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Agenda Item 29.

City Council Meeting

Meeting Date:	08/16/2022
FROM:	Bill Gallardo

Subject:

Microsoft 365 Exchange (Email) Licenses

RECOMMENDATION

Authorize the City’s Procurement & Contracts Administrator or designee to provide a Purchase Order for the purchase of Microsoft 365 Exchange licenses through a Microsoft government pricing Enterprise Agreement (EA).

BACKGROUND/DISCUSSION

City staff recommends migrating all of the City’s email to the Cloud to allow the organization to benefit from the advantages of a cloud-based software service model. As more and more software providers transition to cloud-based services, this eliminates the need for an organization to purchase, maintain and replace physical servers, reducing City hardware and software costs. Microsoft 365 Exchange offers all the email features staff currently utilize, but with the advantage of significantly reduced risk of disruption to service, particularly due to hardware failure, internal interruptions or outages. This benefit will also reduce overtime related staffing costs that may be incurred for after-hour support in order to restore email services in the event of a disruption. Cloud based email provides better business continuity and enhanced disaster recovery (DR) as email becomes accessible wherever there is an Internet connection (WiFi or wired). This solution also offers improved security as Microsoft directly manages software maintenance and upgrades for their cloud-based services. As a multinational technology corporation, Microsoft is a trusted and highly qualified software provider, with substantial investment in data security.

Other advantages include:

Access to mobile Office applications for iPads and other mobile devices;
Access to Microsoft Teams for video conferencing and collaboration utilizing the chat feature
(a possible alternative to Zoom for cost savings);
Access to OneDrive for cloud file sharing with each user receiving up to 1TB of online storage
(a possible alternative to Dropbox for cost savings);
Reduced impact to internal data storage, backup storage and backup cloud storage
(a possible alternative to future physical hardware storage for cost savings); and
Access to SharePoint Online for collaboration and integration with Teams and One Drive
(a possible alternative to the local version of SharePoint for cost savings).

COMMISSION/COMMITTEE RECOMMENDATION

The Finance Committee reviewed staff’s recommendation at their August 9, 2022 meeting and it was recommended for City Council approval.

FISCAL IMPACT/SUMMARY

The IT Division is proposing a transition from our current on-site email solution (physical Exchange email server), to Microsoft 365 Exchange (cloud based). This would entail moving to a subscription-based pricing model with an annual licensing fee. The Microsoft 365 license would also include Microsoft Teams, Microsoft SharePoint (cloud) and Microsoft OneDrive (cloud data storage). This subscription also includes access to web/mobile versions of the Microsoft Office applications Word, Excel, and PowerPoint.

The cost of this software over a three-year contract averages $42,220 per year for a total cost of $126.660. The cost of the annual licensing fee for this software is $42,220* in the first year, $42,220 in year two and $42,220 in year three of the contract.
The funds to purchase these licenses have already been appropriated in the current fiscal year budget. There is no additional impact to the budget. The cost for licenses will be offset by the following estimated savings:

Exchange server hardware and software replacement cost (every 5 years) - $30,000
Transition from Zoom to Teams - $1,800 (Annually)
Transition from Dropbox to OneDrive - $1,200 (Annually)
Transition the intranet from internal SharePoint to SharePoint Online - $38,000 (licensing cost incurred every five years, update due in the next two years)

Total offsetting costs: $16,600/year ($30,000/5 years + $1,800 + $1,200 + $38,000/5 years)

Total Cost*	Cost Offset	Net Cost
$42,220	$16,600	$25,620

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by: Anthony Godoy, Management Analyst II
Concurrence: Kristin Griffith, Administrative Services Director
Randy Hornsby, IT Manager

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