The Massive Market Impact of Microsoft Viva
Today Microsoft introduced an offering that is likely to transform the market for enterprise software: Microsoft Viva, a digital platform built on Microsoft 365 designed for the Employee Experience. Developed over several years and integrated with Microsoft Teams, Viva is an Employee Experience Platform carefully architected to leverage a company’s investment in existing systems and Microsoft technology.
I’ve been advising Microsoft on this product for some time so let me give you some insights and explain why this announcement could have a seismic impact on the HR Tech and workforce software markets.
First, you have to understand that investments in Employee Experience are massive. Fueled by the pandemic, companies spend billions of dollars on collaboration tools, wellbeing apps, training and development offerings, and all forms of surveys, knowledge management, case management, and employee support. This massive industry is over $300 billion in size, and includes every major software vendor from ADP to Workday, Cisco, SAP, Oracle, ServiceNow, and hundreds more.
Last week, for example, Qualtrics’ staggering IPO (now trading at 35 times revenue) shows how dearly the market values tools for employees. ServiceNow, a company known for automating service delivery and employee workflows, is now worth 50% more than Workday, demonstrating how fast-growing and important this market has become.
Microsoft’s Enormous Role In The Enterprise
I don’t have to tell you how important Microsoft is in business. Most of us grew up using Microsoft tools in our lives, and since the original introduction of Microsoft Office (launched in 1988), Microsoft has blanketed the IT landscape. We use Microsoft platforms for email, messaging (Teams is now the #1 collaboration tool), database, security, and thousands of internal websites. In fact, it’s common to talk with HR leaders who tell me they have hundreds of SharePoint sites all over the company used for learning, communications, and knowledge sharing.
And it goes much further. Through a series of shrewd acquisitions over the last decade, Microsoft now owns LinkedIn (the de-facto professional directory for the developed world, with 740 million users), LinkedIn Learning (one of the largest libraries of business learning, which doubled consumption last year), Glint (engagement and survey platform, a similar technology to Qualtrics), Microsoft Learn (large library of Microsoft developer content), GitHub (used by 56 million software developers) and a series of HR applications under the Dynamics brand that thousands of mid-sized companies use for employee administration.
And without formally selling to HR, Microsoft powers many of the employee development, communications, and productivity systems in the world. Companies like Genpact, Unilever, Coca Cola, and AstraZeneca have been using Microsoft Teams for training and learning with huge success; SharePoint is one of the most widely used toolsets for employee portals and knowledge management; and tools like Yammer, Skype, and Teams are ubiquitous as messaging tools. (I do not believe Slack will become a broadly used business communication tool, despite the Salesforce acquisition.)
Under the covers, the Microsoft engineering team has done much more. Workplace Analytics (which started with the acquisition of Volometrics and is now reborn as Viva Insights) is one of the most comprehensive analytics, productivity, and wellbeing platforms you can find. Project Cortex (which gave birth to Viva Topics) is an advanced indexing and knowledge inference engine, and could eventually index skills. And there is more: Teams can index and translate video and is integrated with Microsoft Stream, a scalable video management platform. Our company, for example, uses Teams for meetings, training, and client demos – and through its recording and indexing tools we have built a massive knowledge repository with no real IT department at all.
Enter Viva: A Product That Defines The Employee Experience Platform (EXP)
How did Microsoft get to this market? Well, the company has been focused on personal productivity from the beginning and more recently started talking to HR. Following the LinkedIn acquisition, I had the opportunity to present at several CHRO and CLO summits where Microsoft demonstrated its products – and the reactions were amazing. The first time Microsoft showed off Teams, Stream, and Video tools to Chief Learning Officers, their reaction was “how do I get this?”
Microsoft’s traditional strength has been selling to IT, business executives, and industry buyers. Other than through LinkedIn, there was no real marketing or sales focused on HR. Well, effective today, that is about to change.
