Microsoft 365 Local: What You Need to Know Before Adoption

Imagine having the power of Microsoft 365’s cloud services right within your own datacenter, offering you unparalleled control and security. That’s what Microsoft is promising with Microsoft 365 Local.

Microsoft 365 Local is a validated reference architecture for running a private instance of Microsoft 365 on Azure Local (Azure Stack HCI). It provides Microsoft 365 services, like Teams and Exchange Online, in your own datacenter or sovereign cloud.

Microsoft 365, which includes services like Office 365, Microsoft Exchange Online, and SharePoint Online, is normally only available in Microsoft’s public cloud. All Microsoft’s cloud services run on Azure infrastructure.

In the past, Microsoft has required customers to use the publicly hosted version of Microsoft 365, as the setup is complex and it isn’t easy to reproduce it on a smaller scale on-premises.

But Microsoft is now able to provide you with the Microsoft 365 experience in your own datacenter.

Why did Microsoft change its mind?

There had been a long-standing request from commercial customers to run Microsoft 365 locally in their own datacenters. I can remember discussions with customers ten years ago when I was implementing Azure Pack (now called Azure Stack Hub).

“It is like Azure, why can’t I run Office 365 in that environment?”

Some of you will remember those discussions too.

Geopolitical landscape

Another reason could be improvements in technology and performance density with new hardware and software components. But to be honest, recent changes in the global political landscape, and requests from many customers for data sovereignty and independence from public cloud environments are more likely to be the primary drivers.

What’s the catch?

There are two catches at launch that you should consider as a potential early adopter.  

Feature parity

The first and most obvious is we don’t know when it will be released and what initial features and services to expect. Don’t expect the full-blown Microsoft 365 experience. That will require time and customer feedback to make it work. So, don’t be surprised when your features aren’t included in the initial release.

Expect an extended public preview for the product and features, like we had with Azure Virtual Desktop (AVD) on Azure Local.

Limited platform support

Another catch for organizations already invested in replacing for example VMware with Nutanix, Proxmox, or hosting partners. Microsoft 365 Local will only be available on Azure Local. There is no option for other hypervisor or server solutions yet; and that includes Windows Server.

Why the decision for Azure Local only?

The reason is likely the same as why Azure Virtual Desktop services are limited to Azure Local. One is the controlled Partner and hardware ecosystem. As you can see in the Azure Local hardware catalogue, every solution and hardware combination are tested and validated by the Microsoft Partner and Microsoft Engineering Teams. The same goes for the network backend and backbone requirements for service communication.

Having strict requirements in place reduces the risk of configuration and environmental drifts while developing the solution. Unmanaged and uncontrolled hardware and IT environments often get software vendors into trouble because of unexpected behaviors.

Another core component of this controlled environment is the so-called attestation service, which ensures everything runs smoothly for the solutions deployed. The attestation service is the same service as used by other solutions, like Azure Hybrid Use Benefits leverage. It was built on top of the IMDS Attestation Service that runs in Azure.

Conclusion

After so many years requesting a local version of Microsoft 365, it personally makes me proud and happy that the service was now announced. I understand why Microsoft 365 Local has limitations and hope Microsoft Partners will help to implement it as it becomes available in the future.

I predict there will be many complaints about the release or features when it becomes available to customers. I advise talking to your Microsoft contacts or leveraging the Microsoft community to make your thoughts public. And to use people like Microsoft MVPs to bring your suggestions to the attention of the responsible product owner.