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Computerworld - Budget cuts have reduced the city of Miami's IT staff from 102 to 80 positions, a significant contraction that could have lead to drastic services cuts and morale issues.

But instead of letting melancholy take over when many vacant positions were left unfilled, Miami's IT department is working to figure out how to use the cloud to cut costs and even generate revenue.

But before the company could act on such intriguing ideas, the city's IT personnel needed to have experience with a cloud platform.

That experience began this week with the launch of Miami's first cloud application, Miami 311. The online application, built internally using Microsoft's Azure, allows residents to monitor requests for services such as a list of reports of potholes, abandoned vehicles and code violations.

The potential of cloud services has also led city officials to consider revenue generating ideas such as creating custom data aggregation and mashup services that could be sold to businesses.

Budget cuts "have caused us to start evaluating everything," said James Osteen, Miami's assistant IT director, noting that more than half of the IT staff is now dedicated to maintaining the city's existing IT infrastructure.

Miami's situation represents the new world for IT managers -- looking closely at cloud services to offset tight to shrinking budgets.

But, say some IT managers, the cost savings of these services is easier to determine than user acceptance of them.

Jay Kenney, CIO of Lincoln Property Co. in Dallas, which for the past several months has been using the hosted Google Apps Gmail service, has measured both total cost of ownership (TCO) and the reaction of the 1,000 users of the cloud-based product. The company replaced its Novell Inc. GroupWise software with Google's hosted e-mail and collaboration system last September.

Kenney said the results of the TCO study roughly mirrored Forrester Research Inc.'s recent report showing the that cost of using Google's Gmail hosted e-mail at about $8.50 per user per month versus about $25 per user per month to support in-house systems like GroupWise.

Kenney's firm continues to use Microsoft's Office and SharePoint products.

Kenny said there was general dissatisfaction with GroupWise and when time came for the city to refresh its hardware systems led to an re-evaluation of its needs. "It was time to do a business case and get all the cost on the table," he said.

He calculated the TCO over five years and and the Google Apps product, from a financial perspective, came out as the best valure for the city.

For Kenney, the biggest issue was user acceptance of Gmail, including its calendar and chat features. The internal survey found that 65% of Lincoln Property users said Gmail is the same, better or much better than GroupWise, while 35% said it was worse or much worse.