4-page Case Study
Posted: 5/14/2009
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City of Carlsbad City Government Uses Online Services for Messaging, Saves 40 Percent Annually

In California, the City of Carlsbad employs 1,100 people who rely on up-to-date technology to help them serve more than 100,000 local citizens. The city’s workforce devotes a lot of time to team-based projects that require efficient communication and collaboration tools, yet the city had an aging e-mail service and no collaboration solution. Faced with stringent budget limitations, the city chose a Microsoft® Online Services solution that provides hosted communication and collaboration services. The new solution delivers the security and functionality the city needs for desktop and mobile e-mail, online collaboration tools, and Web conferencing. In these tough economic times, Carlsbad is saving approximately 40 percent annually opting for a hosted solution that provides more productivity-enhancing tools for its workforce compared to an on-premises solution.



The City of Carlsbad is located on the southern California coast. The city incorporated in 1952 and serves more than 100,000 people living in an area of 42 square miles. The city provides the full range of services associated with a municipal government, including police, fire, parks, recreation, libraries, planning, building, water, sewer, and maintenance services with an annual general fund revenue of approximately U.S.$120 million.

The city’s IT department maintains the information systems and services required by 1,100 employees, who work in 22 departments spread across 30 different locations. “We are dedicated to providing a high level of service to our internal customers, ensuring that they have the information they need, when they need it, to work productively,” says Gordon Peterson, Director of Information Technology at the City of Carlsbad. “At the same time, we try to strategically allocate our resources to make the most out of our IT investments. This is even more important in the current economic climate, as the city faces increasing pressure to reduce its overall budget.”

However, for the IT department, cutting costs was difficult as long as the city retained its heterogeneous IT infrastructure. So IT staff decided to standardize the city’s infrastructure on Microsoft® technologies, signing a Microsoft Enterprise Agreement in 2008.

Aging E-Mail Solution

This strategy meant that the IT department had to address the issue of the city’s Novell GroupWise collaboration solution, which was due to expire in June 2009.  “As part of our standardization on Microsoft technologies, we did not see any functions or features that would justify maintaining a separate messaging platform,” says Peterson. “Microsoft is uniquely positioned to help us  provide enterprisewide communication and collaboration tools that are familiar and easy to use.”

The city wanted to deploy Microsoft Exchange Server 2007 and Microsoft Office Outlook® 2007. At the same time, the IT department wondered if it would be cost-effective to allocate its limited resources to purchasing hardware and hiring or training staff to administer Exchange Server 2007. So the city sent out a request for proposal to different vendors to compare the costs of a hosted, managed, or on-premises solution. “It was an opportunity to explore a new way of acquiring and using technology that would give us long-term savings,” says Peterson. “We worked with Gartner to help us understand the value, security, and reliability ramifications of going with a hosted solution, and we learned that hosting was a viable option.”

Ensuring Data Security

As security is often a concern when considering hosting, the city needed to confirm that any hosting partner could provide the required level of security and reliability for its messaging solution. “We had to make sure that if we went with a hosted e-mail solution it could match the best practices and security levels needed,” says Peterson. “The other area of concern for us was availability. Our messaging solution is a mission-critical application that everyone expects to work 24 hours a day, seven days a week.”


The City of Carlsbad chose the Microsoft Business Productivity Online Standard Suite to provide a hosted messaging and collaboration solution. For a low per-user, per-month subscription fee, the suite offers hosted communication and collaboration services that include desktop and mobile e-mail, calendaring and contacts, instant messaging and presence, shared workspaces, and live audio-visual Web conferencing applications.

Through the Business Productivity Online Standard Suite, city employees gain access to Microsoft Exchange Online, Microsoft SharePoint® Online, Microsoft Office Live Meeting, and Microsoft Office Communications Online—all of which are hosted by Microsoft. “We were immediately interested in Microsoft Online Services,” says Peterson. “Our initial goal was to replace our messaging solution, but we ended up selecting the entire suite as it offered integrated communication and collaboration tools that fit our long-term goals to deliver productivity-enhancing tools to our employees.”

