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Computerworld - Does each and every state government really need its own computer system for processing driver's licenses or issuing hunting permits? Or could all 50 states use SaaS applications offered by a single state provider -- or perhaps by a handful of commercial providers?

Could states attract more small and midsize businesses and increase jobs by offering low-cost SaaS applications to start-ups and other enterprises, including libraries and colleges?

Those are the kinds of questions that Michigan's CTO, Dan Lohrmann, raises when he discusses SaaS. Michigan is launching a series of pilot programs under which the state will offer branded, low-cost data storage services to various state agencies as well as libraries and schools.

Lohrmann expects early customers to include state agencies with nonsensitive data to store. "For example, the state needs to take dirt samples from the Upper Peninsula of Michigan and store that data for seven years. We could take the data for Years 4 through 7 and put it into the storage cloud, and it would be a lot cheaper" than storing it locally, he says.

But Lohrmann is also looking beyond infrastructure services such as storage. Ultimately, he would like the state to provide application services for processes like provisioning licenses and permits. He says he has no doubt that SaaS technology will get to a point where data security is no longer a stumbling block. Most states, he says, would also welcome the opportunity to cut infrastructure costs by using SaaS applications.

"In 2010, the most sensitive data is not a candidate for SaaS," he says. "But it is going to happen. You never say never."

What would have to change, however, is the long-held belief among many state officials that the way their state provides services to its citizens is unique.

"Every state says they're unique, just like every customer says they're unique," Lohrmann observes. "Every customer is special, but they're not really that unique.

"The biggest problem in 2010 is that almost every state is facing a difficult budget," he says. "If someone said you could do X, Y and Z for half the price with SaaS, but you'd need to change this [data] field or that field in an application, I think you'd all of a sudden see that those unique requirements would not be as important."

Next: SaaS takes on business intelligence

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