Score one for Microsoft. Although its chief competitor Google has made significant inroads in the enterprise and federal government space with Google Apps, Microsoft just signed a contract with the City of Chicago that will see the Windy City switch more than 30,000 city workers over to Microsoft Office 365.

Michael Donlan, vice president of U.S. state and local government at Microsoft, wrote in a blog that Chicago is just one of several American cities that have bought into the concept of Office 365. That’s a pretty sizable win for Microsoft in the ongoing fight for dominance in the cloud productivity market, and it’s one the company should feel good about it.

According to Microsoft, by switching to Office 365, the powers that be running Chicago are expected to save taxpayers $400,000 per year. The city’s cloud strategy is being partly driven by Mayor Rahm Emanuel, who has placed emphasis on reforming Chicago’s digital infrastructure and making departments more effective. Cloud computing is one way the mayor is hoping to cut costs and improve efficiencies.

Google has had its share of wins in the state and local government sector. For instance, the City of Edmonton announced last April it was moving 9,000 city employees to Google Apps. Others include Pittsburgh and Orlando.

The cloud system installed for Chicago encompasses all email and desktop applications across all city departments. The adoption of Office 365 helped simplify what was a far more complicated infrastructure that included three separate email systems internally. That’s hardly the most efficient way to run email within a government, and it’s probably safe to say the consolidation into one cloud-based system will make things more efficient and more secure for the city and its tens of thousands of workers.

“The cloud strategy gives city employees the ability to do their jobs more effectively while saving taxpayer dollars, decreasing duplication among departments and streamlining our operations across the board,” said Brett Goldstein, Chicago’s CIO and the commissioner of the Department of Innovation and Technology, in a prepared statement.