Qld Govt inks $26.5m deal for Office 365


news The Queensland State Government yesterday announced it had signed a $26.5 million deal with Microsoft which will gain the state access to Microsoft’s Office 365 software and services platform. However, with the deal not covering operating system licences and not being mandatory for departments and agencies, it remains unclear what its impact will be.

Queensland IT Minister Ian Walker (pictured) announced the three-year deal in a statement yesterday, claiming that it would save $13.7 million in IT expenses for the State Government.

“Not only are we saving the taxpayers of Queensland millions of dollars, it’s another positive step towards simplifying IT services across government,” Walker said. “Under the previous government, government IT services were cumbersome and delivered little value-for-money. This is the first whole-of-government contract in Australia to provide the flexibility to move between computer and cloud-based software, making the Queensland Government leaders in this area.”

“This new contract means that for the first time all government departments will have access to the same technologies, allowing for greater sharing and collaboration. Access to the most up-to-date IT services and world class innovations will further boost the services Queenslanders receive and help reach our goal of having the best public service in Australia. We are moving from a government owned and operated model to one that uses world-class solutions to deliver flexibility that drive innovation and transformation.”

“This is a great example of the government continuing to lower costs through effective partnering with non-government and industry providers. It will improve the government’s capabilities for us to engage with Queenslanders in new and innovative channels and offer more opportunities to local business and industry.”

However, Walker’s statement did not include details on what the contract actually covered. Delimiter is seeking further information from the Queensland Government on the deal.

Further information about the deal was published on Microsoft’s Australian blog by the company’s Queensland state director Sharon Schoenborn. Schoenborn billed the arrangement as a landmark deal which would bring Microsoft’s software and services platform Office 365 (which includes both services such as cloud email as well as access to desktop software and software delivered as a service through a web browser) to some 149,000 Queensland Government employees.

“Using Office 365 means that the government will have always up-to-date IT services, with access to the best and latest cloud technologies from Microsoft,” wrote Schoenborn. “It will help drive improvements to the Queensland Government’s digital environment and provide greater capabilities for the Government to engage with Queenslanders in new and innovative channels so it can service its constituents more effectively.”

“Office 365 will also underpin better workforce flexibility, mobility and collaboration, and facilitate creative approaches to problem solving. It will also provide a foundation for standardisation and simplification: All employees will have access to the same capabilities and tools, which means information can be exchanged more easily.”

“More broadly, this new partnership with the Queensland Government has the potential to transform the State’s digital ecosystem through local industry participation and enable the Government to become a leader in the innovation space.”

The Queensland Government is currently facing two major headaches with respect to Microsoft software. Firstly, it was reported in July 2012 that the Government could not afford the approximately $100 million it would require the state to upgrade its desktop PC fleet from Windows XP, which is no longer formally supported by Microsoft. And secondly, the state is also grappling with the need for a whole of government email platform, after a previous initiative in this area failed.

iTNews reported yesterday that the new deal with Microsoft would allow all of the state’s departments and agencies access to Office 365, but quoted Walker as stated that use of the platform would not be mandatory. The site also reported the deal would not include operating system licences.

If you believe the hype emanating from the office of Queensland IT Minister Ian Walker and from Microsoft, this is a landmark deal for the Queensland Government which will unlock hugely important upgrades to its IT infrastructure. However, at this point I must note that I don’t believe the hype, and I am not quite sure what the Queensland Government believes it is achieving here.

Among the state’s many problems (outlined in detail in its recent ICT Audit) are two which are quite relevant to this contract. The first is that the state’s email infrastructure is in dire need of an upgrade. The state needs to migrate off legacy platforms and onto modern infrastructure in the form of Microsoft Exchange, Office 365 or Gmail. This is a matter of urgency for Queensland, and it’s already failed in a previous attempt to do this. Secondly, there is the vast number of Windows XP desktops in the state government, which should now be considered deprecated and unsupported.

To be blatantly honest, this deal signed this week with Microsoft appears to solve neither of these two problems.

