While federal CIO Vivek Kundra was unveiling his high-profile cloud computing initiative, two of the nation's most technologically sophisticated states were making cloud plans of their own.

The September launch of Kundra's Apps.gov online storefront -- which makes it easier for government agencies to acquire cloud-based services from private companies like Google and Salesforce.com -- drew most of the attention. But state CIOs in Utah and Michigan are betting that some public-sector customers would rather get cloud services from another government instead of a commercial provider.

Both states are gearing up to launch public-sector clouds operated by their central IT agencies that will serve state agencies, as well as local governments and schools. Some expect this type of government-operated cloud to become common as states look to leverage their investments in consolidation and sophisticated technology infrastructure. For customers, emerging government clouds add another option to a growing menu of hosted infrastructure and application offerings -- an option that doesn't include turning over government data and applications to a private vendor.

Utah's Cloud

Steve Fletcher, Utah CIO and executive director of the state's Department of Technology Services (DTS), views Utah's cloud as a natural extension of a data center consolidation initiative that has been under way for several years. It also dovetails with growing government interest in cloud computing and software as a service.

"We're in contact with six or eight cities that are saying, 'Yeah, we'd love to have you take over our operations,'" he said "They understand that we know how to protect the information and we know how to handle it. All those issues of access and ownership and security have already been resolved. So it's a lot safer for them, and if we can show them that our prices are very similar to what's offered in the commercial side, then they're saying, 'This is a good idea.'"

Utah's DTS is currently defining a package of software, platform and infrastructure services that will be offered to state agencies, local governments and schools. The plan envisions a "hybrid cloud" that provides a mix of state-hosted services and commercially provided offerings -- but they would all be delivered through the DTS IT Service Catalog.

"We're consolidating and virtualizing [state government servers] now. So from there, we will have all of our state agencies essentially virtualized -- they'll be in the cloud," Fletcher said. "Then we will start to add local entities."

Similar activity is under way in Michigan, where the state intends to break ground next year on a massive data center designed to provide cloud computing services to state agencies, cities, counties and schools.

Michigan CIO Ken Theis said there's huge demand for application hosting and managed services among local governments in Michigan, which has been battered by the decline of domestic auto manufacturing and other economic factors.

"The state government is hurting, and the local governments are hurting even more," he said. "So the heart of our cloud computing strategy is not a state of Michigan cloud, but a public-sector cloud, and there's a ton of interest in it."

IT and Economic Development

Michigan's Department of Information Technology planned to release a request for information this fall to gauge industry interest in forming a public-private partnership to build and operate what is being called the Great Lakes Information & Technology Center. The state envisions a public-sector cloud that would offer application hosting and managed services to any public entity in Michigan.

"This is really big for us," Theis said. "It could potentially be an 80,000-