Microsoft Executive Vice President Jason Zander says the company has “never been more busy” partnering with the energy industry on cloud technologies and energy transition; the combination of COVID-19 and the oil market shock has condensed years of digital transformation into “a two-month period”; the company’s return to its “innovative roots” and its goal to have removed all of the company’s historic carbon emissions by 2050 in the latest edition of CERAWeek Conversations.
In a conversation with IHS Markit (NYSE: INFO) Vice Chairman Daniel Yergin, Zander—who leads the company’s cloud services business, Microsoft Azure—discusses Microsoft’s rapid and massive deployment of cloud-based apps that have powered work and commerce in the COVID-19 economy; how cloud technologies are optimizing business and vaccine research; the next frontiers of quantum computing and its potential to take “problems that would take, literally, a thousand years, you might be able to solve in 10 seconds,” and more.
The complete video is available at: www.ceraweek.com/conversations
Interview Recorded Thursday, July 16, 2020
(Edited slightly for brevity only)
Watch the complete video at: www.ceraweek.com/conversations
On Microsoft’s large and rapid resource mobilization in the COVID economy:
“Like everybody else there’s both the impact that we have for our own company that we’ve had to deal with, but we’ve also been a core supplier for teams and companies that we’ve had to go work with. Microsoft Teams—we have done 4 billion meeting minutes in a single day. We’ve had 200 million daily active participants. The opportunity for us to have had a cloud, built a cloud and brought that together was really allowing a whole bunch of that productivity to kick in for everyone. It would be hard to imagine how that may have even worked three years ago.
“We’ve already prepositioned in over 60 regions around the world hundreds of data center, millions and millions of server nodes—they’re already there. If you can imagine COVID, if you had to go back and do a procurement exercise and figure out a place to put the equipment, and the supply chains were actually shut down for a while because of COVID. That’s why I say, even three to five years ago we as industries would have been pretty challenged to respond as quickly as we had.”
On how the cloud is optimizing business, industry and vaccine research:
“The general mechanism is: I now need to go build up some rapid applications, I don’t have time for long IT cycles, I don’t have four months to go build something. Think of some of the apps that we’ve actually published around being able to do things like track PPE. We have found several different cases where people were able to use the cloud programming platforms, create apps and get them deployed and get them up and running and used. (It) was very, very quick.
“That’s on the more tactical end of the spectrum. On the other end we’ve also done a lot of things around data sets and advanced data work. How do we find a cure? We’ve done things like [protein] folding at home and making sure that those things could be hosted on the cloud. These are things…that will be used in the search of a vaccine for the virus. Those are wildly different spectrums from the tactical ‘we need to manage and do logistics’ to ‘we need a search for things that are going to get us all back to basically normal.’
“There’s also a whole bunch of stimulus packages and payment systems that are getting created and deployed. We’ve had financial services companies that run on top of the cloud. They may have been doing a couple of hundred big transactions a day; we’ve had them do tens to hundreds of thousands a day when some of this kicked in.
“The point is with the cloud I can just go to the cloud, provision it, use it, and eventually when things cool back down, I can just shut it off. I don’t have to worry about having bought servers, find a place for them to live, hiring people to take care of them.”
On how COVID-19 has optimized the efficiencies of the cloud:
“All of this growth that we’ve seen it has really made us sit back and say when we have situations like this, obviously unprecedented, massive growth coming through, no way to plan for it, how do we get the most efficient systems that allow us to go do extra provisioning?
“There was disruption in supply chain also. Many of us saw this at least in the States—if you think even the food supply chain, every once in a while, you’d see some hiccups. There’s a whole bunch of additional work that we’ve done around how do we do even better planning around that, making sure we can hit the right levels of scale in the future? God forbid we should have another one of these, but I think we can and should be responsible to make sure that we’ve got it figured out.
“The policy and investment side—it has never been more important for us to collaborate with healthcare, universities, and with others. We’ve kicked off a whole bunch of new partnerships and work that will benefit us in the future. This was a good wake up call for all of us in figuring out how to marshal and be able to respond even better in the future.”
