For the last two years, as state revenues keep falling and state budgets turned upside down, officials have been looking for ways to trim the fat in state programs while doing their best to retain quality. We've written many times as to why it's important to trim state spending and ensure that government stays within its revenue projections and actual collections.

So, it's with a raised eyebrow amongst some in the policy and technology community that a new report commissioned by the Department of Information Services (DIS) says that Washington state should run its own email services, and that contracting the service out to professional! companies would actually cost taxpayers more in the short-to-medium time frame (five years).

This caused state representative Reuven Carlyle some consternation, as he posted in his blog this week:

"How can Washington state produce a report that says, in effect, there not only no savings from moving away from state-designed, managed, hosted systems comparable to the private marketplace? The state can beat the price of Google, Microsoft, Amazon and others? Really? The state report looked at one vendor (Microsoft) and one of their model programs. Is that really the extent to all of the flexibility, pricing, services and offerings in the marketplace?"

The report, while technical, does a good job at making the state look like it can do a better job than Microsoft's Business Productivity Online Standard Suite (BPOS). Why? Well, for one the report ignores the hundreds of millions that have already been set aside for the state's new DIS data center (another missed opportunity to outsource). Also, the report only looked at Microsoft's BPOS system, and while mentioning other competitors, only glosses over other options out there -- including some in our backyard such as Amazon's Elastic Compute Cloud; or Google Apps.

One of the most recent high profile cases of outsourcing email and business collaboration tools is the city of Los Angeles'! move to Google Apps by Google. The city is contracting out its 30,000 users' email services along with other enterprise solutions.

Asked to justify the move, LA's Chief Technology Officer Randi Levin said,

"For example, moving to Google will free up nearly 100 servers that were used for our existing email system, which will lower our electricity bills by almost $750,000 over five years," she said. "In short, this decision helps us to get the most out of the city's IT budget."

The state of Washington could very well use the extra space on its servers for something else or power down unneeded servers in a bid to save power and therefore money. Just take a look at the new data center going up within a stone's throw of the capitol. Quite an ambitious project for the budgetary times in which we live.

Closer to home, another state representative was skeptical. NPR's Austin Jenkins interviewed former Microsoft executive Rep. Ross Hunter, who said,

"If you ask for a report written by the agency that would be privatized out the likelihood that they'll come up with a report that says it's a bad idea is pretty high."

Rep. Hunter also mentioned that if anyone should have done the report, it should have been the state auditor. We agree completely. It's not unusual for government agencies to commission studies to justify its own existence or expansion (as a case in point, check out the King County passenger ferry fiasco uncovered by WPC's Mike Ennis).

When it comes to outsourcing state government functions, it is important to truly ascertain whether the private sector can do it for less, more efficiently or both. Are there instances where state government can do a better or more cost-efficient project than the private sector? Sure.

But is that the case with outsourcing our state's email and enterprise business tools to companies that make billions hosting these! services because they offer high quality products people want for prices that are affordable? Probably not.

Cloud computing is emerging as the next big IT thing. What Twitter and Facebook did for social networking, what the iPhone and Android are doing for mobile applications, cloud computing is doing for IT management and structure. There continue to be policy questions revolving around cloud computing and outsourcing computing power to the likes of Amazon, Google, and Microsoft (and dozens more), such as privacy and data retention, but these services deserve more than a cursory glance.