Microsoft Teams: From Slack Rival to AI for Work – Jim Gaynor, Directions on Microsoft

Jim Gaynor, Editorial Vice President at Directions on Microsoft, reflects on the evolution of Microsoft Teams and its shifting role in Microsoft’s strategy.

• How Teams evolved from a Slack competitor to a central productivity platform
• The impact of the pandemic on Teams adoption and scale
• Why Teams Premium is becoming the home for advanced features
• Microsoft’s pivot to Copilot and what it means for Teams
• How customers are approaching Copilot adoption, ROI, and data governance
• Jim’s perspective on Microsoft’s long-game approach to AI and platform strategy

Thanks to AudioCodes, this episode’s sponsor, for their continued support of Empowering.Cloud.

Transcript

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Tom Arbuthnot: Hi, and welcome back to the Teams Insider Podcast. This week we take a walk down memory lane. I talked to Jim Gaynor, who's editorial Vice President at Directions on Microsoft. We talk about Microsoft's Teams launch the competitive landscape. What's happened over the years, the massive growth, the pandemic impact, right up to date with what's happening with Teams premium, and also Microsoft's massive pivot towards Copilot.

Really interesting conversation with Jim. He's covered the space for many years. Really enjoyed talking to him. Many thanks for him taking the time to jump on the podcast and also many thanks to AudioCodes who are the sponsor of this podcast. Really appreciate all their support on with the show. Hey everybody, welcome back to the podcast.

Excited to have this conversation. I had an awesome prep call with Jim. We probably could have talked for an hour in the prep call. Um, so we're gonna get into, uh, some Teams, some Teams, premium conversation, Microsoft journey conversation. Um, but first off, Jim, do you just wanna introduce yourself, please?

Jim Gaynor: Sure, sure. So, my, I'm Jim Gaynor. Um, I'm the. So was it Vice President of Research? Uh, titles or titles are free, um, at directions on Microsoft. Um, I lead our editorial team, so, um, I'm kind of responsible for checking the, uh, the tone of our overall coverage where things land. But then we've got editorial, we've got an, you know, we've got editorial, we've got advisory, we've got training.

Um, so yeah, that's what I do. But, but fortunately I still get to write about things and Teams is my beat. I've been covering Teams since it first came out in 2017, was a user of Slack and other things as well. Uh, I. Heck, I was helping support Skype for Business back when it was, uh, back when it was still Lync and Office Communication Service.

So, 

Tom Arbuthnot: and you are well over, you are over eight years at Directions on Microsoft, so a long run of focus on Microsoft and helping people understand it. 

Jim Gaynor: Yeah, yeah. I've been, I've been at Directions since 2017. I've been in it both in higher education and in enterprise work since the early 1990s. So, you know, lots of places around there.

And I've been writing, I've been writing a little bit about it on the side here and there since, you know, since the days of using it. 

Tom Arbuthnot: That's, that's going back a bit now. 

Jim Gaynor: I've earned the gray hairs. 

Tom Arbuthnot: So I'd love to hear from your perspective that that Teams journey, like you were, you know, say you were covering it from, from the start when it was kind of the, the, the Slack compete conversation.

Jim Gaynor: Oh yeah. Yeah. So, so when it first came out, you know, slack was eating, slack was eating everything it seemed like, and it was all about per, we were talking a lot about persistent, uh, text-based communication. 'cause back then, you know, one of the, one of the big co one of the big comments we have, um. When we were using Skype for Business even was like, okay, so we've got these, these situation rooms 'cause there's an event going on, but none of it's persistent.

If someone like left the, left the room and came back in, like it wasn't still there anymore, but Slack was, you know, you've got this persistent threaded chat, you can come back to it, you can you, you can return you. That was that. And then the ecosystem of that helped. Foster was something that Microsoft hadn't addressed, and so in 2017 they announced Teams and they said intelligently and not, not long after, they said pretty intelligently that well Teams will also eventually replace Skype for Business.

Which makes sense. You know, they've got all of this they were using and they've already had the backend of Skype for Business online, and they said, well, we'll we'll bring that in. And that was the journey going on for, for a good number of years. They were bringing in more of the telephony items and Teams.