Employee productivity, wellbeing, and safe workplace strategies are now issues for everyone. IT, HR, Facilities, and Legal and Safety teams have banded together to focus on the Employee Experience, “Back to Work,” and “Future of Work” strategy. And Microsoft wants a big piece of this market.
The problem companies face is that Employee Experience is a fragmented, complex space. Take a look at the picture below. People who take responsibility for EX quickly realize this is a dauntingly complicated problem. Not only are there many employee use-cases and scenarios to consider, but companies also need strategies to deal with retail workers, manufacturing employees, remote salespeople, and many other workforce segments. No one tool or system can address them all.
Microsoft Viva, with its four initial product modules, is designed to bring all this together.
What Is An Employee Experience Platform Anyway?
Right now, if you want to simplify the mess above, you have to build a massively complicated “Employee Portal.” Vendors like Workday, Oracle, SuccessFactors, Ultimate, and ADP try to do some of this, but in reality, they can’t cover everything. So even if you go through a global HR transformation and move to a single integrated HCM system, there are hundreds of applications to consider.
Here’s an example. We are working with one of the largest companies in India, which has been hiring close to 100,000 employees per year in their retail operations. There were no recruiting tools, interviewing tools, background checking, identity validation, or onboarding tools that could handle this scale. So they went out (they have 300 software engineers working in HR) and built a set of “micro apps” to do all this. Most companies could never do this themselves. And this is just for recruiting.
In learning and development, the situation is similarly complex. Wal-Mart told me they had 80 different learning management systems (they’ve now cleaned that up); a large pharma company we work with has more than 120 different tools; and our research shows that the average training department has 23 different apps. Employees have to search around, guess what to click on, and constantly waste time – unless the company spends millions of dollars on an integrated portal for learning.
And this type of “mess” comes up in every part of HR. Wellbeing solutions are growing like weeds; tools for coaching and feedback are complex; and companies have multiple systems for project management, performance management, sales enablement, and more. In fact, one of the biggest onboarding issues in business is teaching employees where everything is, which itself is a moving target.
Vendors like ServiceNow have tried to address this with their end-to-end workflow and IT service management platform. And they’ve succeeded in bringing IT and HR together, now addressing issues like onboarding and safe workplace management. But their role is limited – opening up the door to Qualtrics (who calls it Experience Management, even though it’s a survey system), Medallia (who provides closed-loop employee survey and sentiment analysis), and Workday (who just acquired Peakon to build out this area).
The bottom line is that HR and IT departments want something to help standardize these applications and bring them together. And this is the Employee Experience Platform that Microsoft is launching today.
There are several layers to the Employee Experience, which is why we call it a Platform.
There is an employee productivity layer (the mobile or portal experience), an application layer (the workflows and apps we use), a set of services (search, indexing, chatbots, search, case and knowledge management), and then all the back-end transaction systems. Companies build and buy these layers in various products, and then try to turn them into action platforms: actions for employees, managers, service delivery centers, and HR.
In some ways, the EXP is a “platform of platforms” – because not only does it give employees a place to go, it connects to other applications and systems.
How do you solve this problem without an EXP? The typical solution requires a team of IT professionals or consultants to build an employee portal. And this portal can be very expensive: one of our bigger pharma clients told me it was a $100 Million project to revamp their employee portal and related mobile apps. Wouldn’t it be nice if there was one platform to integrate this all together?
Enter Microsoft Viva.
Viva, which is built on Microsoft 365 and delivered in Teams, is a place to pull this all together. While the four core Viva apps are new, they cover many of the employee needs for companies and Viva becomes an integration platform for everything else. Out of the box, Viva covers a wide array of application areas, and the company will offer Glint, LinkedIn Learning, and content from Headspace, Skillsoft, and dozens of others in the experience. I’m sure third-party vendors will line up to join the parade as soon as this is launched.
So Viva, in addition to a suite of applications, is a vastly functional “integration platform” that lets IT and HR departments standardize their EX strategy.