It’s all well and good for Walker to pontificate about every Queensland Government department having access to the same technologies. But the reality is that it will be an extremely slow process for those agencies to migrate onto the email aspect of Microsoft’s Office 365 platform, and one which will require substantial integration work. These projects are never easy or quick and I don’t see the Minister discussing handing departments any extra resources to hire partners to integrate Microsoft’s platform.

Walker has also thrown a spanner in the works by not mandating that departments and agencies take up the offering. This lack of ‘bite’ in the deal will no doubt mean that many smaller agencies, which may not have the resources of larger ones, will simply ignore the offering and continue on their merry way with their existing outdated infrastructure. Microsoft can state that 149,000 Queensland public servants will have access to Office 365, but I doubt that number will be reached any time soon.

And of course, there is also the bigger problem of operating system licences. Most IT managers and chief information officers know that it’s not normal to sign deals with Microsoft for just one component of its stack. It’s much more common — in fact, bog standard normal — for organisations to sign one overarching Enterprise Agreement with Redmond, which then covers everything from operating system licences to server software to services and desktop software. Microsoft also likes to throw in a couple of kitchen sinks along the way.

This week’s Office 365 deal with Microsoft looks like an acknowledgement that the Queensland Government actually can’t afford to sign a bigger deal with Microsoft along these lines right now to handle its broader problems — or at least that Walker doesn’t have the political capital to get such a deal across the line. It appears the Minister is trying to carve off a chunk of the Microsoft services the state really requires, trying to slip in adoption of next-generation software and services to agencies without explicitly forcing them to adopt the new technology or paying (yet) for the whole slab which Queensland needs.

This isn’t a bad approach, and it’ll probably work to a certain extent. I anticipate that Walker’s move will have the effect of pollenizing Office 365 into a few departments and agencies. Hopefully the software and services will spread more widely.

However, it also doesn’t substantially address Queensland’s major problems. And this is a very serious problem. In early June, the state’s long-awaited comprehensive audit of its ICT systems and processes found that ninety percent of the Queensland Government’s ICT systems were outdated and would require replacement within five years at a total cost of $7.4 billion, as Queensland continues to grapple with the catastrophic outcome of years of “chronic underfunding” into its dilapidated ICT infrastructure.

A $26.5 million Office 365 deal with Microsoft is an OK step forward to starting to deal with that larger problem. But it’s still a “minimal effort” approach, at a time when Queensland requires much, much more.

Image credit: Office of Ian Walker


  1. Wouldn’t it be better to invest in the use and development of standards compliant content rather than the same version of closed-source software? That way not only would the government be able to allow “for greater sharing and collaboration” amongst themselves (or those departments/sections who choose to use Office 365) but with their stakeholders – the public and businesses of Australia.

    • I don’t quite know what you mean, but I can assure that Outlook/Exchange is pretty much a corporate standard for email at this point.

  2. I think you’re right on the money about needing to mandate departments to use this software. A lot of the issues from the audit indicate out of date infrastructure and it would be a lot easier to have say – one migration project across each department rather than multiple infrastructure projects across many departments.

    It would be interesting if you could quantify how much (out-of-date) infrasture across departments in Microsoft based as decommissioning those servers would help achieve audit remediation (possibly) activities and save more money in the process.

    (I imagine this is the line of thinking they’re using when signing this deal.)

    • Mandating change doesn’t work – its the belief that a central agency can mandate change that has been the root cause of so much faulty decision making and failed central IT projects over the last 2 decades.

      Need to address issues of adoption – and remove these barriers. Also as seen by comments here and recent articles on the lessons of the adoption of cloud based email etc – devil is in the detail and its often not as simple as it first seems.

      simplistic assumptions have cost qld tax payers billions. Just ask QH ..and ask QH users re migration off Groupwise.

  3. I worked for QLD health for awhile (now in W.A) I think realistically the only option (at the least cost), will be to move to a cloud base system. But regional clinics are still limited by slow internet speeds. Another reason the #NBN was so vital to Australia in the long run.