Yeah. 'cause for those who don't 

Tom Arbuthnot: remember, Teams launched as just chat and chat rooms. Like that was the very first instance. We didn't even have meetings initially. And then, then it was meetings, then it was, it was calling. 

Jim Gaynor: Correct. Yeah. Yeah. That's all it was. And 'cause that's what people really wanted, they added that in later.

Um, but the one thing that Teams always had was it's, um, it was a conglomerate application. It wasn't like, yes, there's the, the underlying team service with which lives in Azure, but Teams itself is put together of all these different things, which is what Microsoft does. They, they reuse what they've got.

So you're using back then Azure AD, now Entra ID for your authentication. You're using, um, Microsoft 365 groups for your groups. You're using SharePoint Online and OneDrive for your storage. It's all of these other things that they had put together to make a, a nice. Conglomerate service. And that's continued onward with Teams.

So we had the, we had, okay, so it's just text-based chat. We're just competing with, we're just competing with, uh, slack. And then we're gonna bring our telephony stuff in here because we're gonna put all our eggs in one basket and Teams is really hot, so we wanna keep doing that. And then the pandemic hit and remote work exploded, as you well know.

Yeah. Everybody here, everybody who's listening to us knows and. Suddenly, it wasn't about fighting off Slack, it was about Zoom. It was about remote meetings and that's where you started seeing, I mean, the, the immediate things were things like, oh, I can only have this many people in a meeting soon. Let me do this.

Oh, I, so you suddenly saw all of that being attacked? 

Tom Arbuthnot: Yeah. I love that like competitive scenario. 'cause Microsoft were at their best when they're in a, in a compete situation, I think. And it was like, yeah, you gotta give credit to Zoom. They stole a march on some, some great features, but it was just, it was very, very fast.

It felt like the whole of Microsoft mobilized during the pandemic and it was just like, this is the thing. 

Jim Gaynor: Well, you can, I mean, yeah, you can look at what they've done for a lot of things that that's, that's, yeah. That's just been so great when, when they're the underdog, when they feel like they've gotta fight back is really when they get going hard.

And as a side comment, it's interesting because they then will. They'll have the dominant position, but still want to be treated like the underdog. Which, you know, that can be a little bit odd. Like, like you own the market. You're not, you're, you're, you're not the scrappy person who's being repressed. Um, 

Tom Arbuthnot: yeah, yeah.

Well, we'll get onto the AI conversation a bit 'cause that's a whole different one. But, uh, yeah, so the other thing I think's interesting about the pandemic period is like there, there was still in the early days, it wasn't a foregone conclusion for lots of customers. Like, very lot of customers were happy with Skype for Business.

That was their platform. And the pandemic really changed that. It was like, oh, we need to scale way beyond what we thought was individual customers and then Microsoft. They never could have scaled the Skype business online infrastructure like that. It just wasn't built like that. So it felt like a, fortunately, a really good bet to have that kind of cloud-centric architecture.

Jim Gaynor: Yeah. Yeah, because it, it was a very, it was very good timing. Um, what was funny, do you remember though, how they talked about how, um, early on in the days of the pandemic that you were, um, what was it, government in the government cloud? So this is obviously, you know, us, um, parts of the government infrastructure were actually being hosted in public cloud for a bit.

Tom Arbuthnot: 'cause they had to burst out. They didn't have enough pure infrastructure. That's interesting. 

Jim Gaynor: Exactly, exactly. Because they were slamming so much infrastructure at it because not only did you have everybody adopting Teams, you also had people moving, doing lift and shifts of moving their infrastructure to the cloud and everything at the same time.

And it all shares that same infrastructure in Azure. But yeah, they, they, they ramped things up so quickly. They went from 300 meet. I mean, what is it now? You can have 10,000 people in a Teams meeting. Only a thousand interactive. The rest are kind of in a, in a feeding mode. Yeah. Whereas it, the original limit was like 250

Yep. 

Tom Arbuthnot: Yeah. And it was a big deal when we pushed it up to 300 and then 350 That was like a big deal at the time. 

