Microsoft hosting NZ Office 365 in Australia

From March 2015 Microsoft will host New Zealand and Australian business customers from Azure datacentres in Sydney and Melbourne. Microsoft’s new Australian Azure datacentres opened in October and will cater for Office 365 and Dynamics CRM Online customers.

For most New Zealand customers the move has two implications.

First, Australia is closer to New Zealand than the previous datacentre hosting Microsoft online customers.

Better than Singapore

At the moment a datacentre in Singapore hosts Microsoft’s New Zealand customers. Direct data traffic between New Zealand and Singapore typically has a ping time of around 120ms. Things are worse over the public internet where NZ-Singapore connections can even travel via the US.

Australia is 24ms from Auckland. To put this in context, that roughly the same as the ping times between the Auckland and the most distant mainland destinations in New Zealand.

Conventional wisdom says latency becomes an issue when ping times go over 50ms.

Latency an issue, but not that much

In general lower latency means you access applications faster and speed up data storage. In the case of Microsoft’s Office 365 apps, that might not always be noticeable as they handle most processing tasks locally on your machine. It will make a difference when saving or retrieving data from OneDrive storage.

Yesterday Kordia announced a Microsoft Azure ExpressRoute service. This gives New Zealand companies a private connection to the Azure datacentres. It bypasses the public internet and makes it possible to build hybrid clouds using on-premise servers and Microsoft’s remote services.

The second point about Microsoft moving its Azure datacentres closer to home is a tricky one: data sovereignty, security and confidence. When Microsoft hosts your data on Australian soil, it is subject to Australian law.

Data residency

In a media statement Microsoft New Zealand’s managing director, Paul Muckleston, says Australian data centres help address data residency considerations, particularly in sectors such as healthcare, education, government and financial services.

Mucklestone is right in the sense that New Zealand organisations are more at home dealing with Australian rules than, say, those in Singapore. But Microsoft is an American company, which means it also has to operate under US law. If the US government decides looking at your data is a matter of its national security, then Microsoft is only going to resist so far.

The good news is that, to date, Microsoft has a good track record on resisting. However, if data sovereignty is a big deal for you or for your customers, you may want to look elsewhere for cloud services.

Data sovereignty

New Zealand government seems relaxed about hosting non-critical data in Australia. Some ruling National Party ministers and MPs have suggested moving most data offshore as a cost-cutting measure. That could yet backfire politically, but outside of specialist circles data sovereignty doesn’t seem to excite much interest.

For my money one of the best messages in Microsoft’s announcement is that the company will offer what Mucklstone calls “geo-redundant back-up”. What that means in practice is that should the Sydney datacentre run into problems, Microsoft will switch everything to Melbourne.

Although this kind of redundancy is exactly what cloud service providers would like you to think is standard practice, it would normally cost extra.

Xero drops Personal

personal-laptop-1d1561Xero is winding-up its personal accounting product.  The service will close on November 30, 2014.

In a statement to the NZX chief executive Rod Drury said the move will cost the company $700,000. From now Xero will focus its development resources on the core products for small businesses and accountants.

Xero Personal is only a small part of the company’s business. Drury said while it covered its costs, it only contributed $600,000 to the $39 million in revenue that Xero posted for the year to March 2013.

Seemed a good idea at the time

Drury says independent personal financial management looked like a complementary service to accounting, especially for small business owners. But the market hasn’t taken off for Xero or any other players.

Xero says existing Personal users on September 30 will be able to continue to use the service after their annual expiry date at no additional charge. The company will give help to customers wanting to export data.

Comment: Clearly Xero Personal is a distraction from the company’s main business. Dropping it makes sense for Xero. While the move is mildly annoying for users, I doubt many will be deeply upset.

Hopefully another company will be able to pick up the business. This tweet from Rod Drury suggests as much:

As one of Xero Personal’s 12,000 or so paying customers, I’ll miss it, but I won’t be heartbroken. The software is useful, but only up to a point. Most important, it can’t do what I want most from a personal finance application: that is give me an instant snapshot of my overall position.

That’s because of the difficulty it has dealing with my Kiwisaver account.  For readers outside New Zealand, Kiwisaver is a government supported personal savings scheme. Sparing you the details, let’s just say Xero Personal requires work; more work than $600,000 a year in revenue justifies.