Microsoft’s UK data centre signals a turning point for public sector cloud compting

Written by Mark Skilton on 13 September 2016 in Opinion

Mark Skilton of Warwick Business School says that the opening of Microsoft’s three UK data centres marks another step on the road to full public sector adoption of cloud computing in the country.

Microsoft opening UK data centres indicates a shift for public sector adoption of cloud computing - Photo credit: Flickr, Chris Potter

Last week’s announcement that Microsoft has opened data centres in London, Durham and Cardiff is part of a bigger picture, where large cloud computing providers are setting up shop on local territory to provide better access and performance of their cloud products and services.

When we consider the impact of the move, we also need to think about the current climate and debate around data security.

There have been months of negotiations about how data generated in the European Union can be shared with companies in the United States. Although it is regarded as an improvement on Safe Habour, the Privacy Shield agreement that was settled on at the start of July has done little to allay fears about massive and indiscriminate’ surveillance by US government. 


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Large US cloud companies like Microsoft, Amazon and Google have much to gain and potentially just as much to lose in navigating these legal issues.

However, the scale of adoption of cloud computing has become an unstoppable force in business transformation and the need to modernise IT has led to an increase in take up of ‘on-demand’ cloud services.

Turning point

The public sector is no stranger to cloud computing, but a local data centre offers new advantages and new options for established managed community cloud services.

By being on-shore, companies offer organisations the chance to keep their customers’ data within the jurisdiction of their country.

This is particularly important for public sector bodies that need to adhere to strict data security rules – and is one reason that Microsoft in their press release emphasis the ability to bring local data residency to government departments, regulated industries and other businesses alike.

Indeed, the fact that organisations like the MoD will consider an external cloud data centre is something of a turning point for companies that have previously been perceived as inherently insecure due to their having all kinds of tenants.

Modern cloud computing security partitioning, and software-defined networks and infrastructure, are enabling new robust levels of encryption and secure access.

In addition, the economics of these centres are highly compelling, due to their ability to partition and speed up access to Software-as-a-Service products and computing capacity. Not only does this provide access to modern, flexible software, it also means it can be listed as operating expenditure and not locked in as a capital expenditure investment.

Choosing such on-demand cloud services also offers the chance to shift to a sourcing model that allows IT investments to be future-proofed, with upgrades and professional services – such as cyber, backups and deployment to multiple mobile devices – included.

Cloud competition

The other side of Microsoft’s UK presence is the likely response from competitors.

We are likely to see greater use of the larger cloud platforms as Platform-as-a-Service, with smaller companies being empowered by using the large data centres for hosting scalability and service management support.

This could be attractive to public sector organisations seeking robust and reliable IT services partners that are innovating in the cloud.

However, the vision of PaaS will have to be carefully considered in light of long-term costs to develop the UK government's own desire of having its own in-house cloud solutions.

For example, the goal of the UK government's Digital Marketplace platform is to create cost-effective buying and selling of public sector IT services and products, and it can also be a source of cloud hosting. With Microsoft now being local this may be another option to extend this marketplace capability.

Meanwhile, the entry of Microsoft into this highly competitive market should help cut costs for buyers and perhaps drive faster cloud adoption rates that commercial analysts like Gartner describe as slower than expected.

Strategically, we have seen Google working towards price-matching Amazon cloud, so having another entrant should be good for pricing competition.

What is clear, is that – especially with the Internet of Things having the potential to connect everything – we are creating a sea of data that is set to get even larger.

Many companies see the vision of the smart city, connected transport and other connected industries and government services underpinned by infrastructure and cloud data centres, as a critical part of that.

Add to that new advances in machine intelligence, automation and augmented reality services, as well as innovation that is continuing apace, and it is clear that modern computing needs modern solutions. The installation of UK-based clouds that are public-sector-ready will help increase the speed of this adoption.

Having cloud computing is a vital layer of infrastructure in the modern digital economy that the OECD and others international bodies continually emphasis.

Cloud computing will be a major part of the drive to use innovation to deliver increased performance across the public sector.

About the author

Mark Skilton is a professor of practice at Warwick Business School. 

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