Microsoft’s announcement that it will set up data centres in Toronto and Quebec City is big news for Microsoft, for the provinces and cities involved – and for Microsoft partners.

TORONTO – Today, Microsoft announced that, for the first time, it is establishing data centres in Canada to provide locally delivered cloud services. Two data centres will be established, one in Toronto and the other in Quebec City.

“This is a historic milestone for Microsoft in Canada,” said Microsoft Canada President Janet Kennedy. It represents the enhancement of our ability to provide locally delivered cloud services in this country. What’s exciting is for the first time we actually have data centres in this country. Those who have been concerned about data residency now have the opportunity to participate in the Microsoft cloud and we are super excited about that.”

”This is truly taking our cloud philosophy to the next level,” said Kevin Turner, Microsoft’s Chief Operating Officer, who came up to Toronto for the occasion. For Microsoft, the cloud is both the future and the present. Today, we are making one of the most exciting and significant announcements in Microsoft’s 30 year history in Canada. Microsoft is opening two data centres in Canada so we can deliver cloud services locally in this country. Now customers will be able to enjoy the benefits of all commercial cloud services on their terms throughout Canada.”

Canada now becomes the 20^th country worldwide to have a local Microsoft data centre. The preview for Azure is scheduled to be operational by the end of this year, with Office 365 and Dynamics CRM Online set for right after that. Pricing will be on the same standard as other Microsoft data centres globally.

“We expect Microsoft’s locally available cloud services will open new cloud scenarios across Canada ,” Turner said. “Companies and organizations that have to adhere to compliance standards can now take advantage of the Microsoft cloud here in Canada. We are very excited about what the future holds for cloud innovation in Canada.”

At the same time, Turner emphasized that Microsoft’s cloud market in Canada had already been strong before the existence of local centres.

“It’s really about growing a market that’s already booming.” He said. “We already have 80,000 customers in the cloud here. This is just an accelerator.”

Provincial and municipal politicians attending the event were effusive in their praise of the initiative.

“This investment bolsters our position as North America’s second largest center for communications technology, second only to California,” said Deb Matthews, Ontario’s President of the Treasury Board and Deputy Premier. “It shows we are an attractive place to invest.”

John Tory, Toronto’s mayor, emphasized how the Toronto data centre would further Toronto’s competitive advantage internationally, which it enjoys by virtue of the fact that is the home to both Canada’s main innovation and financial centres, which in the U.S. are on separate coasts.

“We have a very deep pool of talent here, and to have Toronto as the home of the Microsoft cloud will add to that,” Tory said. “It elevates and reinforces our status as a leading centre for innovation.”

While this is very big news for Microsoft, for Ontario, and for Toronto, it’s also very big news for Microsoft’s Canadian partners, said Jason Brommet, Microsoft Canada’s channel chief.

“I think it’s phenomenal news for the channel,” Brommet said. “No matter where I travel in the country, the issue of a Canadian data centre is the number one question I get from partners.”

Brommet said that of Microsoft Canada’s approximately 12,000 Canadian partners, about half are currently doing something in the cloud, in a mix of hybrid and partner-hosted environments, and he expects that the local data centres will increase both the number and the sophistication of partner cloud efforts.

“I expect to see an evolution of the business models from this, among both managed service capabilities, and among IP service providers (ISVs),” he said. “There will be a demonstrable change.”

Two Microsoft partners attending the event agreed.

Mohanned El-Barachi, CEO of SweetIQ, a Montreal-based maker of local search solutions which offers retailers insights from Big Data analysis, and for whom the cloud is fundamental for business, thinks Canadian data centres will be of material assistance to them.

“This announcement today shows that Microsoft is serious about doing business in Canada,” he said, “It will give us better localized content. Having that localization makes our platform that much more concrete.”

Matthew Cassar, co-founder and president of Sherbrooke, Quebec-based cloud service provider SherWeb, also believes the local data centres will be helpful to their type of business.

“We want to be a one stop shop solution provider for the customer, and having data centres in Canada helps with that,” he said. “In 2015, the cloud market has matured to a point that customers want a much broader set of features and services that a service provider like SherWeb cannot offer on its own. Microsoft enables us to remain relevant by being able to lead with a Microsoft cloud solution like Office 365 and complement it with our own offerings or a custom solution like a hybrid or private cloud, Some Canadian customers, for data sovereignty reasons, want their data kept in Canada, and this lets us reach those customers.”

That reluctance of some Canadian customers to store data in a non-Canadian cloud has been significant, even though no law expressly forbids them from doing so.

“It is very sector-specific, but a significant percentage of customers in some sectors choose to want their data hosted in this country,” Cassar said.

“In banking, they want their data as close as possible, preferably on premise,” El-Barachi said. “In retail, it’s not as big a deal, but they would rather have it close.”

“This removes that set of those boundaries and barriers for some customers about the cloud,” Brommet stated. “This takes that last level of hesitation out.”