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Implementing Hybrid Cloud at Microsoft

Published September 2013

The following content may no longer reflect Microsoft’s current position or infrastructure. This content should be viewed as reference documentation only, to inform IT business decisions within your own company or organization.

After extensive experience with cloud computing, Microsoft Information Technology (Microsoft IT) has updated its cloud computing adoption strategy. Emerging and upgraded technologies, realigned organizational goals, and lessons learned in the cloud-computing environment have led Microsoft IT to redefine its own cloud adoption strategy to enable the organization-wide goal, “All of Microsoft runs in the Cloud.”


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Products and Technology

In 2011, Microsoft IT defined a cloud adoption strategy. At that time, the goal was to have 80 percent of its hosting requirements provided through public cloud services. Much has changed in the last two years, including public cloud service offerings, and products and management tools that combine both on-premises and public hosting environments. Microsoft IT has learned a great deal about cloud computing since 2011 through its cloud adoption projects. In 2013, Microsoft IT decided to revisit and revise its strategy.

Microsoft IT developed a new cloud computing strategy that utilized a combination of both public and private cloud computing, which is commonly known as hybrid cloud computing. The new hybrid cloud strategy enabled Microsoft IT to leverage new capabilities in cloud technology, and to accelerate their plan for cloud computing adoption.

  • Return on investment

  • Improved agility

  • Improved support

  • Improved quality

  • Risk reduction

  • Focused resources

  • Windows Azure

  • Windows Server 2012

  • Windows Deployment Services

  • Microsoft Dynamics

  • Hyper-V

  • Microsoft Lync

  • Microsoft System Center 2012

  • Microsoft Office 365

  • Windows Intune

  • Microsoft Exchange Server

  • Microsoft SharePoint


Cloud computing has changed considerably since Microsoft IT made its first substantial migration to the private cloud in 2011. As cloud-computing capabilities have grown, Microsoft business goals have aligned with cloud-based adoption to realize cost and infrastructure efficiencies, enable new and emerging ways that Microsoft employees use IT, and to demonstrate the effectiveness of Microsoft cloud computing platforms.

Cloud computing is a significant priority at Microsoft. In 2011, Microsoft IT set an internal goal that 80 percent of application infrastructure would be cloud-based by 2015. However, that goal depended on several factors that did not materialize in the first two years of the Microsoft cloud adoption strategy. As a result, Microsoft IT discovered that at the current adoption rate, cloud computing adoption rates would be closer to 21 percent.

Figure 1: Microsoft IT cloud adoption forecasting

Figure 1: Microsoft IT cloud adoption forecasting

In 2013, Microsoft added new functionality to Windows Azure, its public cloud computing offering. Microsoft also released new versions of its primary private cloud infrastructure components, Windows Server 2012 R2, and Microsoft System Center 2012 R2. These changes to the underlying cloud computing infrastructure were also a factor in Microsoft IT’s decision to update its cloud computing strategy. The final deciding factor was that Microsoft IT wanted to do an even better job making its IT infrastructure work for the business goals at Microsoft, instead of making the business work around IT.


Microsoft IT executive management had a vision of 100 percent of Microsoft infrastructure being hosted on cloud-based platforms. Microsoft IT developed a simple, but straightforward mission that all Microsoft operations would run in cloud services. This was a daunting and absolute mission choice, and one that Microsoft IT knew would take complete organizational participation and agreement to achieve.


When planning its cloud computing strategy, the cloud computing team worked extensively with both the IT leadership team and the IT planning group to establish alignment with business goals. Microsoft IT wanted the new strategy to focus on solving business problems by developing business solutions first, instead of first developing technical solutions, and then retrofitting the business need into that technical solution. Rather than approaching a solution by focusing on the technical merits or drawbacks, IT changed their approach to first looking at the business needs, including considerations such as market trends, company and customer expectations, financial requirements, risks, dependencies, and expected return on investment.

Through this process, Microsoft IT realized that they also could use cloud computing to approach the delivery of their services as a service provider and partner, rather than a department that requires capital investment and resource allocations.