Jim Gaynor: Yeah. So watching that happen and that became the thing. So hybrid work was the thing for several years. And now we're getting into what you hint at earlier is, is like, okay, so you know, Teams is a, Teams is the platform.

I remember, you know, Ignite 2022, Satya talking about Teams. Teams isn't the product, Teams is a platform we're gonna develop on Teams. Yeah. We 

Tom Arbuthnot: Teams basically positioned as an OS. At one point it was like, well, everything like, like, and this is what happened to Microsoft. When don't you go, when you are hot, you are hot.

Like that's the, the center of the world. 

Jim Gaynor: Mm-hmm. And. Then by spring of 2023, well that wasn't the center of the world anymore. 

Tom Arbuthnot: Yeah. That was Copilot, 

Jim Gaynor: that was AI. Um, and Teams, at least though, was still focused. 'cause I mean, you can go let, let's, let's rewind again for a second. Go back to 2017 and what was.

Teams actually being used for too. Remember chatbots? Remember natural language interfaces? Remember how hot chatbots were in 2016 and 2017? Yeah, 

Tom Arbuthnot: yeah, yeah. 

Jim Gaynor: And that was the thing. And then suddenly, here comes AI volution enabled 

Tom Arbuthnot: business process. CEBP. We were talking about bots. It was Bots were gonna be everything.

Jim Gaynor: Yeah. Bots and pages. And then suddenly that went away because, so it's, again, it's, it's funny how there's always like, this is gonna be the big thing. Oh, maybe not this. You still come back and you, um, cannibalize isn't the right word, but you have parts of that that you bring forward and then glom on to help build this new conglomerate that moves you forward.

So here you have Teams, which now has amazing penetration due to its adoption during the pandemic and Teams at the initial level starts to become one of the interfaces to Copilot. 

Tom Arbuthnot: Yeah, and I think potentially one of the key interfaces in the sense of you've already got people who are at Centric and it's a modern client platform, so it has that ability to, you say the bot story now a bots are agents, 'cause agents is the core word.

But I mean, it's the same frameworks. Yeah. Mm-hmm. Um, yeah. So I think it's, uh, it's interesting now and, and, and during that period we had kind of a brief, like beaver's, the hotness, and then it was like, oh no, wait, no, that hasn't really gone AI's the hotness. But, but I think it's interesting now to see Teams isn't the primary focus.

It's still obviously a very important platform, but definitely AI is. 

Jim Gaynor: Yeah. And that's a good, that's one of the things we talked about during the, during the, uh, preview, during the testing call too, is now. Teams isn't the hotness. Um, but it's about using that and, and getting more revenue out of it. Um, getting more things out of it.

'cause now we had, we had Teams premium that was announced back in 2022 and early 2022. And Intelligent Recap is still, I think, one of the killer of the killer. Yeah. Uses of Copilot and the use of machine learning forward. That's like, that's the big thing we are like, well how do I get that? We actually had to write a report about people, for people who were, well, do I have to have Copilot to get intelligent recap?

No, you can just get it with Teams premium. It's cheaper that way. Oh, okay. Cool. 

Tom Arbuthnot: Yeah. We had Mary, Mary Jo on the podcast. She was saying a big part of Direction for a while when they're probably still now is explaining the, the fast movings of what's premium, what's Copilot, what are all the other add-on skews.

'cause we had this explosion of add-ons and boltons and extras. 

Jim Gaynor: It's still happening. It's still happening. Um, you know, we, when they're. We're talking now about the differences between Microsoft 365 Copilot and Microsoft 365 chat, and all of that keeps moving around. And that's part of it is the, that we're quickly adopting what's going on, but with Teams now that now that Copilot is the golden child, golden child, and Copilot is where Microsoft is looking for adoption.

Um. We just had some stuff, uh, some information that we got saying that Microsoft's, uh, the spiffs, the, the bonuses they give to, to partners to help customers adopt things are now pretty much focused entirely on ai. Those are the stories they want to tell. Like, well, we'll give you money to help a customer journey if it's involved with ai.

