How Will Hosting Office 365 In Australian Data Centres Make A Difference?

How Will Hosting Office 365 In Australian Data Centres Make A Difference?

From March 2015, Microsoft will host its Office 365 and Dynamics CRM for Australian business customers in the shiny new Australian Azure data centres in Melbourne and Sydney which it officially opened in late October. How will that process happen, and what practical difference will it make to customers?

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Microsoft says it hasn’t set an official end data for the transition process, but it should be completed by the end of March. New customers who sign up for either service with an Australian billing address will automatically be hosted in Australia. Existing Office 365 business customers with a local address will be given advance warning of the planned migration, and will have the option of deferring if the selected date falls at an inconvenient point. Dynamics CRM customers (a much smaller group) will have to opt-in for migration; it won’t happen automatically.

That three-month window between announcement and happening reflects a shift away from the notion that cloud-based business apps can be automatically upgraded — the reality is that even for relatively familiar tools, enterprises prefer a notice period. Dynamics CRM has a much slower update cycle and continues to promote on-premises releases, so it’s unsurprising that it is taking a less aggressive approach to migrating users.

One aspect that won’t be changing is the pricing, which is set globally (but translated into local currency). These are the current GST-inclusive Australian dollar prices per year per user for the business skews of Office 365. While Microsoft quotes per-month pricing on its site, the plans require a minimum 12-month commitment, so we’ve reflected that here.

Package Annual cost/user ($AU)
Office 365 Business Essentials $67.32
Office 365 Business $144.00
Office 365 Business Premium $166.32
Office 365 Enterprise E1 $106.92
Office 365 ProPlus $208.80
Office 365 Enterprise E3 $337.92

While it’s possible to score discounts on that pricing through careful negotiation, you have to be careful. Check our guide to issues to consider when negotiating Office licences.

What Are The Benefits?

One of the most commonly heard arguments for local data centres is improved latency — you can access applications and store data more quickly. While those benefits will accrue to Office 365 and Dynamics CRM users to some extent, especially if they’re saving data to OneDrive, it isn’t necessarily a major benefit. Tact that those applications are still installed to run on local machines — you run Word as a local executable, not as a browser-based extension — means that the latency issue won’t be as pronounced.

Another argument centres around improved data sovereignty, but that shouldn’t be overstated. While the data centres may be located on Australian soil, they are still operated by an American company that will ultimately answer to US law. If sovereignty concerns make that impossible, you’ll still be looking at a hybrid solution.

Perhaps the most compelling argument for the approach is that it provides geographically diverse redundant backup. If there’s a problem in the Sydney data centre, you can flip automatically to Melbourne or vice versa. Microsoft says the Australian rollout is only the second time it has taken that approach with Office 365 and Dynamics CRM, and that it’s a direct response to customer demand. And hey, if Microsoft wants to carry the costs of running centres in two states, why pay for all that infrastructure yourself?

One other interesting factoid that emerged during the announcement briefing: Microsoft won’t host consumer and business apps on the same rack within its data centres. “We will never co-locate business and consumer data,” John Case, corporate VP for Microsoft Office, said. “It’s against all our philosophies.” Rack-level separation is the minimum requirement, and in many cases the deployments are in different buildings, Case said.


  • Will Lync Online be moved as well as part of the Office365 migration? That’s the real application that will see massive benefits of a locally hosted MCU. Current experience hosted out of Singapore is (unsurprisingly) terrible.

  • The government contract we’re governed by outright bans offshore data hosting, but it’s still pretty shady on local cloud services. I don’t know any companies in our sector that have managed to get permission to use them yet.

    On the other hand, we’re an exchange/dynamics CRM shop so it’s worth a go.

  • It will be only slightly harder for the NSA to get hold of your data. They will either get it through a backdoor or via the Australian intelligence agencies since Australia is a member of the Five Eyes spying group. It doesn’t matter that Microsoft is governed by US law in the USA, here it is subject to Australian law.

  • Data sovereignty is the key for my organisation – in health. Being located in Australia makes them bound by Australian privacy legislation, whether they are an overseas company or not.

    • Facing the NSA shutting down the USA office or the Australian Arm being fined for disclosing the data… Microsoft will hand it over faster than you can say “CIA Rendition”

      • Actually Microsoft has already shown that they will ignore a court order to hand over data on overseas hosted. That’s right, they ignored the court order in order to protect their overseas hosted customer. And they were one of the first to up their encryption to prevent NSA snooping.

    • That’s right. While the merits of data being located in Oz can be debated, the fact remains that there is legislation that requires it. This will open up O365 to a host of government and qango customers who simply couldn’t consume it previously.

  • Whether you use an American company or an Australian company is irrelevant. The Patriot act guarantees access to your data if the hosting company has even a single point of presence on US soil — and that is regardless of whether or not your company’s data is stored there. Of course, as others have said, the point is moot anyway since Australia has an agreement to provide data to the US as required.

  • I think the issue with Sovereignty though, is the fact that the Geo-redundant DC’s are Singapore and HK which have very open policies for access to local data. Given the prongs in HK’s networks no doubt, there’s the AU, SIN, HK, US laws that probably apply to mailboxes. Now we only have to worry about the 5Eyes. With regards to Medical data, its similar to HIPAA in the US where the data needs to be stored in AU, so it’s still a better choice.

    Data Sovereignty also concerns those that are not bound by legislation, but I guess also by those who are bound government agencies with confidential requirements or to illicit activities. If it’s the latter then you might need to reconsider your hosting strategy. If It’s corporate espionage then you’re probably more secure in this environment then your own! 🙂

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