To assess the impact of a redesigned cloud computing strategy, Microsoft IT created a specific evaluation and planning process. This process would review the current IT situation to ensure that the technical state of Microsoft IT was ready to support business-first cloud computing. The evaluation and planning process was broken down into the following four key areas:

  • Evaluate available technology

  • Assess the current state of IT at Microsoft

  • Calculate financial implications

  • Determine organizational readiness

Evaluating Available Technology

Cloud computing types are defined by how and where the resources used for cloud computing are hosted. The two most common choices are the public cloud, and the private cloud:

  • Public cloud. The key difference between a public and a private cloud is the notion of corporate multi-tenancy. Private clouds host only one company or enterprise, whereas public clouds host multiple companies on the same infrastructure. The main advantage to a public cloud is economy of scale. Microsoft currently offers cloud services to customers. Microsoft cloud services include several different service options, including Window Azure, Windows Intune, Microsoft Dynamics, and Microsoft Office 365,

  • Private cloud. Private clouds must exhibit the five main characteristics of cloud computing (self-service, broad network access, resource pooling, elasticity, and measured service). However, in a private cloud scenario infrastructure resources are hosted within the customer’s datacenter. Microsoft supports the use of private clouds through a combination of Hyper-V in Windows Server 2012, and Microsoft System Center 2012. IT uses these components to construct the similar capabilities as for a public cloud, but by using infrastructure resources hosted on-premises.

The primary benefits of an on-premises private cloud deployment are security, physical control, and autonomy. The primary benefits of an off-premises public cloud deployment are economy of scale and automation.

As part of the evaluation process, Microsoft IT reviewed both cloud types and assessed their benefits. While both cloud types were valid solutions, the public cloud economy of scale and automated support made it the logical end model for all applications. However, the success of the public cloud depended on its ability to meet the requirements of all applications that it hosts. For Microsoft IT, the public cloud was, and still is the ultimate end goal.

Realizing Hybrid Cloud

While the public cloud is the theoretical ideal, Microsoft IT realized that not all internally hosted infrastructures were ready for migration to the public cloud. Several concerns, such as legal information security requirements in certain regions, and the logistical limitations of public cloud solutions meant that Microsoft IT needed to consider an alternative to the using only the public cloud. They understood that some services, while not yet ready for public cloud migration, could be migrated to a private cloud.

Microsoft IT identified the on-premises private cloud as an intermediate solution and as a way to gain a better understanding of the resources involved in hosting cloud computing services. Microsoft IT realized that hosting a private cloud could help prepare applications for eventual transition to the public cloud, and make it easier to achieve the “All of Microsoft runs in the cloud” vision. The private cloud enabled Microsoft IT to realize further efficiency gains, and provide a destination for internally hosted applications to be redesigned for the cloud.. It also changed the IT operational model to one of self-service,

Determining Applicable Delivery Methods

Microsoft IT evaluated both private and public cloud computing at another level. Understanding the different delivery models that are available within cloud computing would affect evaluation of how Microsoft IT could migrate on-premises services in to public or private cloud computing. The following assessed delivery models make up the basis for cloud computing platforms:

  • Infrastructure as a Service (IaaS): Customers typically use IaaS to run client and server applications on virtual machines. The vendor manages the network, servers, and storage resources so that customers no longer need to buy, track, or decommission hardware. Operating systems, databases, and applications are still managed by the customer, and pooled resources such as networking, memory, and CPU allocation may be configurable by the customer, depending on how the service is presented.

    Microsoft provides IaaS in the public cloud through Windows Azure. IaaS in Windows Azure was one of the critical factors for Microsoft IT to enabling it’s cloud computing strategy. The Windows Azure Virtual machine service was released to the general public in 2013, and it provides full IaaS capability within Windows Azure. With a Windows Azure virtual machine, the customer maintains control over the details of the infrastructure, such as resource allocation, computing capabilities, and choice of operating system to install.

    Microsoft IT recognized Windows Azure virtual machines as an excellent vehicle for migrating on-premises services and applications directly to the public cloud.

  • Platform as a Service (Paas): Customers use PaaS to develop, deploy, monitor, and maintain applications, while the cloud provider manages everything else. Developers can manage configuration remotely as with IaaS, but they need not configure the virtual machine image directly.
    Windows Azure is highly recognized for its PaaS offerings, and Microsoft IT identified these offerings as targets for migrating individual on-premises web applications and all new development of applications.

  • Software as a Service (Saas): In this delivery model, customers subscribe to prepackaged applications that run on a cloud infrastructure and allow access from a variety of devices. Enterprises are rarely responsible for much beyond limited configuration and data quality management.
    The Microsoft primary SaaS offerings are: Microsoft Dynamics, Windows Intune, and Office 365, which provides instantly available Office applications, SharePoint sites, Exchange services, and Lync services.

Assessing the Current State of IT at Microsoft

Microsoft IT manages an immense number of IT infrastructure resources throughout the world. With an organization of this size, the first and most complex step was planning for the implementation of the hybrid cloud strategy. Microsoft IT needed to determine the state of the platforms and applications in their organization, prior to deciding how they would or could be migrated to cloud computing.