Whereas before it was like, Hey, can we get them involved in Teams? Can, can we get them involved when it was blockchain? So it's, so it's that. So. With Copilot being the, being that Golden Child Now Teams now shifts from being, we're pushing adoption to, we're trying to increase revenue per user, the magic arpu.

Um, and so you see things like Teams premium. You see things like, um, Teams, rooms. You see more features getting pushed into Teams Premium. We've got the Queues app. 

Tom Arbuthnot: Yeah. And 

Jim Gaynor: the, which is, which is nice. It's, it's great for a company that wants to do a small, um, you know, call center thing. But if you want it, you better have Teams premium.

You're doing places, places as kind of good for introductory facilities management, people management. But if you wanna get it, you need Teams premium. Oh, and by the way, you also probably need Teams rooms too, and Teams, pro devices and things. 

Tom Arbuthnot: Yeah, it definitely feels like everything fancy now. It's like, like the bar is, seems in core is, is fine for most people, but I, if you want the, everything fancy and you just expect it to be in premium or so, and be pleased if it's not rather than the other way around.

Jim Gaynor: Yeah, pretty much. Um, but they're still trying to, they're still trying to refine it. Um, that's the thing too, is that it's, it's, uh. Before I go there, one other thing you're seeing is, um, a lot of, when they were trying to push adoption, they pushed a lot on, well, here, we'll give you these things for free. Oh, here's these, all these connectors.

Remember all that when they were making connectors to everything into Teams, so, oh, you've got Dropbox. We'll connect that in and. They're slowly winding back now, support for a lot of those connectors and saying instead, well, you know, well you can just do a flow, do a power app for it. And again, that's something else like, oh, well you've gotta pay a bit more money for those.

Every, every run of a flow comes to the cost. So it's more so again, that's the move from when they're pushing adoption. They'll give you all the things for free. They'll make it plug in and interoperate with everything. But when you start moving to a, oh, it's a mature product and we wanna increase the revenue per user.

Then it's the, well, how can we use it? How can we leverage this bull, this bully pulpit that we have? Yeah. For other things. 

Tom Arbuthnot: Yeah, definitely. Definitely not, not, not a charity. There's a, there's always a, an opportunity potentially to, uh, the revenue and, and that's kind of part of the whole Microsoft three five journey as well.

The whole, everything's in E5 and now actually a lot of things are broken out beyond E5, as well as they've looked to monetize different, different scenarios. 

Jim Gaynor: Wes keeps Wes Miller, another one of our analysts. Um, you should talk to, have you talked to Wes? Yeah, yeah. Have actually, actually 

Tom Arbuthnot: he's uh, I've been DMing on the Twitter.

We've got Yeah, we were talking about getting him in the pod as well. 

Jim Gaynor: Oh, that would be great. Um, Wes has long hypothesized, like, when are we gonna see E7? That's one thing he likes to talk about. 

Tom Arbuthnot: See, my theory with that is we never will because of the EU and competition commission like Microsoft gets so much grief for bundling.

Yeah. I think Microsoft have worked out, actually they can make more money by not bundling than bundling. So, um, I just don't think they need the grief. 

Jim Gaynor: Yeah, they, they've, yeah, exactly. A they don't need the grief 'cause they're definitely getting the grief from the eu. Um, but like, like the airlines, they've discovered that they can make more money charging you a la carte for everything.

Tom Arbuthnot: Yeah. Yeah. Go ahead. I say let's get into that, uh, the Copilot conversation because I think it's really interesting. And for you obviously follow the space. I follow the space. Like, uh, the whole, I don't think anybody could have foreseen where we are now in that open eye, open AI relationship, and I'm so glad that Microsoft are for better or worse in the game.

Like there could have been a scenario Yeah. If they didn't have that open AI relationship where they were kind of this Yeah. Like, you know, the, the appley a bit fumbly type scenario, but actually they're bang banging the, in the conversation, which is great to see. 

Jim Gaynor: Yeah. And, um, can I share a story please?

