Previously, businesses using Microsoft’s cloud services (such as Azure) had to store their data in offshore data centres, with most choosing facilities in Australia. Now, with a local option available, organisations must weigh the benefits and costs of migrating.
Data Sovereignty: A Concern for Some, But Not All
While a local data centre aligns with New Zealand’s data sovereignty regulations, in practice, many organisations including government agencies and NGOs have been permitted to store data in Australia without penalty. So, for most businesses, data sovereignty is not a pressing issue, but for those in highly regulated industries (such as healthcare and finance), it could be a compelling reason to move.
Performance: Faster, But Only for Certain Use Cases
Having a data centre onshore means reduced lag time (latency) and improved performance for cloud-based applications. However, the actual benefits will depend on what you're using it for.
Where you will notice a difference:
If your team is using software that connects to a database or application hosted locally in the cloud, such as a job management or accounting system, performance could be much faster.
If you use Remote Desktop Services (RDS)—where you log into a remote computer (Terminal Server) to access work systems—you may see a small speed boost.
Where you won’t notice much of a difference:
Websites, intranets, or web-based applications (these are already optimised to run smoothly).
Large file storage and retrieval (upload/download speeds won’t change significantly).
If your work relies on fast access to cloud-based databases or applications, an onshore data centre could be beneficial. If not, the switch may not be necessary.
Moving to Microsoft’s New Zealand North data centre is a relatively straightforward process for organisations already using Azure, but it still requires careful planning.
Key factors to consider include:
Migration Costs: Microsoft offers financial assistance through the Azure Migration and Modernisation Programme, but businesses must factor in the overall expense.
Downtime Risks: Minimising disruption is critical organisations need a migration strategy that ensures continuity.
Security & Compliance: Ensuring that data remains protected throughout the transition is essential.
The cost of migration is one of the biggest considerations. While a local data centre offers advantages, it comes at a premium. NZ is approximately 17% more expensive than Australia East for the same setup. Although costs vary between regions, organisations must balance pricing differences against key benefits such as data sovereignty, compliance, and performance. For highly regulated industries, these factors can be particularly crucial and may justify the investment. Additionally, cloud providers regularly review pricing and infrastructure, so cost disparities may change over time.
Microsoft isn’t the only one expanding its local footprint. AWS (Amazon Web Services) originally announced plans for a New Zealand-based data centre region back in 2021, with a big NZ$7.5 billion investment over 15 years. But there were multiple delays, including stormwater design issues, put the project on pause in 2023. Now, it looks like AWS is back on track, aiming for a 2025 launch.
Google is also making moves, announcing plans for a cloud region in New Zealand. They haven’t shared many details yet, but it’s clear they’re looking to grow their presence here.
With more big players entering the scene, competition is heating up, which could shake up pricing and service options in the long run.
Microsoft setting up a data centre in New Zealand is great news for organisations that need to meet strict compliance rules or rely on real-time data processing. Faster speeds and keeping data local could be a big win for some organisations.
That said, the higher costs mean many SMEs might still find hosting in Australia the more budget-friendly option.
Thinking about migrating? We can help you figure out if Microsoft’s New Zealand North data centre is the right move for your business. Get in touch to chat about your options and ensure a seamless transition.
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