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L.A. bets on cloud computing despite financial woes in Google Apps deal

Municipal authorities who chose Google Apps to replace Novell GroupWise for 30,000 users are betting that promised productivity gains will pay off.

When the Los Angeles city council voted to turn the city's email infrastructure over to Google Apps Premier Edition, Google won a much-needed reference account, Novell lost a big customer for its on-premises service Groupwise and L.A. faced a lot of questions.

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The $7.2 billion contract is seen as a signal test for Google's ability to build a promised 'government cloud' that can meet rigorous security and reliability concerns. But L.A.'s willingness to deploy what many see as 'beta' software and the terms of the deal itself raised questions. Google beat out a Microsoft proposal for the business, but what remains unclear is whether L.A. users will start using the other Google apps -- word processing, spreadsheet, etc. -- instead of the Microsoft Office standbys. If that happens, Google will win another victory for both its apps and its cloud-computing model.

Most notable is a provision in the contract that will win L.A. significant monetary concessions if references from this deal win Google Apps more business elsewhere in the state.

A October 7, 2009 report from City Administrative Officer Miguel Santana lays out the deal:

"The city may receive a series of discounts of up to $1,200,000 for its Google subscription costs if California governmental entities, such as the city's proprietary departments or the county of Los Angeles, 'piggy-back' onto the city's contract."

Some see this as an untenable conflict of interest, as there is no way a city IT person will talk up problems with the deployment if the city's budget will be adversely affected.

Critics also say the technology choice was poorly thought out and fraught with unknowns in cost and performance that make it a risky move for a city government reeling from financial crisis.

But the city IT staff is sticking to its guns.

Google makes concessions
"We don't consider ourselves bleeding edge," said Kevin Crawford, assistant general manager for L.A.'s Information Technology Agency. Crawford is overseeing the planning and migration of the city's roughly 30,000 email users and their archived data. He said that Software as a Service (SaaS) was a well-tested model and that, with Google's promises to segregate and make accountable its 'government cloud', he was confident the move was wise.

Google vowed to fence off portions of its massive data operations specifically for governmental use because of much more stringent security and transparency requirements governments require. In this case, Google will segregate data centers for both the city and for its police department into two separate units.

"If they break confidentiality we can go after them for unlimited damages," Crawford said. Even a secret federal subpoena would break the contract if Google didn't notify city officials. The original proposal specified complete auditing of facilities and procedures used by Google to store mail, and Crawford said he was satisfied with what he'd seen, as well as with the potential penalties specified by the contract for any Google shortcomings. "We give them no right to any of our data." he said.

Who's going to pay for the Internet [use] for 30,000 people to use Google Video?
Kevin McDonald, executive vice president at Alvaka Networks,

Crawford said the decision made good fiscal sense. The contract with Computer Sciences Corporation (CSC), the company taking care of the implementation work, is slated to cost almost $1.5 million more than the five-year cost of maintaining and upgrading GroupWise, but L.A. can repurpose decommissioned GroupWise servers for other computing loads.

But is that enough?
This doesn't satisfy critics, who say the move is full of unknowns.

"Who's going to pay for the Internet [use] for 30,000 people to use Google Video?" asked Kevin McDonald, executive vice president at Alvaka Networks, a Huntington Beach Calif., IT consultant who followed these negotiations closely but is not involved in the deal.

Questions about things such as the extra bandwidth needed and the limited capabilities of some Google services outside of Gmail make this an enormous risk. Even if security concerns, always an issue in outsourcing and cloud deals, are addressed, there are far more factors than go into making a decision like this, McDonald said. For instance, he thinks the productivity claims Google made to win the deal are dubious at best.

"Google justified its pitch by saying that the use of Google Apps will save a ton of money based on productivity gains, when everyone knows that when you put in something new, you never know if it will integrate [well] or not with existing technology," he said. That's part of the calculations that haven't been done, according to McDonald.

"Why are [they] doing it with such urgency?" he asked. He said a deal shouldn't have taken place during a fiscal crisis. He notes that the timing adds an unnecessary one-time cost of more than $1 million, and since the costs of running Google are the same as running GroupWise, the move could have been easily pushed off. The additional costs cover the installation and migration to be performed by CSC, and the city hopes to cover those costs with a reimbursement of $1.5 million from a 2006 class action lawsuit against Microsoft.

One thing in Google's favor is its image of a being a new, hip application provider. Students and other young PC users are already adept at Google apps. McDonald watched a city councilor at the October 27th budget meeting raise a fist in the air and say "I say we go and we go Google!"

So critics have their doubts abou Google Apps capabilities and retraining costs associated with moving from a familiar Microsoft Outlook client. No one questions why Google pitched this deal, however: It needs to show that Google Apps, often viewed as lightweight and being in perpetual beta, can do grown-up work in a business environment.

"This is a great reference account for Google -- a great move -- especially the very public nature of it," said Matt Cain, email and collaboration analyst for Gartner. Crawford confirmed that the project is getting an awful lot of attention. He said he's been contacted by 29 different agencies from five states that want to observe the migration, which will begin after the contract is approved by the mayor and signed, expected shortly.

Carl Brooks is the Technology Writer at and Barbara Darrow is the Senior News Director. Contact him at and her at

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