The Schwäbisch Hall local government, which serves a community of 36,000 in southern Germany, plans to ditch Microsoft's Windows operating system, swapping it for the open source Linux software as the basis of its entire IT infrastructure.
The local government has decided to deploy Suse Linux software servers from IBM and up to 400 PCs, targeting an initial cost savings of more than €100,000 (£64,000).
In addition to cost savings, the city government expects Linux-based IT infrastructure to provide greater security and interoperability with other systems, said the city's mayor, Hermann-Josef Pelgrim.
This trend towards open source as a means to cut IT costs could soon spread further, too, as in the UK the Treasury is also considering swapping some of its Microsoft software for cheaper alternatives.
In Germany the project will initially include the migration from Windows and Microsoft Office to the Suse Linux Enterprise Client and OpenOffice.org for 120 PCs, a number that is expected to rise to 400 in the final stage.
On the server side, Suse Linux Enterprise Server software will be deployed on IBM's eServer xSeries servers.
Microsoft could not be reached for comment.