Behind the scenes of Azure Local: How we built the offering.

When Microsoft introduced Azure Local, many organisations were already rethinking how cloud infrastructure should work across distributed and customer-controlled environments. For us, it quickly became more than a platform announcement. It became the starting point for building an offering through early customer demand, close collaboration with Microsoft, and practical work across the wider partner ecosystem.  

As the conversation later expanded into sovereignty, resilience and operational control, that early work gave us a strong foundation to build on. This blog shares how that journey unfolded. 

Azure Local arrives  

At Ignite 2024, Microsoft introduced Azure Local to extend Azure’s cloud model to distributed and on-premises environments. The key shift was that infrastructure in remote locations was no longer managed separately but became part of Azure through Azure Arc. 

Earlier approaches, like Azure Stack, were more self-contained and locally managed. They relied on separate tools and operational models, leading to fragmented governance and duplicated processes across environments. 

With Azure Local, Microsoft unified this approach by making distributed infrastructure centrally governed and consistently managed through Azure, using the same control plane and operational practices across cloud and on premises. This changed everything. 

Early demand emerges  

Right after Ignite, we started hearing interest in Azure Local from customers across Europe. The announcement clearly resonated with organisations that had been exploring local private cloud options for some time but had not seen earlier solutions as the right fit for their needs. 

As we had already been working with Azure Arc to extend both our professional and managed services into hybrid environments, investing in Azure Local was a natural move for us. It aligned well with the direction we were already taking and with the needs we were hearing from customers. 

Turning Azure Local into an end-to-end delivery capability quickly wasn’t trivial. But it’s the kind of challenge we’re used to tackling. With the experience, mindset and cross-functional expertise of our architects and wider team, we know how to go deep and start building. 

Building together with Microsoft 

A key enabler was our close collaboration with Microsoft. Working together early gave us visibility into the platform’s direction and helped us to shape our structured delivery model and concrete deliverables, leading to two Microsoft Marketplace offers: Workshop and Enablement.  

A natural next step in that collaboration came in June 2025, when Microsoft introduced its broader Sovereign Cloud vision at AI Tour Amsterdam. Satya Nadella outlined how organisations, especially in Europe, needed greater control over data, operations, and compliance boundaries while still benefiting from cloud innovation. 

The direction was clear: a more consistent model for extending cloud capabilities into customer-controlled environments. That gave organisations a practical way to address sovereignty requirements without falling back on fragmented or isolated solutions. We were proud to be included as a launch partner, and the connection to Azure Local as Sovereign Private Cloud was immediate for us. That made it a straightforward move to carry the work forward into our Sovereign Cloud offering. 

Early customer engagement 

Early in 2025, we started working with an existing customer in the manufacturing sector. They had identified a need to replace their VMware environment and wanted a more cloud-like, future-proof approach to managing local private cloud infrastructure.  

This is how we build at Nordcloud: starting early, working closely with customers, and shaping the offering through real-world needs. It helps us move faster, keep the work grounded in customer need and focus early on outcomes that create real business value. 

Building with the solution providers  

Azure Local is not just about infrastructure, but about integrated solutions delivered through a broader partner ecosystem. This made close collaboration with vendors an essential part of the offering from the start, and something we saw as important.  

The collaboration quickly moved into practical work. We aligned on solutioning, clarified roles and responsibilities across the full stack, and built a delivery model that was easy to operate and adopt.  

What we learned along the way 

Since the November 2024 announcement, Azure Local has come a long way, but not without friction. Early deployments exposed real gaps: limited hardware flexibility, missing enterprise storage scenarios, and operational rough edges around Arc onboarding, updates, and troubleshooting. It was clear that while the control plane vision was strong, parts of the platform still needed to catch up. 

There have also been serious production issues along the way. One of the more notable examples was a platform bug where VMs could be unintentionally deleted due to misclassification in the control layer. Combined with inconsistencies between Azure and local environments and some update friction, it showed that the platform was still maturing under live workloads. That is not unusual for a rapidly evolving platform, but it does reinforce the need for strong expertise, solid operational practices and experienced partners. 

The good news is that the pace of improvement has been steady and tangible. Support for external SAN storage, with FC now generally available and iSCSI in preview, is a good example, unlocking scenarios that were simply not viable initially. It has also become easier to deploy, scale, and operate, as updates have become more predictable and day-2 operations are becoming easier to manage through Azure. You still see the underlying complexity, but you can see the shift: fewer local workarounds and more centralised, API-driven control through Azure. 

There are still areas where some operational assumptions need to be revisited. Based on our customer delivery experience, storage, backup and restore are good examples where Azure Local brings different operational considerations. Even so, the platform is now in a much stronger place than it was at launch and is something organisations can standardise on with confidence. 

Why it matters now 

Sovereign Cloud and Azure Local quickly became important topics across Europe as geopolitical uncertainty drove stronger interest in control, resilience and compliance. In close collaboration with Microsoft, we hosted webinars, events, and other activities such as micro-hacks which helped customers better understand how sovereignty translates into practical solutions. 

From early build to real delivery  

Building Azure Local into a real-world offering has been more than technical design alone. It has involved rapid learning, close collaboration across Microsoft and partner ecosystems, and continuous validation against real customer needs. Just as importantly, it has meant translating those experiences into a repeatable and scalable approach.  

It now gives our customers a stronger foundation for adopting Azure Local and sovereign private cloud capabilities with confidence, supported by an offering that spans advisory, implementation, migration and managed services. 

And importantly, this is no longer early capability building. We have now worked with multiple customers, and the customer engagement mentioned earlier has already moved into production. For us, that is the clearest proof point: the work has moved from early build into real delivery, and these case studies (1,2) tell that story in practice.