key player. Last week, Microsoft announced that New York State has become the latest government entity to sign up. The deal is also, according to the state's CIO, a testament to the simplicity and savings that cloud services can bring to large organizations.
More than 120,000 employees across New York's executive agencies are scheduled to move to Office 365 by the end of the year. Currently, the state employs more than 27 systems for email, word and data processing. The move to a standardized platform is expected to save approximately $3 million in annual license, hardware, maintenance, energy and personnel costs.
But these savings are just the immediate benefits, said Brian Digman, New York State CIO, in an interview.
"It saves us money but it's also a big step into the cloud," he said, adding, "It signals that the best solution might not always be homegrown."
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Maintaining dozens of systems internally ties up taxpayer dollars that might otherwise go to worthy but underfunded projects. By ceding many of the administrative duties to Microsoft's cloud, New York will immediately gain the flexibility to reallocate millions of dollars.
But the move to Office 365 is part of a bigger plan, initiated by Governor Andrew Cuomo in 2011, to make New York's government more modern, accountable and efficient. Digman said that Office 365 will advance this plan by allowing employees to drive efficiency -- and thus more savings -- via the cloud.
On a day-to-day basis, New York employees will benefit from the ability to access email, calendars and important documents from virtually any device and at virtually any location, he said. Microsoft's cloud infrastructure also makes the state more agile in the case of an emergency. Digman said that during a crisis, the demands on state resources spike, sometimes to the extent that communications are impaired by lagging or overlapping systems. Soon, critical New York systems will run through Microsoft's data center, rather than internally-managed servers. The new hosting environment, in combination with the standard interface, should allow agencies to respond quickly during an emergency, Digman stated.
Hosting the data in a state-run data center was untenable, Digman elaborated, saying, "For us to invest at a level to match a company like Microsoft is not feasible."
Many companies are still skeptical of cloud services, preferring to keep sensitive data under internal management. But Digman said New York's cyber security division reviewed Office 365 and is "quite comfortable" that the service will meet the state's needs.
"The government is always very careful with security," he stated, noting that New York's data is housed in a single-tenant environment. Microsoft is currently hosting core Office 365 components, such as email and SharePoint, but the state is currently negotiating additional pieces. Active Directory, Digman said, is "the next leg."
Another way New York employees will benefit is from Office 365's automatic access to the newest versions of Microsoft's productivity applications, noted Digman.
"With every version, Microsoft seems to expand the capability to analyze data, and to move it from product to product," he said of new features such as Power BI. He said state agencies have been interested in using these features to deliver data and insight at a faster rate, and that they will also benefit from a predictable and consistent upgrade cycle.
He said Office 365 even allows the state to milk the last bit of productivity out of aging computers. Digman said that many machines that struggle with processing power can offset some of the burden to Microsoft's servers by running Office in the cloud. "It's another benefit that's hard to measure," he said.
One thing that's not hard to measure: Office 365's momentum. In July, the company announced that the product was on pace for $1.5 billion in annual revenue, a 50% improvement from its pace earlier in the year. Because Office 365 is a subscription-based service, this profit stream is perpetual and thus more attractive, in Microsoft's view, than traditional standalone licenses. North American government customers who have recently signed up for Office 365 include the cities of San Francisco, San Jose, Kansas City, Seattle and Chicago, as well as the county of Santa Clara, which is home to Silicon Valley, and the state of Texas.
The company also can boast of Office 365 success stories with businesses of all sizes while fending off further encroachment from Google. Additionally, with many Office 365 installations running on Windows Azure or a combination of Azure and a company's private servers, the product has boosted not only Office sales but also the adoption and reputation of Microsoft's cloud infrastructure as well. Microsoft hopes that Office and Azure both will reinforce the appeal of its increasingly cloud-focused Microsoft Server products.
Microsoft has had less success selling Office 365 to consumers. This fact has only added to the debate about whether the company should release a version of Office optimized for iPads. The company offers Office 365 subscribers a version of Office that runs on iOS and Android phones, but it has declined to produce a tablet-oriented version for either platform. The plan is ostensibly intended to increase the appeal of Windows 8.