  4. Interesting points Renai.
    Why is it ” an extremely slow process for those agencies to migrate onto the email aspect of Microsoft’s Office 365 platform, and one which will require substantial integration work”? The only work required is to have your On Prem Exchange system “connect” to the one on Office 365 (DNS, DirSync and certificates, no extreme tech voodoo) and then it’s a simple matter of moving whichever mailboxes you want to reside in the cloud vs on prem via a single powershell command. It all integrates nicely and you manage the cloud Exchange from within the EMS console On Prem.

    Also, since when did Office and CAL packages come with OS licenses? I don’t know of any deal MS has done where OS and Office are part of the same deal. Usually the OS is either a VL deal, or just simply using OEM from a supplier and get rid of it when the box dies and you go through your refresh cycle. This is far more dependent on how the particular department does its business. The Office365 licensing provides the entire government with the latest Office clients for every employee and they just shore it up every year, based on the current numbers in the PS. This is independent of whatever refresh cycle the hardware/OS goes through and probably a better way of dealing with it. Office365 also provides a lot of value that’s not just “an office client”. The CALs alone (for Exchange, SharePoint and Lync) are extremely valuable, not to mention the hosted SharePoint, Lync and OneDrive so that employess can access their work wherever they need it without in-house IT going bananas over poking holes through their firewalls. Also, Lync, being an absolute mongrel to set up on prem, becomes a dream when you simply use the one hosted online.

    The much bigger shift is the departments trying to get their head around the fact that their costs are now OPEX rather than CAPEX.

    • “The only work required is to have your On Prem Exchange system “connect” to the one on Office 365 (DNS, DirSync and certificates, no extreme tech voodoo) and then it’s a simple matter of moving whichever mailboxes you want to reside in the cloud vs on prem via a single powershell command. It all integrates nicely and you manage the cloud Exchange from within the EMS console On Prem.”

      Granted, that’s a straightforward process, but first you need to migrate your mailboxes from your on premises Groupwise servers to an on premises Exchange platform…

  5. The Office365 licences they would get include the hosted exchange (data is stored in Singapore for Australian users), along with giving each user access to Office 2013 for PC, Office 2011 for Mac and Office for Mobile (with included version upgrades as long as they stay with Office365).

    Sounds great and all.. But the catch? Office 2013 does NOT work on Windows XP.

    All of their Windows XP machines will need to be upgraded/replaced before Office 2013 can be installed, and because Hosted Exchange is “domain wide”, you cant flick over the emails until everyone using that domain will be able to use the new software….

    Without addressing the underlying Windows XP issue, and without mandating that takeup be required, the QLD Government haven’t saved $13.7ml, they have wasted $26.5m.

    • “All of their Windows XP machines will need to be upgraded/replaced before Office 2013 can be installed, and because Hosted Exchange is “domain wide”, you cant flick over the emails until everyone using that domain will be able to use the new software….”

      I’m not sure what you’re talking about here. Exchange 2010 can work seamlessly with Office 365 so those that are “On Prem” and have XP can still use Office 2010 (or even office 2003) to connect to their On Prem Exchange 2010 server and function normally. Those that are capable of using Office 2013 can either have their mailbox migrated to an On Prem Exchange 2013 server, or have it moved seamlessly into the cloud.

      I know of at least one government department that’s currently working towards that. Although they’re also trying their hardest to get off XP as well. This deal allows them access to Office 2013 since some near-sighted person in QGCIO.a decade or so ago, made the determination that the government would only buy OEM licenses of Windows and Office, thus the rut that almost every department is in due to no VL/SA.

      • The idea behind Office365 is that you don’t need the on prem exchange server and that everyone is always running the “newest version” of Office on their desktop.

        You don’t get to pick and choose what version of exchange your hosted version runs, or what version of office you can install on the clients – it is, by design, meant to always be the “newest”.

        This is all well and dandy on machines running 7 or 8, but you cant install Office 2013 (the version that comes with Office365) on XP, and you cant use the version of Hosted Exchange that comes with Office365 with anything older than 2007 (although 2010/2013 is recommended).

        If you still end up needing on prem Exchange, you are basically negating all the cost benefits of moving to Office365 in the first place.

