Microsoft (MSFT) Office 365 has placed New York State into its large bag of recent victories, forcing Google (GOOG) Apps to cross the Empire State off its list of potential customers, at least for the moment.

More than 120,000 state executive mailboxes will be  transitioned to Office 365 by the end of 2013, state officials said.

State officials said Office 365 will bring state employees to the most recent versions of productivity software, provide a universal address book that includes contact information for all state agencies, create uniform archiving processes, and enable full system redundancy and backup.

"New York and Microsoft share the same goals—to make state employees more productive, to ensure continuity of service and operations in times of emergency or natural disasters, and to save taxpayer dollars through a move to efficient and secure cloud technologies," said Microsoft COO Kevin Turner said in his prepared remarks.

But just how much will this statewide implementation of Microsoft Office 365 save taxpayers? Governor Andrew M. Cuomo said in a prepared statement that this partnership is expected to save approximately $3 million annually in license fees, hardware, maintenance, energy and personel costs, while increasing collaboration and productivity among state agencies. Prior to this agreement, there were more than 27 different email, word processing and data processing systems in use at state agencies. 

Microsoft Office 365 was recently awarded a contract with International Airlines Group (IAG), which is the parent company of British Airways, Iberia, IAG Cargo and Avios.