Choosing a Hosted Option

The city made its decision after comparing the cost of Microsoft Online Services with a managed solution, in which the servers would reside at the city’s data center but be administered by a third-party, and with an on-

* With Microsoft Online Services, we can achieve that goal of doing more with less. The suite reduces IT costs while delivering more services than we could provide on our own. It’s a win all the way around. *
Gordon Peterson
Director of Information Technology, City of Carlsbad
premises solution purchased and maintained by the city. “Between Microsoft Online Services and the managed services vendor, the differentiators were primarily the 7 days a week, 24 hours a day support, disaster recovery, and total cost of ownership that came with the Microsoft option,” says Peterson. “In a managed services scenario, we would still be subject to our own data center constraints, whereas going with the Microsoft hosted solution we would benefit from their geographically dispersed data centers and compelling failover capabilities.”

In fact, after investigating different e-mail storage and protection options, the city determined that the Microsoft data center provided more security than the city’s own facility. “We were reassured that Microsoft Online Services could deliver the security and privacy requirements necessary to protect the city’s records,” says Bob Fries, IT Manager for the Enterprise Systems Group at the City of Carlsbad. 

Bringing Carlsbad Online

The city was one of the first customers to join the Microsoft Online Services Technology Adoption Program (TAP) in 2008. The city worked with its Microsoft account representative and the product group to refine features and functionality, providing important feedback to Microsoft along the way. “The TAP gave us valuable hands-on experience of the product,” says Fries. “We ran a pilot project in the IT department with approximately 20 employees where we successfully tested Office Live Meeting and used the e-mail service.”

In February 2009, the city began working with Microsoft Services to plan the migration of 880 GroupWise mailboxes to Exchange Online in March. On all of its desktops, the city installed Microsoft Office 2007 and the Microsoft Online Services client that provides a single sign on to all the online services in the suite. The city used a migration tool from Quest Software that facilities the municipal government’s migration from GroupWise directly to Exchange Online.  

“We planned the migration for the weekend of March 21, and when everyone came in on Monday morning, they were able to start using their e-mail solution right away,” says Peterson.

“We were breaking new ground, being the first municipal government to adopt Microsoft Online Services, and the first to use the Quest migration tool, to migrate directly to ‘the cloud’,” adds Fries. “Microsoft invested significant resources to assist us.”

Even though the city has used GroupWise for 15 years, employees were enthusiastic about the user interface with the Microsoft Office Outlook 2007 messaging and collaboration client as well as the comparable functionality within Microsoft Office Outlook Web Access. Mobile employees were also pleased with the synchronization experience they got with Microsoft ActiveSync® 4.5 sync software for devices running Windows Mobile® software. “Because ActiveSync is native to Exchange Online, we encouraged people to come in and we helped sync up their devices so they could receive their e-mail messages on their phones,” says Fries. “The syncing is reliable and fast.”

The city plans to launch Office Live Meeting by June 2009, and then deploy SharePoint Online by late summer. 


The City of Carlsbad is the first public sector entity to deploy the Microsoft Business Productivity Online Standard Suite. The city is benefitting from more flexibility in resource allocation, reduced costs, accelerated deployment, and improved employee productivity.

Increasing Budgeting Flexibility

Faced with a stringent budget and tough economic times, Microsoft Online Services provides the city with a valuable opportunity to allocate its finite amount of resources where they’ll generate the greatest return on investment. “Microsoft Online Services is a reliable, hosted solution that takes care of our commodity communication and collaboration services, so we can focus our resources on value-add services for Carlsbad employees and citizens,” says Peterson. “Because we have freed up time that would have been spent standing up servers and patching applications, we can now respond more quickly to strategic initiatives within the city.”

Reducing Costs

After deploying the services included in the Business Productivity Online Standard Suite, the city expects to see reduced IT costs on a number of fronts. There were immediate cost savings from not having to purchase any hardware or to train staff to support the new e-mail and collaboration services, and there will be ongoing cost savings in server administration, software upgrades, and hardware replacements. “Having the servers live elsewhere is about initial capital savings and long-term benefits,” says Peterson. “We would have had to hire an administrator if we tried to deliver these communication and collaboration services in house. Compared to the in-house option, we expect a savings of approximately 40 percent annually.”

