What does Microsoft's cloud momentum mean for NZ CIOs?

There was a time when Microsoft hid away from innovation, an ageing dinosaur in the new world of technology.

Marooned in darkness as Apple and Google danced on by, the Microsoft of yesterday was in danger of becoming irrelevant.

Fast forward a matter of years and Redmond has changed. Triggered by a change of leadership and culture, Microsoft hasn’t just emerged from the shadows, it’s now shining like a beacon across the world, ripping up the industry on its way to cloud supremacy.

But as the marketing wheels spin from Seattle to Sao Paulo and back, addressing the media in Auckland, John Case, corporate vice president, Microsoft Office reenforced Microsoft’s standing as a changing company, a company aware of past failures but confident of future innovations.

“Office 365 is very central to us reinventing ourselves in the mobile first, cloud first world,” says Case, fresh from revealing that the company’s cloud services portfolio, containing Office 365 and Dynamics customer relationship management (CRM) online, will be available from two data centres in Australia by March 31, 2015, Microsoft.

These days, Case admits Microsoft is undergoing a “very public and visible” strategic transformation, as it tries to hammer home consistent messaging about its vision in enterprise for 2015 and beyond.

“We’ve been incredibly consistent about our transformation as a company and as proved over the past two years or so, we’ve made noticeable changes,” he adds. “Because of who we are and how we think about the cloud and productivity, we can differentiate ourselves from the market through the products we sell and the relationships we make with our enterprise customers.”

There was a time however when for Microsoft, differentiation meant behind, different in the sense that the company remained off the pace compared to its competition.

But with 2015 around the corner, and new CEO Satya Nadella settled into his new role, the Microsoft of today is throwing down the gauntlet to its industry rivals, using its cloud services portfolio as the stick to bash Amazon Web Services and those seeking market share.

“There is no CIO in the world who looks at Microsoft and says ‘hmm I’m not sure they are ready for the enterprise space’,” adds Case, who insists that while Nadella’s appointment has helped drive change, the wheels where already in motion under former chief Steve Ballmer.

“We believe Microsoft cloud is different in terms of allowing customers to run data locally in the cloud whether that be public or private. The conversation has changed within enterprise, it’s now a case of not if but when organisation’s move to the cloud.”

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With 20 million businesses already running Microsoft cloud across the world, the door has been wedged open for organisations across New Zealand to walk on through and take advantage.

“Compared to the other cloud vendors in the market, when it comes to enterprise customers actually bet their business on Microsoft,” Case adds.

But while the over-the-top American enthusiasm doesn’t always wash with the more grounded, or even cynical, Kiwi business folk, Case believes he has a case, quite literally.

“We understand that every organisation has specific needs and requirements but change is happening and it’s no extra challenge for Microsoft,” adds Case, alluding to the company’s ability to specifically tailor its cloud services to each individual organisation.

“We don’t believe one size fits all is the way to go with the cloud, we work specifically with our customers to help them move to the cloud on their terms.”

With the New Zealand market reflecting global trends, Case says retail and media have been the quickest to move to the cloud, with banking, government and the public sector unsurprisingly lagging slightly behind.

As reported by Computerworld New Zealand, Kiwi small-medium businesses are leading the world when it comes to Office 365 adoption, with Microsoft New Zealand reporting that 15% of the market are now moving to the cloud with Microsoft.

From an enterprise perspective however, 50% of the company’s enterprise customers have made a commitment to move to Office 365 in New Zealand.

“In general the commercial vertical is moving along quickly in New Zealand,” adds Paul Muckleston, Managing Director, Microsoft New Zealand.

“We’re also finding that professional services and consulting groups are moving to the cloud relatively quickly. The banking sector is unsurprisingly taking a little longer but the public sector is an interesting space at present because history suggests they would be late to jump onboard.

“Yet we’ve found within public service agencies the move has been more workload based - the increased uptake of Yammer and Sharepoint online for example have proved to be one of the biggest shifts during the past twelve months.”

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With over 150 features rolled out during 2014, Office 365, to some degree, almost sells itself within enterprise.

Yet for the key decision-makers in businesses across New Zealand, Case understands the boxes Microsoft must tick to initiative an enterprise-led move to the cloud.

“When we build data centres we assess how much of the market we can truly serve,” explains Case, referring to Microsoft’s new two geo-redundant data centres in New South Wales and Victoria. “While performance and latency does of course matter, Microsoft also works off strong beliefs when it comes to data privacy and security within the cloud.

“In terms of locally storing data in Australia, we’ll be certified for IRAP the day of our data centre launch therefore we’re taking issues of location off the table.”

As Case explains, Microsoft also don’t co-locate business and consumer data.

“We’re very clear on this,” adds Case, who cites Australian multi-nationals Qantas and Coles as big adopters of the Microsoft cloud platform. “It’s a case of separate racks and separate administration in every possible way, there is no overlap.

“We’re also financially backed with 24/7 support across the world so if we have an outage, and unfortunately this can happen, we immediately reimburse customers with credit. This is not some future discussion or negotiation, it’s an instant procedure with the credit return set in advance upon the signing of the contract. We’re very visible in that respect.”

Speaking following a whirlwind tour of Australia and New Zealand, Case, who resides in Redmond, says the company’s move Down Under represents only the second time Microsoft has offered locally geo-redundant data centres across the world.

“It’s certainly unique for sure,” he adds. “In the US we don’t provide a local data offer but in Australia we realised it was important for a big percentage of the market to say that their data didn’t leave the country so it was very much a reaction to demand.”

While offering geo-redundant data centres is a costly move for Microsoft, Muckleston, echoing Case’s comments, believes the statement of intent will help Government agencies in New Zealand make their transition to the cloud.

“I’ve been talking with the Government and time and time again the overriding message has been that if we can’t provide it in New Zealand, at least make sure it’s in Australia,” Muckleston adds. “The Government is comfortable with the legal environment and privacy laws in Australia and this move will help make them more positive about the benefits of public cloud.”

As the company’s visible transformation continues in the public eye, behind the data centre doors Microsoft continues to prepare enterprise for cloud - a move which in the words of Muckleston, “is a case of when, not if.”