Office 365 and Dynamics CRM in Australia alleviates data sovereignty concerns: analysts

Services to go online in March 2015

IT analysts have welcomed Microsoft’s decision to deliver Office 365 and Dynamics customer relationship management (CRM) in two Australian data centres from 2015, saying it will alleviate fears about data sovereignty in the cloud.

Microsoft Office corporate vice president John Case told media on 9 December that this decision will provide customers with faster performance and help address data residency, particularly in sectors such as healthcare, education, government and financial services.

“When the services go online in March, we will be giving [Australian] customers weeks of warning that we will cut you over to the local cloud services,” he said.

However, for Dynamics CRM online, Australian customers need to opt in so they can be migrated over to the local service by Microsoft.

Ovum public sector research director Kevin Noonan said the announcement was “an important step forward” and marked a growing maturity in the cloud market in Australia.

“Data sovereignty continues to be a blocker for cloud uptake in a number of enterprises, despite improvements in risk management procedures. The provision of onshore cloud capability takes these concerns off the table in a very comprehensive way,” he said.

Noonan pointed out that the Microsoft announcement needs to be seen in the context of other Australian cloud hosting announcements from Telstra, SAP, Dimension Data and IBM.

“The onshore cloud market is fast growing in breadth and sophistication. Cloud services have clearly earned a place on the Australian CIO shopping list for 2015,” he said.

IDC Australia infrastructure research manager Glen Duncan said Microsoft’s move to deliver its cloud services locally is consistent with general trends in the cloud market.

“Both public and private cloud providers are taking space in or building Australian data centres in order to overcome customer concerns and government regulation around sovereignty and security of data, as well as potential latency issues,” said Duncan.

“It’s worth noting that data privacy, security and compliance are always in the top criteria for end user service selection for above non-critical workloads, and so for Dynamics CRM this would be important.”

Having Dynamics CRM in Australian data centres also allows better integration with other applications that might be hosted locally or in the same data centre, he said.

For example, if the customer is co-located in one of the third-party data centres in which Microsoft’s services are hosted, they can use the vendor's ExpressRoute service for fast direct access between cloud applications and other applications without needing a telecommunication provider’s link.

“IDC research suggests that end user organisations prefer third-party data centre oriented services to be located physically close to them. Microsoft’s decision to take space in both Sydney and Melbourne caters for this significant part of the market and will appeal to those end users where not only Australian-based but city-based physical presence is important," Duncan said.

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