Briefly. So, um, when I was at Ignite in 2018, um, I was there as an analyst and a handful of us got rounded up by analyst relations and they're like, okay, we need you to meet at this place and don't tell anybody. Oh, okay. Um, and then they get us all there and one of the handlers comes and takes us all. We get taken off to someplace way away from all the normal halls.

We've got people around us and we get all shuffled into this relatively small room like, are we okay? And Satya walks in. We get this brief period with Satya and it was great because it was we, we was talking to him and it was a much more unguarded conversation. It sounded like we were talking to a person as opposed to the guy who was spouting vision on the stage.

And one of the things that got him so excited that you could just see that he was excited about was AI as he was talking about artificial intelligence and machine learning. Even then. 

Tom Arbuthnot: And that's interesting to hear 'cause that is way before the kind of public peak of Exactly. 

Jim Gaynor: Exactly. And so, so it doesn't surprise me that they were in the game.

That's obviously something that he's interested in back then. So when I started seeing all this. Well that, that makes sense. Um, but it's still, yeah. It's very much interesting that they're in the game. It's very good for Microsoft and their customers that they're in the game. And Microsoft does have the position of.

Yes, they're pushing AI and everything, but they're still looking at ai. I don't know if you quite wanna say it this way. It's not a, it's, it's still a feature that ties into everything else they've got because Microsoft has. They've got all your email, they've got all your documents, they've got all your SharePoint stuff, they've got the entire business context.

They have identity already there. Wes will go on about how identity is like the thing to have and other analysts will too. Um, they've already got controls for okay, if you actually are, are getting in and managing your data, which is one of the most important things you want to do if you're adopting ai, is do that kind of data management.

Tom Arbuthnot: And, and, and they've got, they've got, yeah. Customers trust, right? Because you've already given them your email and your data, and your meetings and your calls, right? So you're like, I, I've already trusted you with my most important assets. So actually, who do I trust for the AI conversation? Like, do I bring in somebody else or do I also trust you?

Jim Gaynor: And if the AI is gonna be really useful to you, it needs that context. Understand, so, so you've already, you've already entrusted Microsoft with all of your stuff. And then you can say, okay, well we're adopting Copilot and now here's all my stuff. Whereas if you're with open ai, it's the, well, then I have to give them in to really make use of it for your business.

You have to give it insight to all of your stuff. If you're working, you know, working with philanthropic, whoever you're working with, you have to give them insight to all your stuff. And Microsoft's like, we've already got your stuff, you've already entrusted us with it. 

Tom Arbuthnot: It's interesting, I feel like, but I feel like we're very much in that like, uh, zoom Teams or Slack Teams.

Kind of a competitive scenario. Again though, because the open AI definitely stealing the Mindshare March. Yeah, and I think a lot of early adopters obviously jumped to open AI because that Chat GPT brand is almost synonymous with AI in the public domain. Oh, yeah. And you say Microsoft, Microsoft have got all these infrastructure and trust advantages.

Um, but it still feels like there's a lot of effort. And as you said, this fy we've just come into, there's an even harder focus on, it's all ai, it's all agents. Uh, so go on. 

Jim Gaynor: I was gonna say they can afford to play a slightly longer game. I mean, that's what they, that's what they did with Teams, right? Yeah.

They, they, one of the common things that Microsoft has is, well, they, they have office. Windows, which is the cash cow that can kind of subsidize all these other things. It's been interesting though because AI has all of the, um, it's got a lot of the CapEx, it has the full on infrastructure, massive infrastructure requirements.

Yeah. Which is why you're seeing some of the developments with Microsoft lately. It's, it's that, well. They have, if they're going to do what they want to do, they have to invest massively in these capital expenditures for data centers and GPUs and everything that comes on doing, doing all of that. And that's where so much of their money is going and they're, you know, ruthlessly pruning other things so they can focus on this.

Tom Arbuthnot: It is an absolute, like we say, the the, certainly the roles they've cut recently, the moving around, they're doing the product prioritization. I think it's interesting with Microsoft because they're somewhat interestingly positioned, all in all that infrastructure investment in that they can leverage it for their first party products and they can sell it as obviously infrastructure for third parties as well on the Azure service.

