One of the largest and busting cities in North America, Los Angeles has agreed upon a deal with the biggest name in search industry, Google, to employ Google web services for all the city offices and officials. The Los Angeles reached a unanimous vote to approve the Google Apps contract worth $7.2 million, that would provide a complete overhaul to the existing city administration software, Novell Inc.’s GroupWise, that has been constantly complained of being slow and more susceptible to system crashes.

The Los Angeles city council approved of the Google Apps plan and agreed to use Google’s web based service, such as, GMail, chatting, calendar etc. through Computer Sciences Corp., that is the acting contractor between the city council and Google. However, the contractor has been advised to take care of security breaches, as any such event will cost Computer Sciences Corp. a predefined sum of penalty.

According to Dave Girouard (Google),

“In our view, this can be a watershed agreement. There’s a lot of cities and counties around the state and around the nation who were watching this.

The contract was up for grabs for various companies that submitted their tenders, including Microsoft. However, Google’s acquisition of the Los Angeles’s contract is considered to be a might blow for Microsoft, a company that largely depends upon its operating systems and MS Office for revenue.

According to Rob Enderle (Analyst),

“The shift toward cloud-computing is troublesome to Microsoft, the fortunes of which are largely tethered to operating systems and office software that run on desktop machines. Losing something of this size has to be really painful. It’s not the death knell for them, but it’s a big red flag.”

Google on the other hand has been relentless in pursuing local administrations, government offices and security conscious companies to switch over to Google Apps, that provides more efficiency with complete security.

Via Yahoo! Finance.