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Minnesota secures Microsoft services for government cloud

Microsoft has sold secured BPOS services to the State of Minnesota, eclipsing Google's rocky Los Angeles deal to become the largest government cloud yet.

The State of Minnesota has announced a long-term deal with Microsoft to move a large part of its IT and communications infrastructure to Microsoft's Business Productivity Online Services (BPOS). The state says that savings on management will make the deal financially attractive and that Microsoft bent over backward to offer infrastructure security.

There's no question that the price per user is much lower.


Cathy de Moll, director of communications and intergovernmental relations in Minnesota's Office of Enterprise Technology,

As many as 33,000 state workers are set to move onto the new service, which will provide email, collaboration (SharePoint), conferencing and video chat. Microsoft is selling the state its BPOS-Dedicated (D) service, which is a physically separated, single-tenant hardware environment that isn't exposed to the Internet. It's a key difference from major competitor Google, and a primary reason Minnesota went with Microsoft.

"That was the reason," said Cathy de Moll, director of communications and intergovernmental relations in Minnesota's Office of Enterprise Technology. She said the state had fairly strict rules governing communications data and security, and exposing state communications to the Internet was off the table.

"The BPOS-D environment will be connected to Minnesota's Network of Enterprise Telecommunications (MNET) via dedicated circuits and will utilize an RFC1918 private address space," said a state spokesperson via email. RFC1918 lays out three IP address blocks that can be used by large organizations to address computers without needing to route through public IP spaces. It can be used over direct, backhaul communications links or through specialized endpoint devices.

That's not something you can get from Google. However, like Google Apps, the data facilities are not necessarily close to users. The state wouldn't say where the BPOS facilities are located, but Microsoft is known to maintain secured BPOS facilities in Chicago, Virginia and Texas. Minnesota state law and policy is unclear on where public and non-public data can be stored geographically.

de Moll said that while BPOS-D was the clincher for the state, it didn't hurt that Minnesota already had a long-term contract with Microsoft for office productivity and communications tools. That means the migration of user data, like email, is going to be relatively painless, and the end user in many cases will not notice much of a change. They'll still use Outlook, and BPOS will integrate with the state's Active Directory systems.

"The only change is we multiplied user storage by 50, which nobody is complaining about," de Moll said.

Minnesota's search for IT help
The state began to look for a centralized IT solution for communications in 2009 when the Governor's office designated email a "utility service," something like electricity or water. That meant that IT delivery had to obey strict rules about centralized distribution and reliability, and that the state had to standardize on IT delivery for all its offices. Cloud computing was seen as the obvious fit; earlier this year, video conferencing, online collaboration and communication were also designated "utilities." Microsoft apparently worked very hard to win the deal based on its prior contract with the state.

"The terms are very agreeable," de Moll said. Now that BPOS is established as the email provider of record for the state, the plan is to offer it through the Office of Enterprise Technology (OET) as a service to local governments, schools and public works. "We start with 30,000 [state workers], but we are also opening it up as an expandable contract to local governments," she said.

The OET will charge local authorities for the service, and in turn, its bill with BPOS goes up, but de Moll said the per-user savings were a significant reduction compared to what public sector entities in Minnesota where currently paying for on-premises Microsoft licensing.

"We expect to save a minimum of $800,000 [this year], but the ongoing price is not prescribed. There's no question that the price per user is much lower," she said.

The plan to modernize email and communication systems in Minnesota began in 2008. Microsoft was contracted for providing email software and support, with the migration to be completed by 2009. Re-arranging the contract to include BPOS seems to have happened with remarkable agility for a government body.

Microsoft vs. Google
For its part, Microsoft says that it is pleased to offer the largest cloud computing rollout for government to date and has fired a salvo directly at Google Apps, which has been busily snapping up cities, towns and universities for Gmail. Microsoft is pointing to the Minnesota deal as a way of proving that it has the chops to satisfy customers that won't or can't compromise on security. Microsoft has been lacking in big wins for its cloud services lately.

The only change is we multiplied user storage by 50, which nobody is complaining about.


Cathy de Moll,

Largely in response to Google's pre-announcement of its Government Cloud for Google Apps last September, Microsoft upgraded BPOS in February to compete. BPOS services -- which include Exchange Online, SharePoint Online, Microsoft Office Communications Online and Office Live Meeting -- are all advertised as HIPAA and FERPA ready, delivered from SAS 70 Type I- and Type II-certified data centers, as is Google Apps, while BPOS-D is also Federal Information Processing Standards (FIPS) 140-2 compliant and BPOS-Federal is "optimized to meet the unique security and privacy needs of US government agencies and defense contractors."

Minnesota does not have other plans to adopt cloud computing services at the moment, but the state will watch the results of this move, expected to complete next year, closely. Other government bodies are likely also watching.

"It's an important milestone for us to show that cloud computing is in our future, and it's important for Microsoft because we are the first full state customer," de Moll said.

Carl Brooks is the Technology Writer at Contact him at

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