On digital transformation trends in the oil and gas industry:
“It’s never been more busy. Satya [Nadella], our CEO, had made the observation that we’ve seen two years’ worth of digital transformation in literally about a two-month period. That’s all the remote work that we’ve seen. One of the things that I’m seeing, especially if we’re talking the oil and gas industry, I may have less people to be doing certain types of work, I need to keep the business going, and especially if I think of upstream, I still have the requirement to make sure that I’m finding new sources of energy going forward. And the question of course is how can the cloud help you with that?
“We’ve had a lot of cases where people have been moving out of their own data centers and into ours. Let us basically take care of that part of the system. We can run it cheaply and efficiently. I’m seeing a huge amount of data center acceleration—folks that really want to move even faster on getting their workloads removed. That’s true for oil and gas but it’s also true for the financial sector and retail.
“Specifically, for oil and gas, one of the things that we’re trying to do in particular is bring this kind of cloud efficiency, this kind of AI, and especially help out with places where you are doing exploration. What these have in common is the ability to take software especially from the [independent software vendors] that work in the space—reservoir simulation, exploration—and marry that to these cloud resources where I can spin things up and spin things down. I can take advantage of that technology that I’ve got, and I am more efficient. I am not spending capex; I can perhaps do even more jobs than I was doing before. That allows me to go do that scale. If you’re going to have less resources to do something, you of course want to increase your hit rate; increase your efficiency. Those are some of the core things that we’re seeing.
“A lot of folks, especially in oil and gas, have some of the most sophisticated high-performance computing solutions that are out there today. What we want to be able to do with the cloud is to be able to enable you to do even more of those solutions in a much more efficient way. We’ve got cases where people have been able to go from running one reservoir simulation job a day on premises [to] where they can actually go off to the cloud and since we have all of this scale and all of this equipment, you can spin up and do 100 in one day. If that is going to be part of how you drive your efficiency, then being able to subscribe to that and go up and down it’s helping you do that job much more efficiently than you used to and giving you a lot more flexibility.”
On Microsoft’s climate ambitions and its goal to be “carbon negative”:
“We’re saying we will be carbon negative by 2030. By 2025 we are going to shift to 100% renewable energy. We’re starting off by saying let’s not talk about what everybody else should do, let’s talk about what we’re going to do. Our goal is to remove our historic emissions by 2050. If you then extrapolate out over the next 30 years, how do we go back even to the history of Microsoft and say we have emitted “this much” carbon—by 2050 we will have essentially removed that.
“We’re investing in a $1 billion fund over the next four years for carbon removal technology. We also are announcing a Microsoft sustainability calculator for cloud customers. Basically, you can help get transparency into your Scope 1,2, and 3 carbon emissions to get control. You can think of us as we want to hit this goal, we want to do it ourselves, we want to figure out how we build technology to help us do that and then we want to share that technology with others. And then all along the way we want to partner with energy companies so that we can all be partnering together on this energy transition.”
Response to internal and external pushback for being an oil and gas industry partner:
“We have 150,000 employees worldwide. Our culture at Microsoft is we absolutely want our employees to be very open about their opinions and share them with us. We have an open culture that way, and we respect what our employees are saying. To me it’s much more around a dialogue with our employees about what we’re trying to do.
“From a corporate perspective we’ve made pledges around being carbon negative, but then also working with our energy partners. The way that we look at this is you’re going to have continued your requirements and improvements in standards of living around the entire planet. One of the core, critical aspects to that is energy. The world needs more energy, not less. There are absolutely the existing systems that we have out there that we need to continue to improve, but they are also a core part of how things operate.
“What we want to do is have a very responsible program where we’re doing things like figuring out how to go carbon negative and figuring out ways that we as a company can go carbon negative. At the same time, taking those same techniques and allowing others to do the same and then partnering with energy companies around energy transformation. We still want the investments in renewables. We want to figure out how to be more efficient at the last mile when we think about the grid. I generally find that when you get that comprehensive answer back to our employees, they understand what we are doing and are generally supportive.”
