The City of Chicago is announcing a four-year agreement with Microsoft today that will see it use cloud services for employee email and desktop applications. As Microsoft battles Google for cloud customers, Chicago says it will save taxpayers $400,000 per year with its new cloud strategy.

"We are leveraging new technologies to streamline and modernize the way we do business in order to provide the residents of Chicago with the best service at the best price," says Mayor Emanuel. Although the city doesn't name the exact service from Microsoft, it's likely to be Redmond's Office 365 service which includes access to email and web-based document services. Microsoft is currently preparing an update to Office 365 that will include support for its new Office 2013 desktop applications, including the ability for Windows 7 and Windows 8 users to stream the apps to PCs using Microsoft's cloud services.

Chicago has been trying to stay ahead of the technology curve and its adoption of cloud services is a "major step" towards the city's modernization says Chief Information Officer Brett Goldstein. The move will result in a cost per employee reduction of around 80 percent for its 30,000 city employees.