The current Microsoft financial and migration model is a conservative approach that is based on the migration rate to virtualization observed in the past. Given the status of cloud computing and the potential for positive organizational impact, the previous rate of migration was deemed unacceptable by Microsoft IT..

Assessing Infrastructure Readiness

Infrastructure management is an important part of what Microsoft IT does. As such, assessing the current state of infrastructure at Microsoft, and determining the cloud computing readiness of both infrastructure and infrastructure management was an important part of evaluating the overall status of IT at Microsoft. Microsoft IT needed to consider several different aspects of infrastructure management:

  • Architecture

  • Engineering and deployment

  • Infrastructure provisioning

  • Integration

  • Infrastructure capacity

  • Security and compliance

  • Monitoring

Microsoft IT identified these categories as critical to assessing the effectiveness of infrastructure management in the cloud computing environment.

Microsoft IT currently has over 1,100+ supported applications in its portfolio. Of that total, 90 to 95 percent have the requirements necessary to be moved to either private or public IaaS environments. 5 to 10 percent will be redesigned and migrated to a PaaS environment, and the remaining small fraction of applications will need to remain on-premises, hosted by Microsoft IT on dedicated hardware.

Challenges to Public Cloud Adoption

The percentage of the applications that are ready to move to public cloud is much smaller than the total that could be moved to private cloud. This is primarily due to three key factors that need to be resolved in the public cloud space:

  • Enterprise connectivity: Large data flows and hybrid applications will stress the network connectivity between our datacenters and the cloud. Most low-impact applications (25 precent of the total Microsoft application portfolio) can be directly migrated to Windows Azure IaaS.

  • Enterprise security: Risk tolerance will define which workflows are acceptable to be hosted outside Microsoft data centers. In the case of Microsoft IT, medium business impact applications could be migrated to Windows Azure IaaS.

  • Enterprise manageability: When operational processes and management systems are seamless between the private and public clouds, most of the current application portfolio can be migrated to Windows Azure on the public cloud.

With the current state of the IT environment and with the current Windows Azure functionality, a large portion of the Microsoft IT portfolio will need to be transitioned to a private cloud until which time the three factors above satisfy the application requirements.

Calculating Financial Challenges and Opportunities

For any business, the financial outcome of a solution or project is the ultimate test for success. Microsoft is a business, and as such, exists to be profitable and successful. As such, Microsoft IT also has to consider financial implications, risks, and rewards for any solution it implements, particularly one the size of a cloud computing strategy.

Accordingly, Microsoft IT evaluated the financial requirements necessary to support their hybrid cloud efforts. The first realization was the requirement for capital investment. Traditionally, cloud computing reduces capital investment, and while there are ongoing operating costs, cloud computing usually provides a significant reduction in the cost/savings ratio. Microsoft IT realized that because the bulk of the applications needed to first migrate to the private cloud, this would require the addition of on-premises infrastructure to the private cloud resource pool, which in the short term would result in a less favorable cost/savings ratio. However, as migration to the public cloud continues, capital investment costs will decrease. While ongoing public cloud implementation costs will continue to increase, they will do so at a slower rate, resulting in cost savings.

Determining Organizational Readiness

The primary function of Microsoft IT is to keep computer and server systems running at Microsoft. Change, therefore, is a threat to the stability of the Microsoft IT insfrastructure stability. However, improvement cannot come without change, and change implies risk. Microsoft IT realized that to achieve greater cloud computing adoption, production application support and application development teams would need to take measured risks by deploying various scenarios to the cloud.

This element of risk was not limited to the support and development teams, but extended to the leadership team. By demonstrating that they valued risk taking through innovation, by acknowledging the success and failures of risk taking, and by providing a level of coverage without fear of failure, the leadership team helped effect change in the Microsoft IT culture.

Cloud computing enables a more dynamic and responsive IT infrastructure, and Microsoft IT established that its IT personnel and teams needed to adopt the same general approach to implementing their services applications. Early in the planning and implementation process, Microsoft IT established that cloud computing requires a shift in the way that IT perceives itself, in addition to the way the entire organization views IT and the services it provides. Microsoft IT mandated that the cloud computing strategy be adopted and embraced by the entire organization.