So they've kind of got two bets on infrastructure. One is we're going to need it anyway. And the other one is we're going to be a serving other people doing AI on our cloud. Well, that's 

Jim Gaynor: even open ai. Yeah. You know, that's their most of, most of their use. That was part of, part of Microsoft's deal, like, well, you're gonna use primarily Azure so, so, so much.

It's kind of funny because, okay, so Microsoft invests in open AI who turns around and invests in a, who turns around and and buys Azure. So it's like, well, we give you money to give us money. 

Tom Arbuthnot: Yeah. Yeah. It turns out to have been quite a smart bet by, uh, by all accounts, in terms of what the, what the stake is now worth.

I think it's 49% or something of, of that business is already just worth an insane amount of money. 

Jim Gaynor: Yeah, well, it, it's, and the level of that investment was seen when there was all the thrash about Sam Altman possibly leaving the board. And whether I would come on a Microsoft, and even now when it's, when OpenAI is talking about going, you know, switching to a more for-profit structure, um, you know, we don't need to go into all of that.

I, I, there's probably better people you can talk to to get all those details, but it's interesting to watch, but. It emphasizes how well Microsoft got into that game early on, and to a certain extent, how much open AI is depended upon them. I love, which is very good for Microsoft. 

Tom Arbuthnot: Yeah. Yeah. I love your perspective on the long game as well.

That's really, uh, an interesting point, isn't it? Because if you look at AI and like I'm following the space like diff, each week a different model is slightly ahead, like Grok slightly ahead. Anthropic is slightly ahead, open AI slightly ahead. Mm-hmm. But, but, but within months they're all back within the same kind of.

Shooting match. So even if you see something on one of the other models, you think, oh, Microsoft can't do that six months time. It kind of seems to level out. And you say they've, if they've got the trust and they've got the mind share and it's all in one box, then if you're a customer, you can sort of say, well, okay, this, this ABC product might have an edge now, but give it six months, it's gonna be a, a wash.

Jim Gaynor: And if it isn't, you know, I mean, you can get grok on Azure. Yeah. You know, there's, the thing is that is like, there's like, well, you know, maybe, you know. So maybe you don't, maybe not. Maybe you don't want Copilot for every use. You do want open ai, or you do want these open other models for that use. That's fine.

It's on Azure. We've got the infrastructure side too. We've got the data centers. Yeah, we'd love to sell you. This 

Tom Arbuthnot: feels very sassier, doesn't it? It's like, like we, like we love Linux, we love whatever runs on Azure. We, we are fine with that. Same thing with the models. As long as we're running on Azure, we're all good.

Jim Gaynor: Exactly. Exactly. You know, it's, you know, just to bring it back to Teams, it's like, well, you've got Teams. Um, you know, we'll, we'll give you these things. There was one of the things I was taught, I was, when I mentioned cues and places, cues to me, spec cues to me specifically, it's, it's a good enough application.

It's not, if you want a full on customer contact center, it's not there. Yeah. But it's good enough. It's like, okay, cool. You're using Teams. We, we we're that, and if you want to use us for a contact management system, there's that. But then they're also building in integrations so that if you want to use a third parties because it's more full featured, well fine use their stuff.

But you're still using Teams, you know, they're, they're happy to let partners take some of the dollars for. The more niche cases, but the main thrust of it's like, well, we wanna own the main thrust of it, and if you're still on our platform, you're still on our platform. And then we can leverage those integrations for other things.

Tom Arbuthnot: Yeah. Far better to have a bunch of partners also saying, yeah, Teams is great and you can do this with us than, than trying to push them off the core platform. So, yeah, totally. Mm-hmm. 

Jim Gaynor: Yeah. Even one of the things I used to cover, um, before I moved into the, into this role was I was covering Windows server, but also Azure Arc.

And that's a total divergence for the people who come here to talk about Teams. But Azure Arc is basically a place like, okay, so all these Azure management services you have for managing your VMs and infrastructure, well, yeah, you put Azure ARC on your system and it doesn't matter if that VM is in AWS or Google or wherever, you still come back and you can use your Azure services to manage.

