NZ Post signs major cloud deal with Google - is it the first domino?

Microsoft Exchange, Outlook and Office are on the way out at NZ Post, with 2100 staff moving to Google Apps in a bid to save $2 million over three years.

The deal marks the first time a major New Zealand account has swallowed its qualms about putting its documents out in the cloud - at least on such a scale. But now the first domino has fallen, others could follow.

The NZ Post deal, which was engineered by Google’s New Zealand agent for its corporate products, Fronde, kicks in during September.

Google spokeswoman Annie Baxter says it is her company's largest commercial deal yet across Australia or New Zealand, although it is eclipsed in number of users by several education deals.

The deal covers email and document collaboration. Staff at the SOE will also begin using Google Apps for desktop video conferencing. Postal Services Group general manager of business capability Tracy Voice told NBR that Microsoft Office will also be weeded out of her division as part of the new set-up. Ms Voice says she expects $1 million in productivity gains from extended use of document collaboration, plus the introduction of IM and desktop video.

Although Google Apps is available in a freebie standard version, the Premiere edition - which adds an up-time guarantee (introduced after a recent failure) and more online storage, among other perks, costs $US50 per user per year - implying the three-year deal will cost around $US315,000 ($NZ460,000).

NZ Post says most of its anticipated $2 million gain will come from savings in infrastructure. Storing data in the cloud - that is, Google data centres in the US - will mean less need for the state-owned enterprise to buy its own hardware. And a lot of storage comes with the deal. As with any Google Apps Premiere account, employees will get 25GB of mailbox space each (compared to a 50MB limit under NZ Posts current, inhouse Microsoft Exchange and Outlook set-up).

Last year, NZ Post R&D manager Joe Bourque told NBR he was running limited trials with multiple software-as-a-service platforms, and examining the merits of Google’s cloud platform versus Amazon’s (also represented in New Zealand by Fronde).

As well as Google Apps, Mr Bourque had installed Zoho, Thinkfree and HyperOffice, and was also looking ahead to Microsoft’s coming free online version of Office, and its “cloud” version of Windows, Azure (whose pricing was recently announced).

However, a full-blown cloud implementation was likely five to 10 years away, said Mr Bourque. His chief concern was security; not so much whether Google’s systems could be hacked, but whether enough safeguards could be put in place to stop chump managers clicking the wrong setting and inadvertently sharing their calendar, or sensitive NZ Post files, with the world (as ironically recently happened to Twitter in the past week, with a blogger at TechCrunch gaining access to some of its most sensitive planning files, snippets of which he has published. All of Twitter's files are stored on Google Apps).

CIOs NBR spoke to around that time, to a man, expressed similar fears. For others, including the University of Auckland, fears about Google Apps' ability to keep in compliance with the Public Records Act, which kicks in next year, kept them largely in the Microsoft fold.

However, a 10-week proof-of-concept trial, involving both IT staff and a legal team, saw NZ Post both overcome its qualms about cloud computing, and narrow its choice to one provider: Google.

Other big organisations considering cloud roll-outs will run their own trials. But now that NZ Post has broken the ice, Microsoft’s nightmare has to be that others will follow.

So far, Google Apps business has been slow for Fronde. But in announcing its recent turnaround results, the integrator predicted more cloud business. It could be a much, much more.