Beyond the need for changes to organizational culture, specific roles within IT must adapt to support the cloud model. This was identified as one of the greatest benefits of cloud computing migration, but also the most disruptive. Once migration to the cloud occurs, IT organizations are less involved in the day-to-day operations of running servers, and are free to expand their roles to include more solution-focused responsibilities. This provides additional opportunities for growth in the careers of IT professionals, as they move from technology and service providers to business process enablers.

The majority of role changes that cloud computing enables in the IT environment involve the reduced focus on infrastructure. Once the majority of infrastructure maintenance tasks are absorbed into the cloud infrastructure, the time and capital historically spent on infrastructure will be freed up for more creative and innovative areas of IT management. At Microsoft, roles are evolving as cloud computing becomes more integrated into the IT environment. Infrastructure-based roles such as user-interface (UI) designer, developer, software development engineer and tester (SDET), and database administrator (DBA) can refocus their role towards implementing a solution in a role such as User Experience (UX) Engineer, and Solution Architect.

Figure 2: Transitioning traditional roles to solution-focused roles.

Figure 2: Transitioning traditional roles to solution-focused roles.

Implementing a Hybrid Cloud Strategy

Microsoft IT has identified the hybrid cloud as the current design goal for their cloud computing strategy. The hybrid cloud enables Microsoft IT to take advantage of public cloud economies of scale, elasticity, and scalability for compatible and capable applications. the hybrid cloud also enables Microsoft IT to move applications that at present are not ideally suited for the public cloud, and place them in the Microsoft IT private cloud. This creates a staging ground, or preparation area for eventual migration to the public cloud. In general, services and applications will have two possible destinations in the hybrid cloud: the public cloud, or the private cloud with intent to migrate to the public cloud once requirements are met.

Figure 3: The hybrid cloud environment.

Figure 3: The hybrid cloud environment.

Implementing Cloud Computing Management

While application placement and migration are important considerations, managing the newly migrated services is equally as important. Microsoft IT analyzed the currently available cloud computing management functionality against the following capabilities:

  • Provisioning capacity (both self-service and programmatically)

  • Monitoring systems and applications

  • Managing virtual machine changes (deployment and configuration)

  • Measuring usage

Together, these four capabilities help provide a functional and capable cloud management. In analyzing the available management platforms for Windows Azure on the Internet, and in analyzing both public and private cloud management capabilities in the System Center family of products, Microsoft IT determined that a custom cloud computing management platform was not required for hybrid cloud implementation.

Determining Application Placement and Accelerating Adoption

Determining application placement will first be based on capabilities that exist natively in the cloud as commodities, such as Exchange services, Office, and Microsoft SharePoint. Beyond the commodity applications, next the legacy applications will be moved to Windows Azure Virtual Machines (IaaS). New applications will be developed in Windows Azure (PaaS) by default. When developing or implementing any new applications or services, the public cloud (Windows Azure) will be the desired and default hosting location.

One of the most important factors in the Microsoft IT application placement and migration strategy is ensuring that an application is ready for cloud computing, and that the migration processes and infrastructure are ready for migration of the application. For example, Microsoft IT began their migration to cloud computing using applications with low-impact, and minimal technical implications. These test migrations helped Microsoft IT develop best practices and migration strategies for more complex migrations that would come later.

Figure 4: Assessing readiness for application migration.

Figure 4: Assessing readiness for application migration.

While Microsoft IT attempts to accelerate cloud adoption, it recognizes the need for continual investment in new on-premises capacity to support applications that cannot yet migrate to public cloud services. Microsoft IT also recognizes that that some applications will always require isolation or specific levels of service that may preclude them from participating in a shared public cloud environment. Based-upon today’s processes and technologies, these are shown in this document as a substantial cost in years 2014 and 2015. While new investments are reduced, they still exist into 2018. However, there will be opportunity to reduce these investments with new infrastructure designs and operating processes. Challenges to this plan include: lack of clarity on how technology will evolve, and Microsoft IT's ability to alter workplace culture in order to adapt to a cloud model. At minimum, Microsoft IT believes that by adopting the hybrid cloud, they can provide necessary configurations, improve availability and performance for the tenants, and significantly reducing costs with new hardware designs.

Microsoft IT foresees several opportunities to move forward with the private to public cloud transition, and to more aggressively manage current and future costs. Rapidly enabling the public cloud features for the enterprise and for the development and management teams means taking more measured risks, but may result in accelerating the transition to the public cloud. Additionally, Microsoft IT has to change its operating model and evolve the organization around cloud computing. Cloud computing has the potential to bring far more agility and efficiencies to Microsoft IT operations, and thus contribute more saving than just cost reduced infrastructure costs.