With Microsoft Online Services, the city has the flexibility of choosing to deploy individual services to different departments as needed. In this case, it deployed the Web-based e-mail client only to those employees who don’t typically work at a desk. “Compared to licensing costs for the full suite, we will be saving approximately $4,800 annually on an e-mail solution for our 80 deskless workers,” says Fries.

Not only did the city reduce capital costs, but it also simplified IT budgeting. The Business Productivity Online Standard Suite requires only a monthly subscription fee, so the city can treat that as an operational expense, which is easier for management to track. A regular, recurring cost is also easier to accommodate within the city’s budget than large, sporadic capital expenditures.

And by choosing Microsoft Online Services, the City of Carlsbad was able to take advantage of its existing software licensing acquired through its Enterprise Agreement. “Our licensing agreement meant all we had to do was pay the online services fee,” says Peterson. “Some other hosters bundled the licensing fee and the services together. Since we already owned the Microsoft software licenses, such arrangements did not make sense.”

Accelerating Deployment

While the city had only one deadline in June 2009—the expiration of its GroupWise maintenance agreement—the company was eager to launch its new online services so its employees could benefit from the integrated communication and collaboration capabilities.

“With Microsoft Online Services, you are handed a messaging and collaboration solution all at once,” says Fries. “And we are guaranteed instant access to any new functionality or upgrades. With our small IT department, we couldn’t stay on the cutting edge. We have a lot on our plate, so upgrading applications sometimes takes a back seat.”

Improving Productivity

With Microsoft Online Services and the Business Productivity Online Standard Suite, the city’s IT department can offer an integrated suite of productivity services that introduces online collaboration, instant messaging, and more to the workforce for the first time. Plus, deskless workers and city employees who wish to access their files and e-mail messages from home can use Office Outlook Web Access to stay in touch with the office.

“Outlook Web Access has functionality on a par with the desktop client, so that’s a benefit for our mobile employees,” says Fries. “We had no collaborative online spaces before, so SharePoint Online will be a quantum leap for city employees. We have a lot of team-based projects that require many meetings among staff in different buildings. We are expecting to save time and money being able to host those meetings online with Office Live Meeting.”

“With Microsoft Online Services, we can achieve that goal of doing more with less,” concludes Peterson. “The suite reduces IT costs while delivering more services than we could provide on our own. It’s a win all the way around.”

Microsoft Online Services
Microsoft Online Services is a business-class communications and collaboration software offering delivered as a subscription service, hosted by Microsoft, and sold with partners. These services help make it easier for customers to rapidly and cost-effectively access the most up-to-date technologies, and are designed for rapid deployment to provide customers with streamlined communications, simplified management, and business-class reliability and security.
For IT staff, Microsoft Online Services helps reduce the burden of performing routine IT management tasks such as installation, provisioning, ongoing maintenance, patches, updates, and upgrades, making it possible for them to spend more time on initiatives that move the business forward. These services are backed by strong SLAs and are designed to meet the regulatory compliance and reliability needs of enterprise customers. On a technical level, the services boast the sophistication and reliability that customers expect from Microsoft, which continues to invest heavily in building data centers to support these services.

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For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:

For more information about City of Carlsbad visit the Web site at:

Solution Overview

Organization Size: 1100 employees

Organization Profile

The City of Carlsbad serves an area of 42 square miles in southern California with a population of more than 100,000. It employs approximately 1,100 full- and part-time employees.

Business Situation

The city needed to update or replace an aging messaging solution that it managed in house to provide its employees with improved collaboration, but it was constrained by a limited IT budget.


The city avoided any on-premises investments after choosing the Microsoft® Business Productivity Online Standard Suite. This collaboration server software is hosted at secure Microsoft data centers. 

  • Increased budgeting flexibility
  • Reduced costs
  • Accelerated deployment
  • Improved productivity

Software and Services
  • Microsoft Business Productivity Online Standard Suite
  • Microsoft Office Live Meeting
  • Microsoft Office Communications Online
  • Exchange Online

Vertical Industries

United States

Business Need
  • Business Productivity
  • Collaboration
  • Cost Containment

IT Issue
  • Hosted Messaging and Collaboration
  • Personal Productivity