Colorado looks to SaaS to cut e-mail costs

Colorado's Statewide Internet Portal Authority is implementing a plan that will let state agencies and local governments move their e-mail and office systems to commercial hosted online systems, similar to the city of Los Angeles' recent decision to move to Google Apps.

The state agency is currently seeking requests for proposals from vendors who can offer hosted e-mail, calendar, collaboration, instant messaging, video conferencing, word processing spreadsheet and other office applications. Bidders must offer products that deliver 99.99% systems availability and the ability to syncronize with smartphone devices like Blackberries, Treos and iPhones.

The Colorado effort is optional for government users, unlike that of the City of Los Angeles , which is mandating that some 30,000 employees, including police personnel, switch from internally hosted e-mail to Google's software-as-a-service (SaaS) offering.

In Colorado's case, the SIPA, created in 2004 to "provide efficient and effective e-Government services for eligible governmental entities and citizens," will select vendors and negotiate contracts that will provide a means for state agencies, local governments and schools to a easily implement hosted applications.

Proposals are due to be delivered to the agency by next Wednesday.

SIPA executive director Jon Conley said he expects as many as 45,000 e-mail accounts, or about 20% of the potential statewide pool, to adopt the SaaS model over the next few years.

The pressure on state and local governments to cut costs continues to grow. The National Governor's Association, said in a recent report that declining tax revenues have left state governments "facing one of the worst, if not the worst, fiscal periods since the Great Depression."

Whether other city and state governments follow the SaaS lead of Los Angeles and Colorado remains to be seen, but any significant cost-curtting success stories would validate the concept and would likely lead to a mass migration.

Conley says the cost of providing on-premise e-mail services can range from $16 to $40 per user, per month. Costs are higher in communities that have small user populations. He believes that a SaaS provider can offer comparable services in the range of $5.50 to $7.50 a month per user.

What may make Colorado interesting is to see which vendors compete for this contract.

Google, Microsoft, and IBM are the obvious candidates while Cisco Systems is also a potential bidder because of its purchase of WebEx . Other possible bidders include EMC, whose VMware unit last month agreed to acquire cloud computing vendor Zimbra, and Yahoo Inc.'s open source e-mail and collaboration unit.

Vendors may also submit joint offerings that piece together various services into one package, said Conley.

Conley said he expects that SaaS e-mail and application vendors can provide services that "relatively mirrors what we can do with an on-premise" system. And he sees expansion potential for the system. "This is not the end of the SaaS model, but the beginning," he said. Any application that isn't a direct line of business app has potential for migration to an online service, he added.

Conley lauded the city of Los Angeles for its decision to move to the SaaS model, describing it as "hugely influential. It proves that a government entity can successfully look to the cloud."

Colorado is not the only state looking at the cloud model.

The state of New York recently put out a "request for information" on cloud computing to gather input from vendors and others. A state spokeswoman said the state is just exploring the platform and hasn't made any decision to migrate any applications to it.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld . Follow Patrick on Twitter at @DCgov , send e-mail to or subscribe to Patrick's RSS feed? .

Read more about government in Computerworld's Government Knowledge Center.

Copyright © 2010 IDG Communications, Inc.

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