Azure snares NSW government deal

Microsoft CEO Satya Nadella closes a presentation of new devices in New York. Source: AP

It has been exactly 12 months since Microsoft unveiled its two local Azure data centres in Australia and in that time the software giant has built substantial momentum for its cloud platforms in the region, capping off the one year anniversary by securing a “landmark deal” with the NSW government.

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The agreement will give 150,000 public servants across five NSW government departments - including Health and Finance - access to a range of Microsoft-fuelled cloud and mobility services, including Office 365, which are hosted in Microsoft’s local data centres.

According to Microsoft, the deal is one of the largest of its kind in the country.

The opening of the local data centres in Melbourne and Sydney was part of Microsoft’s $US15 billion ($21bn) investment to expand the global footprint of its cloud business which now extends across 24 regions throughout the world.

The investment seems to be paying off with the company reporting better than expected quarterly revenue for the ninth straight quarter, boosted by burgeoning demand for its cloud platforms such as Azure, which more than doubled in revenue.

Microsoft Australia’s Cloud & Enterprise Business group leader, Toby Bowers, toldThe Australian that since the launch of the local data centres the uptake of Azure had been “significant” across a range of sectors including utilities, the public sector, financial services, start-ups and education.

“The number of enterprise customers using Azure has grown fourfold since launch with almost 50 per cent of our managed customers using Azure today,” he said.

“At the same time, over 40 per cent of Azure usage in Australia is coming from smaller independent software vendors, start-ups and SMBs.”

Perth-based Scancam is one start-up running on Azure that aims to eliminate the scourge of fuel drive offs that costs service stations millions of dollars annually across the country.

Scancam helps identify previous offenders as they fill up at the bowser with the use of video cameras and licence plate recognition software.

The start-up’s software does a database check of known offenders, delivering the results almost instantly to a tablet, allowing the attendant to keep the bowser closed and ask the motorist to pay before filling up.

It also uses Azure Machine Learning to predict the likelihood of fuel drive-off theft on any given day by analysing variables such as fuel prices, weather conditions and demographic areas while simultaneously processing facial recognition feeds and registration details.

“Down the track we could be scanning over three million licence plates a day, so that’s going to become extremely valuable data for maybe Coles, for a loyalty program, or the police,” says Scancam co-founder, Anthony Schmidt.

Scancam went live this month and is gearing up for launch in Britain early next year.

Scancam switched from Amazon Web Services to Azure and it’s a trend Microsoft hopes will continue.

“Discussions with independent software vendors, Microsoft and related industry partners, suggest that Australia represents one of Microsoft’s fastest growing and most lucrative markets globally,” said Joe Sweeney, adviser at research firm IBRS.

“In the mid-market and among local software vendors, Azure is doing particularly well. It’s also in the mid to lower end of the large client market segment where Microsoft’s hybrid cloud messaging is getting a positive reaction.”

While Microsoft’s cloud business has made substantial gains in the Australian market, AWS continues to dominate with a sizeable lead on Azure, especially at the high end of the market.

“We see large AWS customers accelerating their consumption at increasing rates. The most telling sign is that the bulk of large organisations with cloud migration strategies are talking about AWS as a key provider,” Dr Sweeney said.

This article was first published in The Australian Business Review.