Microsoft, New York City Strike Software-Cloud Computing Deal

Microsoft and the city of New York today announced a new contract that the software giant says will save Big Apple $50 million over five years by consolidating existing license agreements and leveraging Microsoft's cloud computing technology.

Microsoft CEO Steve Ballmer appeared with New York Mayor Michael Bloomberg this morning at City Hall to announce the new five-year deal, which essentially puts Microsoft in charge of the city's IT infrastructure, which has more 100,000 employees. While the exact value of the contract for Microsoft has not been disclosed, the deal is a huge win for the software company; although Microsoft products are already prevalent throughout the city's agencies and departments, the new contract essentially standardizes New York's infrastructure on Microsoft's platforms.

The five-year deal is also big for Microsoft because it will lock out the competition -- namely Google. Microsoft's chief rival made headlines last year when the city of Los Angeles tapped Google -- and passed over Microsoft -- to run its e-mail and office application systems. While Google's contract with Los Angeles has been plagued by security concerns and delays, the deal was still seen as a boon for the search engine giant, which has been pushing its Google Apps and cloud computing effort hard.

As part of the New York City agreement, Microsoft will consolidate dozens of existing software license contracts into one all-encompassing agreement. The new deal was made possible by Bloomberg's signing of Executive Order 140, which essentially gave the Department of Information Technology and Telecommunications (DoITT) the power to centralize and oversee all of the city's IT infrastructure rather than having each individual city agency doing its own purchasing and deployments.

"Through our partnership with Microsoft, we've found ways to offer our employees Microsoft's newest, state-of-the-art computing tools while reducing costs to taxpayers," Bloomberg said in a statement. "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."

Next: Microsoft Moves New York Into The Cloud

According to the new contract, New York City's DoITT will be able to manage different employee "profiles" by establishing three levels of software users: employees who need only occasional access to specific applications; employees who regularly use Microsoft's basic programs; and employees known as "power users" that require the entire spread of Microsoft's available products and services.

Along with simplifying the city's IT contracts, the Microsoft deal also moves New York's infrastructure more into the cloud. Under the first wave of the contract rollout, approximately 30,000 city employees will begin to use Microsoft's cloud computing productivity services to simultaneously collaborate on office documents, engage in online conferencing, and other cloud-related activities.

"With Microsoft's latest cloud-based productivity and collaboration tools, New York City employees will benefit from having better access to information, improved collaboration and information sharing among city agencies," Ballmer said in a statement. "Additionally, this comprehensive partnership provides the latest in operating system, server and development tools laying a foundation for greater innovation and infrastructure modernization."

During the press conference at City Hall, Ballmer said other cities and states were currently looking at reducing IT expenses and infrastructure through cloud computing solutions. Bloomberg added that cloud computing was an ideal solution for large governments with several different agencies and departments because having data stored in the cloud instead of housed locally would help improve productivity.