        So.. Unless they already had Office2007/2010 CALs under their old agreement, and are looking at still running their old on prem exchange servers until they can do desktop upgrades, the users on XP wont be benefiting from this – nor will the budget.

        and yes, being that Office365 is pushed out over the web, places like Cloncurry and Diamantina are going to be downloading their software until the next election, lol.

        • So, you’re advocating an all-at-once migration or none at all?

          Most departments don’t have any office CALs, other than the core CAL agreement (what essentially is provided by E1)

          There is still a place for a staged migration so the cost of shifting isn’t all up front.

  6. The dept where I work just finished migration to win7 + ms office 2010. A previous poster stated that your OS licences come from the machines you buy. Well maybe, if you only have couple hundred, but and actual enterprise environment with 5K+ workstations and laptops loaded with custom soe and 100+ sites generally means enterprise OS licence not the crap licence that you get from the OEM. We had to get the migration done to 7 because our licence for XP expires with the MS support end date which is standard for enterprise licensing (at least with Microsoft).

    Office 365 is all well and good but 10% or more of our fleet doesn’t have the bandwidth to use it so we can’t standardise on it. When you have 100’s of staff that have to use a shared ADSL1 links or 850mhz 3G WAAS router because there isn’t anything else available, you can’t move your user base to “cloud services”. User training and efficiency are much bigger budget issues than some licence costs.

    As with most of our IT systems and infrastructure having to be replaced within 5 years, so what? All enterprise IT gear (and systems) tends to have a 3-5 year deployment lifespan. The only systems that tend to live longer than that is big iron and even then that only pushes it out to about 8 years on average.

    Without the NBN to give us the bandwidth to support it, spending $26.5m of services a third of the state can’t use efficiently (or at all) is just a waste of money.

    • “Well maybe, if you only have couple hundred, but and actual enterprise environment with 5K+ workstations and laptops loaded with custom soe and 100+ sites generally means enterprise OS licence not the crap licence that you get from the OEM”

      I guess you’ve never done an enterprise rollout then? There are hundreds of companies (including the big ones such as Acer and Dell), that will take your SoE build and deliver PCs to your door with the SoE already on them, ready to be plugged in and turned on. It’s much better in this case when your workstations are spread out all across the state. The cycle gets initiated when the PC is coming up for replacement, and the new one simply arrives from whoever you’ve contracted to do the hardware support. No need for the IT guys to get involved. All done with OEM licensing.

      • I have worked for a tier 1 OEM and I know that they offer the roll-out service, hell they will do full end-to-end machine and SOE dev if you pay enough. If you want to control which SOE version with which workstation model in your fleet you have, you need enterprise OS licensing. Also, giving your OEM’s contractors (no OEM in Australia employs their tech directly) with which you have no direct contracts is a massive security issue.

        How do you feel about giving a third party contractor access to your patch management schedule and custom applications database just so they can image and deploy some PC’s. A SOE is more than just an OS, a few drivers and some settings customisations. It encompasses a host of settings and compromises needed for applications that can have dependencies over a decade old. Dynamic dependency deployment through AD, SCCM and on windows based infrastructure when have 10’s of custom DB and apps to support is an nightmare,

        Enterprises can have multiple SOE’s with a variety of revisions and patch levels and giving 3rd party contractors to that to save a few bucks on deploying some low end machines once every year or two so is just poor practice.

        • When these contracts were put in place, XP was the current OS and most, if not all, government departments did not have the bandwidth to deploy the OS remotely. They still do use package management for the custom apps but the SoE simply contains the OS, Office and the core apps such as Acrobat, etc.

          The government chose not to use VL+SA a decade ago to save costs. Thus, no access to enterprise Windows. This agreement is the first step towards getting back onto a proper, supported upgrade path. I wouldn’t be surprised if they somehow end up with an agreement for the OS sometime though this is a way to decouple the productivity from just the platform.

  7. What happens to third party apps? It would make more sense to create a Hybrid using on premise Exchange 2013 ( for users that can’t cache) and 365. Wipe all the XP machines and turn them into thick clients and deliver them a desktop using Citrix or something similar. This would also provide the platform for third party apps.

    Didn’t think a Government would deploy data overseas either. I guess they make the rules though….

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