The State of Minnesota's Office of Enterprise Technology (OET) announced Monday that it has signed an agreement with Microsoft Corporation, through which the state office will transition its e-mail, instant messaging, an other Web-based services to a private cloud environment.

The deal, which the State describes as a “groundbreaking enterprise-wide service agreement,” will shift the office's communications services to Microsoft's Business Productivity Online Suite.

Minnesota is the first state to enter such a large-scale collaboration and utilize cloud computing, according to the OET. With cloud computing, users rent virtual servers, software, and/or hard drives from private companies. The data and software is stored in massive, remote data centers, or “clouds.”

“As states battle growing deficits, they are continually being asked to do more with less,” Gopal Khanna, Minnesota's chief information officer, said in a statement. “Rethinking the way we manage our digital infrastructure centrally, to save locally across all units of government, is a crucial part of the solution.”

Khanna said that cloud computing has increased efficiencies in the private sector, and “government must follow suit.” He said that the move will improve security, cut costs, and “transform government into a 24/7 operation-even in hard times.”

The agreement encompasses all of the state's executive branch agencies, but it also presents opportunities for other OET customers-such as city and county governments and the education sector.

According to the OET, the move to house its e-mail, instant messaging, Web-based collaboration, and conferencing in a cloud environment will reduce redundancy and save millions of dollars in upgrading costs. Users will receive increased e-mail capacity-from 100 MB to five GB-and increased collaborative functionality.

“The agreement keeps the service management of our critical communications tools in State hands but leaves the costly application management to Microsoft's experts,” Tarek Tomes, OET assistant commissioner for customer and service management, said in a statement.

Khanna said that “the superior architecture of the applications and the state-of-the-art physical security of Microsoft's facility increases data security several fold.”

The State said that it is working closely with Microsoft as its transitions to the company's system to ensure that the impact on users is minimal.