marketplace, oversimplifying it, is basically a big app store for solutions that run on the cloud. So as buyers of consumer applications, we've all grown accustomed of the idea of purchasing an app from a digital store that we deploy on our phone or our laptop. And the newer generations in the workplace are expecting a similar experience when it comes to business application. So they want to go to someplace where they find, they try, they buy business solutions with little or no intervention from a salesperson, right?


NATAN: So, is that something you're hearing directly from customers? 


DIEGO: Hold on. I was going to caveat that, right? 


NATAN: Okay. 


DIEGO: Now, of course, no one wakes up in the morning and says, I'm going to buy a $50 million MES solution...


NATAN: [laughs]


DIEGO: For my 50 factories on the marketplace. No, that's nonsense. Particularly in manufacturing, these are complex solutions, heavily customized with many moving pieces. Some parts are inside the factory floor on-premise, other parts are in the cloud. And often, they involve heavy price negotiations and special pricing. 


So it helps to think of the marketplace as a platform to streamline the procurement and the billing of these solutions, as a place where customers go and say, "Okay, I have a cloud subscription. What are solutions that are run on the cloud so I can optimize my cost, and my billing, and all that?" At least for the foreseeable future, there were still humans in the loop provisioning, or deploying, or configuring these solutions, right?


NATAN: Mm-hmm.


DIEGO: So, to your point, it's not that people expect that they're going to eliminate the salesperson completely and have no discussions whatsoever with the software vendor. It's more about I want to purchase that more easily. And also, from the partner point of view, the software vendors they want to basically use Marketplace as a service to help them with, again, the plumbing of selling and billing and tax considerations for currency exchange, all the stuff we take care of in the marketplace.


NATAN: You know, it's interesting because as I was listening to how you explained this, first of all, I really appreciate the level of reality and how you talk about effectively, like, the challenges of a B2B marketplace. Because you're right, the consumer experience have kind of set how we expect stuff to work as we map it, like, from our, you know, smartphone to the workplace. And, yeah, and the reality is obviously different. 


I think, and this is...it will be really interesting to kind of get your take on it. I think that in manufacturing, it's another level of complexity because, for decades, you know, manufacturing folks have been actually biased almost inversely to where IT people were biased. They're biased to, like, save every dollar, reduce the bombs, get an efficiency app. There's no, like, what do you mean spend on software? It doesn't compute to the...


DIEGO: [laughs]


NATAN: Bottom line. It's almost like trying to build a marketplace motion that enables the way the customers are actually testing out technology because they do proof of values.


DIEGO: Exactly.


NATAN: And they want to see it work. Because, you know, we meet customers, and the first thing is just, like, "Don't tell me anything. Just don't tell me stuff. Show me how it works," you know. And, you know, when I see places like the marketplace and, you know, I'm a little bit biased here, to be honest, that I don't think [laughs] the cloud...everything is going to skip over operations and that internet as means of distribution is just, like, you know what? Let's just not do this in manufacturing. I think that's irrational. 


Having the marketplace as a facilitator to help the overall transformation of the segment and wondering, do you see that? Do you see people coming in? And it's like, let's click here and get a POV. Let's move on after the POV. And they still, you know, we'll get to the major enterprise deal of $50 million MES later. Is that what you're saying?


DIEGO: We are increasingly, I mean, there is some initial momentum and perceptions that we have to clear. Again, going back to the comment that the marketplace is more of a procurement platform, right? We are providing incentives to the customers and the partners to make it extra palatable to do business through the marketplace. So, for example, if you are already a customer that has an Azure subscription because they have their own line of business solutions or whatever running on it, we have incentives that make it additionally attractive to buy the solution through the marketplace. 


It basically...it turns out they get it at a discounted price indirectly, but they do. So we are adding incentives from our perspective, and the customer and the partner to make it attractive to do business through the marketplace. Again, we are fighting the perception sometimes that, oh, the marketplace is only for simple solutions, and, therefore, it's not for us. But when software vendors understand that the goal is to provide a better, fine, tried-by experience for their customers, they get it.


The marketplace is not here to replace the way software vendors sell software overnight. There are some additional benefits for the less established software partners. Like, for example, using the marketplace it gives them global reach almost overnight. And the stuff that they may not be as capable or knowledgeable about, again, taxes, currency conversions, payouts, collections, all that we provide it as a service. So it's a process, and both the partners and the customers are starting to get the advantage. But, again, it's not going to fill up...that you click this button, and your MES solution is going to be deployed in your 50 factories, and you're good to go. That's not happening. [laughs]


NATAN: You know, and what I'll add to your, I think, very realistic and honest description is that I feel that the marketplaces are also helping to build this community. And they're helping to connect the various infrastructure folks, and the vendors, and the customers and have a place where things get more democratized in our space faster. 


Diego, it's been great. We're running out of time. But there's one more thing we're going to do, which is a little game I play at the end. It's called the 5A, you know, like, 5S, but 5A is for five associations. So it's, like, a very simple association game. I'm going to give you one term, and you think about the future and tell me where it's going but really fast, don't think too much. So you ready for term number one? 


DIEGO: Let's go for it. [laughs] 


NATAN: All right. Lean, as in lean manufacturing.


DIEGO: Efficiency.


NATAN: Efficiency, all right. OEE.


DIEGO: Irrelevant. 


NATAN: Irrelevant. Okay. Are you ready for the next one?


DIEGO: Uh-huh.


NATAN: Industry 5.0.


DIEGO: Industry who? 


NATAN: Okay. Upskilling


DIEGO: A common best practice.


NATAN: Super. And the last one, digital twin. 


DIEGO: Everywhere. 


NATAN: All right, Diego. 


DIEGO: [laughs]


NATAN: Thanks a lot, my friend. It's been awesome. 


DIEGO: Thank you, Natan. 


NATAN: We'll watch out for the Microsoft manufacturing commercial marketplace. Thanks a lot.