Tom Arbuthnot: It's interesting. It's not that much of a leap because if you look at the Microsoft 365 local story and what they're kind of pitching as a conceptually the server products on the subscription, and obviously that'll be Skype for Business. It won't be Teams, but like, actually as long as you're paying a subscription, if you, you wanna run this private infrastructure, that's okay too.

Jim Gaynor: Yeah. Yeah. That's, it's. it's a marvel to watch. It's a very intelligent business. And it goes all that, that strategy goes all the way back to when they first bundled office in the 1990s. You know, it's the, it's not it, it's not the slack before it, you know, we can, we can bring it back to Teams.

Slack was best of breed focused. Teams still has some places where I think that it, it, it does not match up to play things like Slack or even things like Discord, for example. But Teams has all your stuff. Teams ties into your SharePoint, into your identity. Yeah. Into your documents, into all of those things.

Whereas those are still, maybe they're better for specific purpose, but they're siloed. 

Tom Arbuthnot: And that, and that tie in, like you can obviously set up Slack and do some integration. Same thing with chat GPT. Like there's, there's some graph connectors now, but you've got to then do the work and connect it and run it and manage it.

And you've got two data stories, two vendor stories. So this like it all, for better or worse, it all just works together, is such a compelling story for Enterprise. It's like, well, I know what I'm getting, I know who I'm trusting and we're, we're broadly on this journey together of everything, you know, in one box.

Jim Gaynor: Microsoft does intelligently make it that, you know, going with them is the path of least friction, you know? Yeah. And also the, well, once you're in like, oh, so you wanna connect us to this thing, that's fine. You're using that thing and you wanna connect us to that, that's fine. But then once you're using the thing that you're connecting to us with, well that has.

Again, the conglomerate it's attached to. Okay. Oh, so you're using this, well, you'll need identity on this, so you'll need, you'll need your entre id. You wanna manage your entre id. Okay, so you need P two and now you need to have certain levels of certain security products and other things, so there's, yeah.

The octopus reaches its tentacles out and reaches into your wallet. 

Tom Arbuthnot: Definitely. And what, Jim, what are you hearing from customers as far as the Copilot conversation goes? I'd be interested to know what you are hearing, because I know you're doing a lot of work around that as well. 

Jim Gaynor: There's a lot of confusion.

I mean, really that that's it. It's the, they want to know how to manage it. It's gone. There's one set of customers who are still looking at, at proof of concept, right? They're looking at that. But then the kind of customers that we're dealing with mostly are large enterprise customers. So they don't move so quick, they don't adopt so quickly as people in the, in the, uh, Silicon Valley space and that kind of, you know, tech fast moving VC space.

Um, and, but now they're looking at it, they're looking at needing it. And for them it's the, well, that's nice that we've got Copilot, but what about the controls? What about, um, I have to do a legal hold on it. Um, what's all this? I'm hearing how, how do I make sure it's secured? And you're hearing more about using, uh, using malicious prompts now to, to get information.

Um, how do I ensure that it's not getting to information that I don't want it to? Because that was, that was one of the first things I remember when Google was releasing was. Making, uh, search appliances that you could run on your local area network, and it would find all these things and be like, oh my God, it can't, it can't, yeah, it can't expose that into search and Copilots doing the same thing.

Tom Arbuthnot: Yeah. We had it with Delve as well. Do you remember like for the, for the shortest time Delve would just surfacing all sorts of stuff, but it's like, oh, maybe not. Yeah. 

Jim Gaynor: Like, no, I don't want it to know that I'm doing this. And so that, that comes back to the same thing. So. For a lot of the customers, they want to get Copilot.

They want to know that their data is both in it. How can we get our data in it to get the context, but how can we be safe about it? Um, how do we bring our data in? We, we've talked a bit about, you know, we, there was rag was the big thing, but now it's still. There's, uh, the new protocols, uh, a to a, I think is one for agentic and MCP is the other one that, that, that's coming out now. Yeah. MCP is really, really exciting 

Tom Arbuthnot: as a, like, it seems like early days in what I've tested, but like the, the, the premise that you can start to attach those application interfaces directly into the chat is really cool. 