Here is another example. We are helping a global consulting firm design an integrated EX for a client with more than 200,000 employees in 90 countries. They have carefully developed more than 200 “employee journeys” to automate and integrate. The workflow involves pulling together multiple back-end systems, deciding what front end to use, and trying to automate as much as possible.
With Viva, this consulting firm could build these “apps” into Viva – and they instantly get access to the Microsoft Active Directory, Microsoft collaboration tools, and Microsoft knowledge and databased indexing technology in the Microsoft Graph. Honestly, I cannot think of another better way to do this.
The Four Viva Apps
Why is this such a massive announcement? Because without really trying, Microsoft is likely to reshape the vendor market. Let me explain in the context of Microsoft’s four initial apps.
In the first release, Microsoft Viva has four EXP applications. Each, in their own way, has the ability to add value and also disrupt existing vendor markets:
1/ Viva Connections
The first app is called Connections, and it is essentially a system that brings together SharePoint and other employee portal applications to provide a single place for the “Employee Portal” and employee communications. And given that it’s a mobile app, it could become your company’s “mobile employee interface” to all sorts of applications.
As a next-generation portal, Connections could become an integration point for just about every employee-facing app. Platforms like Workday, SuccessFactors, and Oracle try to do this on their own, but they only give you access to their functionality. The Microsoft Viva Connections app will connect to anything.
Suppose you’re Qualtrics, Medallia, or a survey provider. You probably want to build a plugin Connections so the thousands of Microsoft customers can quickly see your surveys, view results, and display dashboards. If you’re a goal-setting tool, travel scheduling app, or even budget and finance app, you probably want to display results here. I think this app becomes an integration point for dozens of application categories, so there will be a lot of consolidation and service-integration there.
2/ Viva Learning
The second app is Viva Learning, a learning portal and learning administration for any form of content – built into Microsoft Teams. And it’s also a discovery platform, which lets employees intelligently find recommended content throughout the network. This puts it on a collision course with many L&D products.
You may know that the Learning Experience Platform (LXP) market is on fire. This set of products (vendors like Degreed, EdCast, Percipio, and others) are going to want to integrate with this system. The Microsoft Viva Learning app is not only an LXP in disguise, it also lets companies publish and share all their internal videos, podcasts, and other user-developed content. There are billions of dollars invested in learning management systems, portals, mobile apps, and all sorts of cool learning experiences. They’re all going to want to be part of Viva Learning.
In my case, our Academy (Josh Bersin Academy) is going to become a Viva Learning App, and we’ve already started building a solution. And since this app is integrated into Teams, employees will be able to find and see recommended learning while they’re collaborating and then open learning within the Teams interface. Right out of the box a bunch of LinkedIn Learning will be available when this goes live.
3/ Viva Insights
The Viva Insights application is very powerful. It’s both an out-of-the-box wellbeing application, productivity analysis tool, and a Workplace Analytics platform.
If you’ve used Microsoft Workplace Analytics (you may see it as recommendations from Cortana) you know that Microsoft Office is already working behind the scenes to make your life better. This toolset looks at your calendar to recommend focus time, it gives you (and managers) insights on your productivity, and it recommends ways to stay healthy. And under the covers, it does Organizational Network Analysis to look at patterns of collaboration, management behavior, and more.
Viva Insights is also Microsoft’s integration point for Headspace and hundreds of other employee wellbeing applications in the market. So this is both a place to analyze what’s happening at work, give managers insights into team performance, and just make work life better.
And Viva was designed with built-in privacy and security controls. For example, “To help ensure privacy and security, customers can rely on personal privacy safeguards, such as de-identification, aggregation, and differential privacy to protect individual privacy. That means personal insights are visible only to the employee. Insights for managers and leaders are generated from aggregated and de-identified data by default to help maintain personal privacy.”
4/ Viva Topics
This app could be the most disruptive of all. Microsoft Project Cortex, which has been in development for more than two years, developed code that crawls through documents and emails and finds “topics” and “topic experts” to find information and experts in the company. This whole area, sometimes called Knowledge Management, is a massive problem in every organization.
