Take That, Gmail: San Francisco Goes With Microsoft For Cloud-Based Email Upgrade

5/18/11Follow @curtwoodward

Microsoft has scored a bit of a coup in rival Google’s backyard: The Redmond, WA-based software giant has landed a contract to provide cloud-based email for San Francisco’s city and county government, winning out against options from Google (NASDAQ: GOOG) and Lotus. San Francisco will pay Microsoft (NASDAQ: MSFT) about $1.2 million per year for the service, which will cover email for about 23,000 government employees, San Francisco’s chief information officer, Jon Walton, said at a news conference today.

Google (NASDAQ: GOOG), based just down the Peninsula in Mountain View, CA, has made inroads with other government agencies that want cloud-based email. One noteworthy customer came in 2009, when the city of Los Angeles picked Gmail for its e-mail services, despite a hard-fought effort by Microsoft.

Walton said San Francisco officials looked at Google and Lotus Notes before settling on Microsoft, in large part because it allows the city to more easily adopt additional Microsoft cloud services in the future, such as instant messaging, video conferencing, and web-based file sharing. “This creates for us the foundation, the core of the system that we could expand in the future,” Walton said.

San Francisco already has moved a pilot group of about 300 people over to Microsoft Exchange Online already, and plans to transition the rest of the workforce over the next year. That means last week’s Microsoft online email outage gave San Francisco officials their first taste of what a big cloud crash could do to their system.

Walton put a happy face on the situation, saying the outage actually allowed San Francisco’s IT department to see how Microsoft would react under fire—and he said the city was pleased, getting good communication as the company worked to resolve the problem. “It only impacted us for about four hours,” Walton said. “Because nothing was lost, it was perceived as a delay by our users.” He also noted that having its own physical email servers—San Francisco government currently has seven separate email systems—didn’t preclude outages either.

Obviously, the numbers on this contract aren’t huge for Microsoft—the real value is the PR. As governments deal with a new era of austerity following the Great Recession, the opportunity to remake their old IT departments will start to look much more attractive. Having a tech-savvy city like San Francisco on its client roster just makes additional sales for the company that much easier.

And, hey, it never hurts to score on the other side’s home turf, either.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • Tuft

    The above about City of SF going to bpos is interesting. Interesting in that the long term cost and positive fluff about bpos was all to paint the pretty picture.

    From someone on the inside, the picture is not that pretty and the costs are so much higher than the $6.50 per month per user as reported.
    This is just another int he long line of public CIO’s wasting millions of tax dollars for their own gain and not in the best interest of the City they work for.
    Mr. Jon Walton is wasting millions of dollars on a sub-par product that does not serve the needs of its users and not in the best interest of the City when public services to health, schools and parks are being but due to budget deficits. Under Mr Walton’s leadership SF’s Department of Technology is not only wasting millions of tax dollars on this project but also adding yet another email systems to the current infrastructure.
    To date, since January 2011 there have only been about 1200 of the 23,000 email user in S F county. There has not been one clean seamless or painless cut over. The cost per user per month is closer to $9.00 and this cost does not include the cost of additional long and short term assets including; project managers, hardware, and contractors to support the increased level of user support calls.
    The ‘cloud’ is suppose to reduce TCO costs, but that is not what the reality is. In fact the cost has gone way up and will actually more than double the current cost of the existing messaging infrastructure.

    Mr Walton and the Department of Technology also have no plan to completely move all user to the BPOS solution since it does not meet the security needs of the Public Safety and health departments. In the end there will be an additional messaging systems added to the already complex infrastructure. Along with the additional email systems there is additional cost to support it. SF’s e-mail costs with the addition of BPOS will skyrocket from the pre BPOS costs of $1.2 million a year to the almost $3 million per year.

    Regards