Jim Gaynor: Yeah. It was like we had a couple of people in internally when Microsoft announced that, okay, we've got an MCP for learn.

Um, and people are like, oh, that's, you know, they could just query that and who would need somebody? Like what directions does, when you can just query, learn and have it give you all the stuff, it's like, yeah. You realize how much outdated information is in learn. 

Tom Arbuthnot: Yeah, yeah, yeah, yeah. Yeah. I think we're safe.

Jim Gaynor: I think, I think, I think all of us are safe for the time being. Um, one of the thing that we do still hear that we're hearing a lot is also about ROI. How do I actually. Okay, we've got Copilot. How do I actually measure and tell upper management that we're getting our money's worth? Whether it's, you know, are we, what, what improvements are we seeing and what kind of productivity are we measuring?

That, that that's, it's not the. It's, how do I do it? Sometimes it's more how am I justifying this? 

Tom Arbuthnot: Yeah. 

Jim Gaynor: Because for so many companies out there, you know, the, the, the, the turn in economy in the past couple of years has been very dramatic. And they're being told, well, AI is the future. I've gotta adopt ai.

But then they're like, well, how do I prove that this is helping my business? So 

Tom Arbuthnot: yeah, I'm hearing similar things from the, the organizations I talk to, like they know. AI is gonna have an impact. So legal in particular has been really interesting, like loads of legal companies are really getting into it.

And part of it is that ROI story. But also part of it is we know we need to get our people using ai, so how do we drive that adoption? So it's kind of like get, get the money outta our investment, but also change the culture to get people using it. 'cause we're gonna get left behind. 

Jim Gaynor: And one thing that worries me a little bit about this is a lot of the.

A lot of the business visible benefits of AI in general. This includes Copilot, this includes open ai, this whatever, um, is based a little bit on a information disparity. I'm an early adopter and thus I can do certain things faster using AI than people who are still doing it traditionally can do, but I'm still charging the rates that it's charged for people who are doing it traditionally.

Once everybody has the same tool, then the playing field levels, again, I don't know if you remember the early days of eBay when in the states people would, you had a group of people who would go off to the countryside and go antiquing and then take their hall and they'd sell it on eBay at a huge markup because they had much greater exposure to all these audiences.

And then once everybody figured out eBay and those, those markets figured out eBay, then that collapsed. It was, they had an asy asymmetrical advantage. Yeah. And I think we're gonna see some of that with ai. There's companies that are trying to adopt it very quickly to have an asymmetrical advantage, but eventually it's, it's going to be a level playing field again.

So, yeah. Yeah. Well that, that's stage thing 

Tom Arbuthnot: is in legal, is you can't, if, if that is going to be true and it feels like it is on some timeline, you can't be the, the firm that didn't go on the journey. 'cause suddenly you are disadvantaged when everybody else has set that new bar. 

Jim Gaynor: But the other side is, is just because you're an early adopter, don't expect that early adopter advantage to continue, because eventually the playing field is gonna catch up with you.

Yeah, 

Tom Arbuthnot: yeah. That's a good point. 

Jim Gaynor: So, 

Tom Arbuthnot: awesome. Uh, Jim, thanks so much for taking the time. I really enjoyed the journey story. It's nice to hear from your perspective. Uh, it's like we, we were both, both following along from, uh, uh, opposite sides of the world, the same story. So it's nice to hear your perspective 

Jim Gaynor: on it.

Yeah, it's always good talking to you. 

Tom Arbuthnot: Awesome. Well, uh, no doubt I'll get you on again. Maybe, uh, catch up, see what, where Teams is in, in, uh, next year or something and, uh, have another chat. 

Jim Gaynor: Should be interesting. Should be interesting. It's why it's fun. It's interesting watching how they're continuing to refine things and you know, Microsoft does always ship a certain version of their own internal use and their own internal org structure, and that's changing a lot.

So it'll be interesting to see how it changes those products. So be happy to check in, check in with you later. 

Tom Arbuthnot: Awesome. Thanks so much.