Microsoft APAC channel network needs boost for cloud

Microsoft still needs to grow its channel capacity to support the delivery of Azure services and expand the number of enterprise applications certified to run on its cloud platform. 

Currently available in 96 countries, with Brazil recently added as a new market, Azure has seen good growth momentum since its launch in 2010, Alvaro Celis, Microsoft's Asia-Pacific vice president, said in an interview with ZDNet. 

Azure revenue has doubled globally and 1,000 new customers are signed each day, according to Celis. Half of Fortune 1000 companies currently run Windows Azure, and over 8.5 trillion objects worldwide are stored on the platform. He added that Microsoft runs over 1 million servers across its data centers and has committed a US$15 billion investment to growing its datacenter footprint, which includes further expansion plans in Japan, Australia, and China, he said.

Celis declined to disclose how many data centers the vendor has in the Asia-Pacific region, but ZDNet understands it currently operates facilties in Singapore and Hong Kong. It also has a local partner in China, 21Vianet, which operates the Azure platform in the Chinese market. 

Across the region, Microsoft has over 100,000 cloud resellers and 28,000 partner network members. Its cloud services, specifically Azure and Office 365, are growing three times faster than the market, and it has more customers running on cloud than on-premise in the small and midsize business (SMB) space.

To further underscore the company's emphasis on cloud, Celis said its sales teams must exceed a cloud-only sales target in order to enjoy an overall bonus payout. 

Despite its existing network, he said Microsoft still faces a challenge in ensuring it has sufficient channel partners to support the delivery of cloud services. Addressing a region that is expansive and highly diverse, also underscores the need for its network of 100,000 partners in Asia-Pacific to receive the necessary training, and at a speed that is befitting of this region's growth rate. He added that the region requires multi-language support and is widely dispersed, resulting in less scale. 

Another gap it needs to fill is getting more enterprise applications optimized for its cloud platform, Celis noted. 

"There are still some applications we need to certify for Azure to offer a broader menu for our customers, like the recent announcement that Oracle is now certified for Azure. We need to make more announcements like this. We're working on it right now, but we're not quite there yet," he acknowledged. 

Dismissing criticisms that vendors such as Microsoft were looking to lock in customers via their cloud strategy, he said the company will soon unveil a new cloud customer that operates in a non-Microsoft environment. Saying only that the client is a major e-commerce website in Southeast Asia, Celis added: "They run completely non-Microsoft technology but are fully on Azure. So clearly, choosing Azure doesn't mean you have to be a Microsoft-only environment."

What continues to hold organizations back from cloud, however, is security and such concerns, including issues around data sovereignty and regulations, will take time to dissipate. 

Celis said: "I've been in Microsoft for over 21 years, and there's still debate today in some countries around taxes and e-commerce payments. The speed at which technology is evolving has outpaced the speed of regulations and processes, for sure, and that's a fact.

"The good news is there's high awareness on the need to modernize the philosophy to get the best benefits out of technology," he said, noting that Microsoft has a legal counsel team that works closely with regulators in every Asia-Pacific country to provide input as well as industry standards and best practices around cloud, including data sovereignty. This is an area of active work not only for Microsoft, but other vendors as well, he added. 

Acknowledging that a vendor's global datacenter footprint would be a key consideration in discussions around data sovereignty, Celis said: "The whole benefit around cloud is scale. We keep working with regulators to show the work we have done around certification, standards, and processes, to answer the questions and concerns they may have about the accountability of our platform. And we have made very important progress, [but] every country is different and we have to respect that.

"We're moving toward an environment where instead of trying to debate where is the data, it's about where it's replicated, what are the standards, what regulators can come and check, and what's the security. And when you move to the conversations about 'the how', then we're winning over the mindset. But it's not going to happen overnight," he said, pointing to Microsoft's move to encrypt all stored user content by end-2014.

In a blog post published earlier this month, the vendor's general counsel lead Brad Smith said Microsoft would use 2048-bit encryption keysand public key system, Perfect Forward Secrecy. "All of this will be in place by the end of 2014, and much of it is effective immediately. We're working with other companies across the industry to ensure data traveling between services--from one e-mail provider to another, for instance--is protected," Smith said. 

The announcement comes as technology giants, including Google and Yahoo, move to address privacy concerns after news emerged that the U.S. government was tapping data traffic between IT providers. 

Smith said Microsoft would use legal means to ensure customers were notified when it received legal orders related to their data. "We'll assert available jurisdictional objections to legal demands when governments seek this type of customer content that is stored in another country," he said, adding that Microsoft believes governments should gain access to information and data in the same way it did before IT moved to the cloud, by going directly to a vendor's customers.