There are many vendors with world-class tools to help with this. Going forward, as Viva Topics picks up speed, companies will have an out of the box Microsoft solution that finds relevant information, locates experts, and helps organize compliance and documentation at enterprise scale. And I have to believe skills inference is coming next.
Most companies have dozens of content management and index systems – located in sales, manufacturing, finance, HR, and other functional areas. Viva Topics has the potential to bring this all together, and encourage vendors to align around Microsoft technology.
Microsoft Teams Itself
Let me also remind you that Microsoft Teams itself is more than a video conferencing tool, it’s a platform. It is a document sharing system, workflow engine, and can be used off the shelf for learning communities, employee communications, and more. It works out of the box, leverages Microsoft Graph and security, and is constantly adding new features with Azure cloud and AI services under the cover.
Disruption: Vendors Will Start To Scramble
This offering is going to be disruptive. Since so many companies have Microsoft infrastructure, most IT and HR departments will immediately consider Viva. This does several things to change the market.
First, Viva legitimizes the EXP Platform category. And this is a good thing. Vendors will rally around the space and it will be easier to make sense of the offerings. ServiceNow tinkered with this term a few years ago but moved into a “workflow” positioning. This may change their mind. I could see Cisco Webex, Facebook, and even Oracle start to focus here.
Second, Microsoft Viva will force vendors to rethink their product strategy. If a vendor wants to sell to a company using Viva, their product needs to behave as a plugin, not a top-to-bottom application. There will be dozens of creative ways these apps integrate, giving vendors a new way to think about their solution. (This is the same scenario for Workplace by Facebook.)
If you’re a learning company, do you publish content in Viva Learning? Or do you integrate the entire app into Teams? Do you integrate your survey or performance tool into Connections? Or use the data in Insights? Get the picture?
I had a series of conversations with Microsoft execs as this launch was coming and the company is just beginning to see how big this will be. This will turn into a massive new ecosystem of tools, content, and apps that integrate with Teams.
Finally, I think this announcement marks the beginning of a major new market, one as big as ERP and CRM in size.
The EXP Era Has Arrived
Let me share the conversation I had with Satya Nadella about this announcement.
When we lived in a “manufacturing economy,” companies realized they could pull together their manufacturing, supply chain, and financial systems into one integrated suite. So in the 1980s vendors like SAP and Oracle built end-to-end business applications that manage the financial, supply chain, and manufacturing process, and became the “integrating platforms” for these needs.
In the 1990s, as the “customer economy” grew, the same thing happened again. CRM, which started as sales force automation, became an integrating platform for marketing, sales, customer service, and customer analytics. And today vendors like Salesforce have become the “integrating platform” that brings these apps together.
Today we live in the “service economy.” More than 80% of the jobs in business are in design, sales, management, service, healthcare, or other forms of human service. So as we learned in the Pandemic, companies need an integrated platform for people – to make them productive, engaged, happy, and healthy. The EXP, in a way, is the ERP or CRM of the future. It’s the place to bring these complex workplace and people needs together, and who better than Microsoft to lead the charge.
This will be a heavy lift for Microsoft: there’s a lot of demand and partnering to do. But based on my experience with the team, I think Microsoft is serious – so hang on to your seats and let’s all go along for the ride.
Resources For The Year Ahead
The Employee Experience Crusade – Join our newest research program on EX, detailed report and best-practices coming in Q2.
The Big Reset – detailed reports on everything we’ve learned from the Pandemic.
HR Technology 2021: The Definitive Guide – everything buyers, vendors, and investors need to know about HR Tech for 2021.
Pandemic Response: Building Business Resilience – the most in-depth study of ten best practices for business resilience.
The Josh Bersin Academy – The World’s Home for HR – join more than 30,000 HR professionals to advance your skills, connections, and experiences in HR.