Queensland’s new state government has scrapped a $A47.3m project to deliver a centralised email, identity management and authentication service using Exchange 2007.

Over half of the funds have already been spent to move  80,000 email accounts under the Identity, Directory and Email Services (IDES) program.

Minister for Information Technology Ros Bates said only 3100 users had begun using the service by June 2012.

"The central problem with IDES was that it never represented good value for money and Departments could source alternative products," Ms Bates said.

"The Auditor General termed IDES a financial and functional disaster, in large part because there was no effective oversight of its implementation," she said.

Minister Bates said the lack of users across Government was one of the major reasons for CIT EC's poor financial position.

A Departmental review of IDES recently concluded that a further investment of $25 million over the next three years would be required to make it viable. The program will be closed by 30 June 2012.

"I have recommended that we stop IDES and explore other options including a potential cloud-based whole-of-Government email solution," she said.

Minister Bates said a cloud-based solution could provide benefits for the Government's short-term cash flow position and could also provide a sustainable long-term option from a technological perspective.

"A cloud-based solution doesn't require a large capital investment and provides an effective way to manage a commodity-based information technology service," she said.

The IDES also included providing a whole-of-government identity management platform and simplified sign-on service to the government's SAP business application portal.