"The State of Minnesota's Office of Enterprise Technology (OET) signed a groundbreaking enterprise-wide service agreement with Microsoft last week. The agreement calls for the State's Enterprise Unified Communications and Collaborations services to be delivered through Microsoft's Business Productivity Online Suite (BPOS). The move makes Minnesota the first U.S. state to move to a large collaboration and communication suite in a private cloud environment."

So reads an official statement about a progressive state in the US using a progressive method to buy and deliver IT. This Cloud appears to be the real deal. "Email, instant messaging, web-based collaboration and conferencing are all included in the agreement and will be provided through Microsoft's online hosting at significantly lower rates than the State can currently offer," according to the release.

Minnesota is a relatively wealthy state but faces the same budgetary pressures as any other in today's lovely economy. Politicians and the citizenry there are staring at a $1.2 billion budget deficit for the current fiscal year, with projections rising to as high as $6 billion in the next few years. (Total annual expenditures are in the $50 billion range.)

Gopal Khanna, Minnesota's State Chief Information Officer was quoted as saying,"Rethinking the way we manage our digital infrastructure centrally, to save locally across all units of government, is a crucial part of the solution. The private sector has utilized technological advancements like cloud computing to realize operational efficiencies for some time now. Government must follow suit."

Another apparently cool thing: The agreement can extend down to the county and local levels, too. "We currently consume cloud-based services for key financial business applications," said Marilyn McCarter, CIO of Scott County, Minnesota. "This agreement creates a tremendous potential opportunity for counties." Scott County is a relatively small but fast-growing county on the edge of the Twin Cities metropolitan area.

Microsoft will be responsible for app management in this agreement. This should be a good test case for delivering Cloud Computing services remotely to a relatively transparent customer. You can be sure the company will be scrutinized, and its cost savings and other potential benefits widely debated.