Figure 5: Cloud computing adoption percentage.

Figure 5: Cloud computing adoption percentage.

Microsoft IT believes that through a concentrated organization-wide effort that fully embraces cloud technology, they can accelerate the adoption model such that the inflection point between private and public cloud becomes year 2016 rather than year 2020, which is the current trajectory. By accelerating the adoption model, IT will reduce the need for additional hardware as planned for currently. Microsoft IT will continue to they review financials as as public cloud features emerge, and as they have opportunity to increase the scope of migration.

Ultimately, the incorporation of cloud computing into IT operations enables Microsoft IT to act as a business partner to the rest of the organization, and not simply a technology provider.


Microsoft IT has realized some benefits from their initial hybrid cloud implementations, and anticipates realizing additional benefits as the migration process continues.

Return on Investment

As cost per operating system is replaced with the lower Windows Azure operating costs, overall investment capital decreases, as a result of the economies of scale provided by both public and private cloud implementations. The following graph illustrates cost savings for past, current, and future projections, as Microsoft IT moves from a physical IT infrastructure toward a public cloud.

Figure 6: Projected return on investment.

Figure 6: Projected return on investment.

Additionally, projected operational costs improve as a result of:

  • Using capacity only as needed.

  • Hardware abstraction and standardization.

  • Infrastructure consolidation.

  • Data center reduction.

  • Reduced helpdesk and support requirements.

  • More agile business continuity and disaster recovery.

Improved Agility

Improved agility in the form of faster provisioning, testing, integration cycles (leading to quicker release), and quicker proof of concepts with reduced infrastructure friction help Microsoft IT meet their business demands.

Improved Support

When critical problems occur in production, the ability to rapidly create a consistent environment enables the engineering team to respond quickly to critical problems. Having multiple environments on demand (such as development and test) ensures that ongoing releases are not affected.

Improved Quality

Teams are able to implement complex and real-world testing environments to perform their testing efforts at scale. This results in better case coverage per release.

Risk Reduction

With faster provisioning and greater test coverage, Microsoft IT is now able to address issues more quickly, resulting in higher quality releases with more predictable outcomes.

Human Resources Focuses on Their Primary Functions

A consistent and predictable foundation environment (including the base operating system, packaged software, security, patches, and all base configurations) enables developers, testers, managers, and engineers to focus on their core tasks rather than creating environments and or troubleshooting environmental issues.

Best Practices

While adopting and implementing a cloud computing strategy can be an imposing task, ensuring participation and buy-in throughout Microsoft has provided Microsoft IT with both a successful and educational outcome

Successful implementation of a cloud computing strategy requires involvement from everyone across Microsoft IT. Most all barriers to adoption disappear with advanced virtualization and private cloud capabilities, and in time, these barriers will also come down with the public cloud. The specific practices that should be adhered to within the organization include:

Production application support and networking

  • Enable core infrastructure services of cloud connectivity and manageability.

  • Deliver new on-premises virtualization infrastructure solutions.

  • Advance operational readiness to migrate to cloud services.

Security and risk management

  • Accelerate adoption by providing appropriate security policies and oversight for both private and public clouds.

Business units

  • Deploy applications to appropriate cloud services.

  • Participate in self-testing programs to test new cloud features.

  • Take calculated risk when business value is anticipated.


  • Provide funding to acquire necessary infrastructure resources and operating model changes to accelerate cloud adoption.

Enterprise architecture

  • Provide guidance for cloud innovation, deployments, shared components, and architectural designs.


It is an exciting time to be in IT at Microsoft. The consumerization of IT is enabling agility and business benefits that were unimaginable even five years ago. As Microsoft IT continues to implement and mold its cloud computing strategy, they understand that many of the factors that will affect this strategy in the future are unknown. Furthermore, the technology surrounding cloud computing is constantly evolving and providing new ways to look at how IT is imagined. As such, Microsoft IT must remain flexible and adaptable as an IT organization, and leverage the growing capabilities of cloud computing at Microsoft.

Video Resources

How Microsoft IT Built a Cloud Strategy

Discussing Microsoft ITs Hybrid Cloud Strategy

Driving the Cultural and Organizational Shift to the Cloud Within Microsoft IT

For More Information

For more information about Microsoft products or services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Order Centre at (800) 933-4750. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information via the World Wide Web, go to:



© 2013 Microsoft Corporation. All rights reserved. Microsoft Dynamics, Lync, Hyper-V, Office, SharePoint, System Center, and Windows Azure, Deployment Services, Intune, and Windows Server are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners. This document is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

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