New York City Workers Going to Microsoft's Cloud

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New York Mayor Michael Bloomberg and Microsoft CEO Steve Ballmer announced Wednesday that the city will move some 100,000 city workers to the software titan’s cloud computing platform for a five year savings to the city of more than $50 million.

The announcement is another victory for Microsoft (NASDAQ: MSFT) in its quest to make cloud computing on the company’s platform the dominant player in the burgeoning market for software as a service (SaaS).

“By capitalizing on the city’s buying power, consolidating dozens of separate city agency license agreements into a single one, and paying for software based on use, we’ll save $50 million over the next five years,” Mayor Bloomberg said in a statement.

The deployment will begin by providing 30,000 knowledge workers with the company’s Business Productivity Online Suite (BPOS) served from Microsoft’s cloud, a Microsoft spokesperson told InternetNews.com.

BPOS currently provides users with access to e-mail via Exchange Online, collaboration using SharePoint Online, and unified communications using Office Communications Online, and Office Live Meeting. However, Microsoft is in the process of upgrading the services to run on the latest 2010 releases of those, products, including Lync 2010, which will replace Communications and Live Meeting.

Those applications services will be upgraded when the company releases its Office 365 online services bundle, which was announced Tuesday. Office 365 is due out next year.

The spokesperson said, however, that the scope of the city’s plan is bigger than just deploying applications in the cloud. New York is also planning to consolidate as many as 50 data centers into “a centrally-managed state-of-the-art facility,” the mayor’s statement said.

“It’s really a broad modernization and consolidation agreement,” the spokesperson added.

The New York deal is just the latest win for Microsoft’s cloud computing initiative.

In late September, the state of Minnesota’s Office of Enterprise Technology (OET) signed on to use Microsoft’s cloud computing services for unified communications and collaboration via BPOS statewide.

Last June, the Kentucky Department of Education inked a deal — albeit free — with Microsoft to provide e-mail, instant messaging, and online storage for 700,000 students, faculty, and administrative staff via its cloud platform.

However, the company has serious competition in some quarters. For instance, this time last year, Microsoft was not able to stave off an offer to the Los Angeles city council by Google (NASDAQ: GOOG) to replace the city’s aging e-mail system.

Still, its win rate has been substantial.

Last spring, company officials said that Microsoft had already won over 40 million paying users of its various online services, including 500 government entities.

In fact, on Tuesday, services giant Computer Sciences Corp. (NYSE: CSC) announced that the state of California has contracted it to migrate all of its multiple e-mail systems to use Microsoft’s BPOS statewide.

Perhaps a little ironically, CSC is also the contractor on the city of Los Angeles’ e-mail modernization program.

Stuart J. Johnston is a contributing writer at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.