The state of Minnesota announced Monday it has signed a deal with Microsoft to use the software titan's cloud computing services for unified communications and collaboration services.
Under the terms of the deal, Microsoft (NASDAQ: MSFT) will provide the state's Office of Enterprise Technology (OET) with its hosted 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," the OET said in a statement.
BPOS is a bundle of enterprise-level services that Microsoft hosts in its own data centers and delivers to customers through the cloud — it's comprised of Exchange Online, SharePoint Online, Office Communications Online, and Office Live Meeting. Among the services provided are e-mail and instant messaging, as well as collaboration tools.
"The scope of this new and innovative unified communications and collaboration service delivery agreement encompasses all executive branch agencies, but other OET customers, including local governments, cities, counties and educational entities, can choose to take part in the agreement as well," the statement said.
According to the terms of the deal, Microsoft will host the state's applications and data in a dedicated data environment and deliver the services via direct connection to the state's secure network.
"The combination immediately improves our security and cuts our costs, making it possible for a digital infrastructure that can transform government into a 24/7 operation — even in hard times," Gopal Khanna, Minnesota state's CIO, said in a statement.
BPOS is part of Microsoft's overall "software-plus-services" strategy, including other paid services such as the Windows Azure public cloud offering and Dynamics CRM Online. The company also has free services for consumers and students such as its Windows Live set of online tools, and its Live@edu services for educational institutions.
Microsoft claims to have 40 million users of its various paid online services, including some 500 government entities.
"We've got over 40 million customers that are paying for online services — Exchange, SharePoint, Live Meeting. People are moving to the cloud at a very rapid pace and experiencing some incredible new capabilities with SharePoint 2010 and Exchange 2010," Bob Muglia, president of Microsoft's server and Tools Division, told developers attending the company's TechEd Conference in New Orleans in June.
In February, Microsoft announced a version of BPOS customized for government IT organizations — including security, privacy, and compliance rules.
In April, the company announced that BPOS availability was being expanded to 39 countries and 45 languages.
The cloud is hardly a marketplace without competition, however. Microsoft lost a high-profile bid to provide email services to the city of Los Angeles this time last year — and what made it smart even worse was that the winning bidder was the company's chief adversary — Google (NASDAQ: GOOG).
That rivalry for customers of cloud-based applications and services has seen the two bump heads more often recently.
"Initially, the two had little in common [about their strategies but] Microsoft and Google are increasingly facing off over cloud business," Ray Valdes, vice president of Web services at Gartner, told InternetNews.com.