Microsoft launches local Azure cloud at public sector

Microsoft’s Australian chief Pip Marlow sees plenty of blue sky in localising Azure. Image supplied.

It might have been the worst kept secret on Australia’s public sector technology scene, but that hasn’t stopped technology giant Microsoft from shouting the long awaited official availability of its locally hosted cloud computing platform, Azure, from the rooftops.

The Redmond-based company on Monday morning used it TechEd event in Sydney to formally throw the switch on the new hosted infrastructure play, which it is betting will actively challenge similar local offerings from competitors like Amazon Web Services that have stolen a lead in signing up public sector cloud computing customers.

Microsoft’s official launch of Azure down under is a potentially very big deal for government organisations of all sizes; not least because of the strong and enduring foothold Microsoft’s Office productivity suite and Exchange email and messaging software.

Until the launch of Azure’s Australian instance this week, government users hoping to use Microsoft’s products from an onshore cloud had to find a local provider to host the company’s software rather than just buying it ‘as-a-service’ direct from the source.

While that position may have sufficed until recently, new mandates such including the federal government’s Cloud Policy, updated earlier this month, now stipulate that “agencies now must adopt cloud where it is fit for purpose, provides adequate protection of data and delivers value for money.”

With other states adopting similar policies to slash their infrastructure and software licencing costs, it was only ever a matter of time before Microsoft responded in-kind by providing their own onshore hosting rather than leaving it to competitors like Amazon Web Services to continue clipping the ticket.

Just last week New South Wales Finance Minister Dominic Perrottet conspicuously name dropped Amazon Web Services as the latest addition to the list of cloud companies that government departments in the state can plug into for their hosted computing needs.

That disclosure from Amazon was almost certainly timed to try and steal a little of Microsoft’s cloud thunder.

At Azure’s big launch in Sydney, Microsoft Executive Vice President for Cloud + Enterprise, Scott Guthrie, joined Pip Marlow, country managing director, to say that by setting up an local “geography” the company was adding an “Australian accent to our global cloud network.”

According to Microsoft its new “Azure Geo” has at least two “redundant regions in New South Wales and Victoria” that will accelerate data speeds “and address data sovereignty considerations for Microsoft customers and partners of all shapes and sizes.”

There’s also a dedicated fibre link between Sydney and Melbourne, although that is more likely to appeal to businesses.

On the data sovereignty or offshoring front, the 800 pound gorilla remains is government because of the strict conditions governing where information is legally stored and who can gain access to it.

Microsoft’s Australian country managing director, Pip Marlow, didn’t hold back from blasting out the new offering’s capabilities, nor those of the people behind it.

“A world class cloud ecosystem requires a rock star team. We’re privileged to work with a team of thousands of Australian partners employing over 290,000 people who are helping our customers grow and transform their businesses,” Ms Marlow said.

“With the cloud, the barriers to innovation are not just being lowered, they’re being smashed away,” she said.

But the real question for many government buyers is whether Microsoft’s licensing fees, which are comparatively high in Australia will also be smashed away, or at least pared back.

The first and most obvious query on price for public sector buyers is whether there will be a single national pricing schedule for all jurisdictions – federal, state and local – or volume based deals as has previously occurred.

That wasn’t immediately apparent on Monday and Government News has put pricing questions to Microsoft to clarify what that position will be.

However the massive vendor   which over recent years has seen its global dominance of end-user computing seriously eroded by Google, Apple and others – may not have the bargaining power it once used to.

Both New South Wales and Canberra have indicated they are prepared to give agencies on either side of the jurisdictional fence access to each others’ procurement schedules and pricing to get better value.

New South Wales, under Mr Perrottet, has also signalled it’s prepared to give local government’s in the state access to its pricing schedules which carry the bargaining power of massive departments like Education and Health.

If that kind of cross-border open access and transparency takes root, it would create the logical equivalent of a price ceiling for smaller government buyers because they would potentially be able to access lower prices if unhappy with the initial price they were offered.

It could also create the equivalent of a national public sector baseline price – a scenario that is no doubt factoring how Azure’s will be pitched to government over coming months.

When that big ‘share’ happens, we’ll let you know.

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