New Zealand's Postal Services Group (PSG), a business inside New Zealand Post Group that connects businesses and the community through mail and online services, is moving from Microsoft to Google Apps, security, compliance and web filtering.

PSG has signed a three-year agreement with Fronde, a Google enterprise partner in New Zealand, that will see Google Apps rolled out to 2,100 Postal Services Group workers.

It's reportedly Google's biggest commercial win in the region so far.

The post didn't say what it's spending but the Premium version of Google Apps runs US$50 a seat annually.

The shift is supposed to save the post US$1.3 million over three years on infrastructure.

Microsoft New Zealand managing director Kevin Ackhurst told ZDNet.com.au that the contract wasn't let by competitive tender and that PSG had to cut costs because its business had changed.

Microsoft isn't completely out of the post and still has a lock on the post's Kiwibank subsidiary.

Postal Services CEO Peter Fenton is apparently concerned that his unit be chi-chi.

He said web-based tools such as Gmail are popular and many people, especially students, expect to access the same tools at work. "Google Apps will help us retain our people and attract the next generation of talented graduates."

The widgetry was tested against other web apps during a 10-week trial and is expected to enhance productivity, making it easier for people to collaborate.

With Google Apps, there will be an increase in mail box capacity from 50MB to 25GB, which is supposed to free employees from having to constantly manage e-mail backups.

The agreement means PSG will move to a variable cost model so that IT costs can be more closely linked to business activity.

According to the plan, Google Apps, including mail, Calendar, Chat, Video, Docs and Sites, will be rolled out to 2,100 Postal Services staff and a small number of workers in the wider New Zealand Post Group.

Google acquisition Postini will be deployed to provide spam protection and secure mail archiving for 10 years

Microsoft's web-based Office Apps aren't expected until next year.

Google has no data center in New Zealand so the post's data will be in the U.S.

According to the National Business Review, New Zealand's State Service Commission recently recommended that government agencies dump Microsoft. It's assumed others will follow the post's lead.