May 18, 2009, 5:11 PM — The human resources people at Microsoft were somewhat taken aback when the city of Carlsbad, Calif., started grilling them on what types of background checks Microsoft performs on its own employees.
But Gordon Peterson, director of IT for the seaside city just north of San Diego, says that before he would allow municipal e-mails to live in Microsoft's cloud he wanted assurances that the background checks Microsoft conducts on its people were as thorough as the checks Carlsbad conducts on its IT workers.
"Security was a big part of the RFP," Peterson says. "We asked a lot of questions on how you do security, on their hire-fire process." For example, Peterson wanted to know what security procedures Microsoft takes when it terminates an employee.
"I don't know that they'd ever been asked that before," says Peterson. But Microsoft answered the queries to Carlsbad's satisfaction and the city recently signed on for Microsoft's Business Productivity Online Suite, a cloud-based service in which Microsoft hosts the city's e-mail and collaboration services, including SharePoint, Live Meeting and instant messaging.
Peterson readily admits that "not everybody is perfectly comfortable" with the idea that municipal e-mails are being hosted outside the walls of the city. But he weighed the pros and cons and worked through a variety of issues with Microsoft before coming to the conclusion that "the hosted environment has a higher degree of security than we can provide internally." For example, Peterson says that within his 20-person shop, tasks are shared, so he's not able to achieve the separation of duties that a larger security organization can put into place.
The road to the cloud
Carlsbad is a city of about 100,000 people with a municipal employee base of around 1,000, according to Peterson. The city has been working for the past couple of years to consolidate the number of IT platforms and once it chose Microsoft as a strategic partner, that meant moving from Groupwise to Exchange for e-mail.
The next question for Peterson was whether to build and maintain the system internally, build the system and have someone else run it, or have it fully hosted.
Peterson had conversations with Gartner analysts, conducted a thorough RFP process and ultimately decided that a hosted solution was the way to go.
"We felt comfortable that this is viable. We learned that it's less expensive than doing it ourselves," Peterson says. He adds that going with hosted e-mail frees up IT staffers to do more high-value projects. "Around 70% of our time and money is spent keeping the lights on," Peterson says. "The rest is innovation and that's where the real value comes in."
In pure dollars and cents, over a four-year period, the Microsoft deal will cost $330,000, a managed solution would have cost $390,000 and doing it all in-house was a $500,000 proposition, according to Peterson. "That's a 30% or more savings to not do it ourselves."
In term of implementation, Carlsbad went live with Exchange in late March and everything went smoothly from Microsoft's end of things. "You went home Friday as a Groupwise user and you came back Monday as an Exchange user. The service works fine," he says.
The only glitch occurred when it came to data migration. Carlsbad used a third party to migrate existing data from one system to the other, and initially about 100 of the 1,000 end users didn't get their files moved. That was quickly rectified.
One of Peterson's initial concerns had to do with bandwidth. Carlsbad has a 20MB pipe to the Internet and Peterson says he was worried that it wouldn't be enough, especially when bandwidth usage soared to near 100% on the first Monday morning of the Exchange rollout. But Peterson said after that initial spike, which he attributed to employees signing on for the first time all at once, bandwidth usage has returned to previous levels.
For Peterson, the Microsoft cloud service is both a hosted e-mail service and a disaster-recovery plan. The data is hosted at a Microsoft owned and operated data center in Redmond, Wash., and mirrored to a second site in Virginia. "There's full failover," Peterson says.
Cloud or not a cloud
With all the hype surrounding cloud computing, it's not always clear whether a hosted service is technically a cloud-based service or not. Peterson says he's not that concerned about the semantics of it all.
But he does have his own idea of what cloud computing means. It's the notion that he doesn't have to know exactly where the data is, as long as he's sure that it's safe and accessible.
There's also a software-as-a-service component to cloud computing, Peterson says. The vendor hosts the application, "they provide the compute power to handle what we need" and the customer doesn't need to get involved in the details, like how many servers, how many gigs of storage. "We don’t know and we don't need to know," he says.
And finally, there's the scalability piece, where Peterson says he is able to easily scale up the e-mail service as his needs increase. Plus, he is able to quickly add new features and applications.
For example, if he ends up needing to archive e-mails from municipal attorneys, he can add an archiving feature for $5 per mailbox. "It's an on-demand sort of thing," he says.
Plus, he plans to roll out Live Meeting within the next couple of months, followed by SharePoint a few months later. Those applications are all included in the enterprise application contract that Carlsbad signed with Microsoft.
Of course, there are other aspects of cloud computing that don't apply in this case. For example, some experts and analysts say the ability to scale down, as well as to scale up, is a feature of cloud computing. And then there's the pay-for-usage feature of cloud computing. Carlsbad has signed what's more like a traditional outsourcing or hosted application contract. Nevertheless, Microsoft calls this a cloud computing service and to Peterson it really doesn't matter as long as it works.
Peterson says Carlsbad has had some experience with hosted applications, including some library apps and his own help desk, which has been outsourced for some time. He's now looking at a new human resources management system and is looking to have that hosted.
There's another angle that comes into play with hosted services, he says. They don't involve capital expense or new personnel, so they're an easier sell, especially in these tough economic times.
Peterson says he will lose the ability to customize applications by going the cloud route, but he says e-mail has become a commodity. "You don't need to know a lick about Carlsbad to be able to provide e-mail."
And if, down the road, Carlsbad decides to go in a different direction, provisions for what Carlsbad's legal team call "disentanglement" have been put into the contract. "We did address getting out of the contract and how we would get our e-mails back."
But at this point, Peterson isn't looking to do less with cloud computing, he's looking do more. "We're asking this question on everything now," he says.