On the Internet of Things and smart, efficient power grids:
“I think even in my home (about) the ability to monitor my own electrical usage and smart appliances, but then more importantly when I get off into the grid how much am I using; if I do have solar or alternative energy sources how are those going back on the gird; how is it getting distributed; how are we being efficient; your electric car—all of these things are going to be part of that solution. The internet of things we think is important.
“Coming up is a digital feedback loop where you get enough data that’s coming through the system that you can actually start to be making smart decisions. Our expectation is we’ll have an entire connected environment. Now we start thinking about smart cities, smart factories, hospitals, campuses, etc. Imagine having all of that level of data that’s coming through and the ability to do smart work shedding or shaping of electrical usage, things where I can actually control brownout conditions and other things based on energy usage. There’s also the opportunity to be doing smart sharing of systems where we can do very efficient usage systems—intelligent edge and edge deployments are a core part of that.”
On ever-present cybersecurity threats to the grid and cloud:
“If there’s one thing that always gets more sophisticated, it is security attacks. We have to make sure that we always have a secure and robust environment. The sophistication level is always, always going to go up. In this world the big investment that we’re making is around critical infrastructure. We want to make sure that all of those devices that are out there are completely secure. We’re actually investing about $5 billion in IoT all up—that includes the security aspects that we’ve got. We recently finished some acquisitions on some security technology that we’re integrating in with our security systems for this. We spend about $1 billion of opex every year. We have 3,500 full time security employees. It has to be a combination of watching what the attack vectors are to keep things safe.
“How do we keep all the actual equipment that people are using safe? If you think about 5G and additional connectivity, we’re getting all this cool new technology that’s there. You have to figure out a way in which you’re leveraging silicon, you’re leveraging software and the best in security—and we’re investing in all three.
On the next frontiers of computing:
“The ones that I am most excited about, and what we call horizon three—big research stuff—the one I think has the most potential impact is quantum. It’s very exciting to me. The way that I think about this, in computer science and electrical engineering we have spent decades trying to figure out how to emulate nature and do it in probably what is a very inefficient way. Your brain has 2 petabytes of storage and it runs on 40 watts of electricity. There is no way that I could ever replicate that today. But then you start thinking about how does nature operate, and can we harness that?
“The idea of being able to harness particle physics to do computing and be able to figure out things in minutes that would literally take centuries to go pull off otherwise in classical computing is kind of mind-blowing. We’re actually working with a lot of the energy companies on figuring out how could quantum inspired algorithms make them more efficient today. As we get to full scale quantum computing then they would run natively in hardware and would be able to do even more amazing things. That one has just the potential to really, really change the world.
“The meta point is problems that would take, literally, a thousand years, you might be able to solve in 10 seconds. We’ve proven how that kind of technology can work. The quantum-inspired algorithms therefore allow us to take those same kind of techniques, but we can run them on the cloud today using some of the classic cloud computers that are there. Instead of taking 1,000 years, maybe it’s something that we can get done in 10 days, but in the future 10 seconds.”
- Reflections on his near 30-year career with Microsoft: “The part that has been really fun for me is when I joined Microsoft, we were very innovative. Windows was just taking off, Office was getting created, we were creating the Xbox, all of these really cool things. But from a culture perspective we were kind of arrogant. I can admit that being part of that. Then we kind of went through a different period. I kind of feel like most recently we’re getting back into our innovated roots and we are really figuring out how to solve some of the hardest problems. But we’re trying to do it, I hope, with a level of humility and not so much of that arrogance, but in a way that says how can we responsibly help change the world: AI ethics, sustainability, and the ways in which we work with governments—those are things that we probably wouldn’t have been so sophisticated about back in the 1990s. But we’re trying to bring hopefully some wisdom and experience with us now but still be very, very innovative and have this collaborative culture.”
About CERAWeek Conversations:
CERAWeek Conversations features original interviews and discussion with energy industry leaders, government officials and policymakers, leaders from the technology, financial and industrial communities—and energy technology innovators.
The series is produced by the team responsible for the world’s preeminent energy conference, CERAWeek by IHS Markit.
New installments will be added weekly at www.ceraweek.com/conversations.
Recent segments also include:
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A complete video library is available at www.ceraweek.com/conversations.
About IHS Markit (www.ihsmarkit.com)
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