Microsoft will go live with locally hosted Office 365 and Dynamics CRM Online by the end of March 2015.
The software-as-a-service applications will be hosted from within Microsoft's two existing data centres in Sydney and Melbourne, which launched in October to house Azure Australia.
According to Microsoft, local hosting will "provide customers with faster performance, offer geo-redundant backup and help address data residency considerations".
Australian Office 365 users are currently hosted out of Microsoft's Southeast Asia region in Singapore.
From March 2015, new customers will be automatically provisioned from Sydney and Melbourne, and existing customers will be transitioned across to the Australian points of presence, according to Steven Miller, office division business group director at Microsoft Australia.
CRM Online users will continue to be hosted out of Singapore by default, but users can opt for Australian hosting, in which case they will be given a transfer window, Miller said.
Microsoft has already notched up a string of top-flight accounts as a result of its localised data centre strategy, such as Office 365 wins at Coles and the Queensland government, and a CRM Online rollout at the WA Mental Health Commission.