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Google's 'Gov Cloud' Wins $7.2 Million Los Angeles Contract

The City of Los Angeles plans to replace its Novell GroupWise e-mail system with Google Apps, partly using anti-trust settlement money paid by Microsoft.

Having largely resolved concerns about privacy, cost, and security, the City of Los Angeles has "Gone Google."

The Los Angeles City Council on Tuesday voted unanimously to approve a $7.2 million deal with IT contractor Computer Sciences Corp. to replace the city's existing Novell GroupWise e-mail system with Google Apps, Google's suite of online communication and productivity programs. Microsoft Office licenses will be reduced but not eliminated, as select city workers will continue to use Microsoft's software.

The hotly contested deal calls for shifting about 30,000 city workers over to Google Apps in the next year.

Part of the reason Google won the deal appears to be cost: The City Administrative Officer (CAO) expects "Going Google," to borrow Google's marketing catch-phrase, will cost the City an estimated $17.6 million over five years. Remaining with Novell, the CAO estimated, would cost $23 million.

The City plans to get $1.5 million of the estimated $1.9 million funding needed in 2009-2010 from its 2006 antitrust settlement with Microsoft.

Novell disputes the City's cost estimate for the contact. Perhaps anticipating the unfavorable vote this week, the company issued a statement on Friday claiming that "the budget figures for GroupWise have not been presented accurately."

Novell said that it "is prepared to help Los Angeles reorganize and centralize its system to make it more efficient, find real costs savings, and reduce the direct cost of the overall service."

Novell's defeat has to be particularly bitter, given that Google CEO Eric Schmidt used to be the CEO of Novell and that Schmidt was just in Utah, where Novell is based, talking about how the state could help more high tech businesses develop in the region.

The other reason that Google's bid appears to have triumphed is that the company is working on a parallel Google Apps instance for government organizations. Google said in September that it is developing a private cloud to accommodate the security and policy issues faced by government entities.

The CAO report states that "Google agreed to store all City data in its 'Gov Cloud' facilities."

The Los Angeles Police Department, according to the CAO report, believes Google's private cloud will address its security concerns, but the California Department of Justice still has to sign-off on this plan.

Vatsal Sonecha, VP at TriCipher, a security company that provides authentication for online applications like Google Apps, characterized Google's contract win as an endorsement of the cloud computing model.

"I really believe that we have accepted cloud computing as the norm going forward," he said. "It's just is a very compelling business case, especially in the area of collaboration."

Such acceptance, however, isn't unqualified however. The City of Washington, D.C., an early adopter of Google Apps and of the cloud model, still runs on-premises systems in parallel with its cloud apps, the CAO report notes. "[M]ost City employees continue to use the existing system, and have not shifted to exclusively use Google's system," the report states.

If cloud computing is the future, most organizations still have at least one foot firmly planted in the past.

Read InformationWeek's first-ever analysis of top CIOs in federal, state, and local government, and how they're embracing new expectations. Download the report here (registration required).

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